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Babies and Families

Stretch your family budget by taking charge of health care

It's tough for families whose healthcare premium is a greater expense than their mortgage. The healthcare system can work to your advantage, but only if you know what to do.
It’s a tough reality that for most families, the single expense greater than their mortgage payment is heath care premiums and associated costs. Still, the changes in the healthcare system can work to your advantage if you know what to do. This article shares some information that may help you keep health care costs manageable and within your family budget.

1. Be prepared to invest more

Although you can expect to pay higher deductibles and co-pays in exchange for lower insurance premiums, you can benefit in other ways by becoming an educated consumer. The good news about the Affordable Care Act and resulting demand for cost transparency is that now you can identify where higher costs originate. This gives us all the opportunity – and responsibility – to be selective in our choices and avoid overpaying for quality care. You absolutely can get high quality care for a lower price, but you can’t assume that a higher cost equals quality care. Costs for the same procedure can vary drastically, so ask for prices and compare costs for medical procedures, treatments and medications. Utilize your health insurance company’s online comparison tool or the HealthcareBlueBook to calculate fair market price in your area. Type in the procedure you need plus your zip code to receive a fair price estimate. Then ask your surgeon and/or hospital what they charge to determine where they land within that range. The HC Blue Book also provides tips and options for doing further research.

2. Planning and prevention save you money

Cost shouldn’t keep your family from getting the quality care it needs to stay healthy. If your child breaks an arm, go to the hospital and work out the finances later. On the other hand, you can save significantly by planning ahead for routine exams or talking to a nurse on your insurance company’s medical hotline. And don’t let a high deductible or higher co-pay steer you away from preventative care. A serious illness will be more costly if it has time to take hold instead of being nipped in the bud by early diagnosis.

3. Keep it in network

Special pricing was negotiated by your insurance company with their network of medical professionals and going outside the network could cost you double for the same treatment. Hospital prices can be exponentially higher than a doctor visit, so take advantage of urgent care centers for colds or flus, sprained ankles and other non-life threatening conditions.

4. Rainy day savings protect your budget

As we have mentioned in previous articles, having an emergency fund is pivotal to keeping your family budget on target. It makes sense to reserve enough cash in an emergency fund to cover the cost of an unexpected trip to the emergency room in addition to three months of income. A health savings account is a cost effective way to put money aside for elective surgery or emergencies and it stays with you if you change jobs.

What are my options for healthcare coverage when I retire?

Many employers are doing away providing health benefits for their employees who retire. So if you're thinking about retiring early, you may need to come up with a plan to cover your health care expenses.

If this is the case, you'll have two options: to secure coverage through a private health insurance plan, or to opt for the Consolidated Omnibus Budget Reconciliation Act of 1985, more commonly referred to as COBRA. Either way, funding your own health care benefits can be costly if you don't plan for them in advance.

With COBRA, you can actually extend your health insurance coverage for 18 months after you leave your job. And although the application can be relatively easy to apply for, the premium for this type of continuation coverage often comes with a very high price tag. A more affordable choice may exist in a private plan. However, it's in your best interest to do some shopping to compare coverage, rates, deductibles and coinsurance before deciding on a policy.

Up until now, we've been talking about health care options for retiring early. If you decide to wait and retire at age 65, then you'll have a third option for Medicare coverage. Now, you'll still have premium payments to make, but waiting can be a less costly option than individual insurance (especially if you're in poor health) compared to a private healthcare plan or COBRA.

To sum it up, we all play a role in responsible health care spending. Even if we are fortunate enough to have robust insurance coverage, we all pay the price for overpayment as health care costs rise. It’s worth the effort to research and evaluate your options to protect your family budget from inflated medical costs.

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

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