Let’s face it, medical costs are ridiculous. What they take out of your paycheck for having medical coverage and what you still have to pay out of pocket can seem mind boggling. Of course, there’s no negotiation AND there are no coupons for your insurance company. So, is there ANY real way to save money on medical?
One option may be to use a medical tax saver plan.
How does it work?
Medical tax saving accounts (also knows as TSAs, Medical Savings Accounts, Tax Saver Benefits, etc.) are often provided by employers. They take a set amount you choose to deduct per year out of your paycheck to help you cover eligible medical costs, such as co-pays, treatments, hospital bills, vision care, etc. It’s a medical savings account that deducts per paycheck, but is available in full from the beginning of the plan year.
Example: If you choose to have an $800 plan, the full $800 will be available from the beginning, but you will pay the set amount per paycheck all year to equal that $800. This amount is deducted BEFORE taxes, which can lower your overall taxes and save you money!
Things You Should Know
- If you don’t use it, you lose it. Any remainder that’s unused at the end of the year just disappears. You don’t get it back, and it does not roll over. So know how much you spend out-of-pocket for the year for medical. You can change the amount every year during open enrollment. Start with the smallest amount you know you will use up, and increase it if you need to the following year. Better safe than sorry!
- Reimbursement is sometimes not immediate. Some plans have TSA debit cards. The money comes directly out of your account and is paid to your doctor, pharmacist, or hospital. Some plans still require that you show proof of treatment, and you are reimbursed after the fact. My own plan is a reimbursement deal, and although I’d love to have it pay automatically, I find the reimbursements to be pretty quick. I put my expenses on a credit card when it is a large bill and can pay the card off in plenty of time. Also, if it is a medical billing, you can send that in for reimbursement, even though it has not been paid yet.
- Hold on to your receipts, and make sure you get detailed receipts from doctors offices (including names, dates and procedures or procedure codes), not just a credit card receipt. Some plans accept your "Explanation of Benefits" letters from your insurance as proof of service, but it’s best to keep receipts. There can always be errors. If you are ever audited by the IRS, you will need these receipts/EoBs as well.
- Make sure you re-up every open enrollment, and take into consideration your future needs. If you’re expecting another baby next year, you may want to consider upping your amount to tackle those out-of-pocket costs. If your kids are out of your house and no longer on your insurance, consider lowering it. It requires a little bit of long-term thinking, but it’s well worth it.
For me and my family, the medical tax saver account has been a good money-saving tool, and helps us to pay for bigger items. It definitely takes the sting out of paying medical bills, knowing we’ll have that cash back in hand in no time.
This has been a guest post by Amber from St. Johns, AZ
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