4 ways to save on rising health care costs

Health care costs are already a pain point in many people’s budgets. With costs poised to continue rising, finding ways to manage them without neglecting your health is more necessary than ever.

Next year, “employees could see their total health benefit cost increase by 6.7% on average,” which would mark the “steepest jump in 15 years,” said CNBC, citing the global consulting firm Mercer. Use these four tips to help manage your wellness and your wallet.

1. Make sure you understand your coverage

To effectively use your health care plan and avoid any surprises, it is important that you wrap your head around what its terms are. A good exercise is to “add up your potential out-of-pocket costs for an idea of how much you should have in savings for a health emergency,” and then actually stash that amount away, said CNBC.

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Getting into the nitty-gritty of your plan can also reveal whether you have the right amount of coverage. “Look for whether you’re using it a lot or not,” as “under or over usage might be a sign you have the wrong amount of coverage,” in which case you may want to course correct, said Ramsey Solutions, a personal finance website.

2. Take advantage of an FSA or HSA if you can

Flexible spending accounts (FSA) and health savings accounts (HSA) are two different options that “allow you to contribute money tax-free to a savings account dedicated to health care costs,” said Ramsey Solutions. FSAs are only available through employers, while HSAs are offered solely to those enrolled in a high-deductible health plan (HDHP).

If either is an option for you, they can offer major savings. According to one estimate, an FSA “may save you on average 30% for your out-of-pocket medical costs,” said Investopedia, citing the Federal Flexible Spending Account Program website. Meanwhile, an HSA has the distinction of being “triple-tax advantaged,” as “your initial contributions are untaxed, your investment grows tax-free and withdrawals are tax-free if spent on qualified medical expenses,” said Fidelity.

3. Look for ways to cut prescription costs

While taking the medications necessary for your health may be unavoidable, there could be some flexibility in the price you pay. For instance, you might look into switching to the generic version of a given drug; generics are as “effective and safe as name-brand drugs and often cost significantly less,” said Investopedia, citing the FDA. You can also ask your doctor if there is a comparable but less costly medicine you might try, or check to see if using a mail order pharmacy or getting a larger supply at once could offer prescription savings.

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4. Be proactive about your care

While it may be tempting to cut corners on the small stuff, such as a dental cleaning or an annual screening, to save some money now, that can end up costing you later — in more ways than one. “These services can unearth issues before they become a problem and help you to stay healthy, reducing medical expenses in the long run,” said Fidelity.

Relatedly, it helps to tend to any health issues as they arise. “If you go to the doctor five years down the line instead of now, things can get worse, and the treatment can be much more expensive,” said Aditi Sharma, a vice president on Fidelity’s Financial Solutions Team, to Fidelity. “The sooner you face it, the better off you are.”

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