Modern medicine is amazing! From heart attacks to cancer treatments, the survival rates of serious medical issues and diseases have sky rocketed over the last twenty to thirty years. Unfortunately, the cost associated with modern medicine has also sky rocketed.
Major medical health insurance cost is a BIG problem for many US citizens not yet age 65. Notable Number 2 in this week’s Weekly Market Review details the average current cost for a family, compared to ten years ago and how much of that cost, on average, is paid by the employer and employee. The increases in cost have continued at an unsustainable pace since the Affordable Care Act was voted into law in 2010.
Practical financial planning considerations to help combat this rising cost include.
- Higher deductibles = lower premiums (having a sufficient emergency account allows you to more comfortably choose the lesser expensive premium option)
- Almost all of us will experience major unexpected medical cost at some time during our lives. Living within your means allows you to be better prepared financially.
- Health Savings Accounts - High Deductible Health Plans qualify your eligibility to contribute to an HSA allowing you to pay for those out-of-pocket expenses with pre-tax dollars.
- Part-time work options. Many workers financially ready to retire are seeking part-time work opportunities with employers to stay covered by an employer’s plan.
- Ask questions – Talk with your doctor about the most cost effective drugs and procedures. X-rays cost a lot less than an MRI and the discrepancy in drug cost can be as wide as the Grand Canyon.
- Negotiate – Many hospitals and doctors are willing to offer discounts for up-front payments. Some will also offer a lower rate based on the patients financial circumstances.
- Many corporations have instituted wellness programs offering discounts and financial incentives to try and maintain better health. You should fully take advantage of these, if available.
- Technology readily puts tools in consumer’s hands, allowing them to shop for the best rate on everything from prescriptions to procedures.
- The free “Good RX” app is a must have on your phone
- You insurance company’s app or website most likely has tools that allow you to compare cost for a variety of issues among different in-network providers. For example: Blue Cross Blue Shield calls their tool the “Healthcare Cost Estimator”
Healthcare costs after age 65 are a problem also. The statistics around what we will spend between retirement and the end of life on healthcare related expenses is flat out scary. Prudent financial planning should be done to account for these significant and rising costs. There are a myriad of tools and strategies to consider and none are perfect, but it is important to not wait until retirement age to begin this planning as some of the tools become less useful or appealing at older ages.
The best plan is the preventative plan. The heart attack that never happens is the least expensive option. An apple a day keeps the doctor away!
Have a good week!
Trevor N. Coe, CFP