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Money Management (02/13/2008)
How to maximize your health care costs

The average employee contribution for health insurance has soared over 143 percent since 2000. Typical out-of-pocket expenses that consumers pay for deductibles, prescription copayments and coinsurance for doctor and hospital visits have jumped 115 percent during the same period, based on facts compiled by the National Coalition on Health Care. You and your family can still afford to receive the treatment you need, according to the Minnesota Society of CPAs (MNCPA), by taking some simple steps to limit your costs.

Be tax savvy

Don't miss out on the tax-advantaged options for lowering your health care costs. For example, find out if your employer offers a flexible spending account (FSA), which will allow you to set aside some of your earnings tax free to cover unreimbursed medical costs, such as copayments and deductibles, as well as items that might not be included in your plan, like eye care or eyeglasses, hearing tests, chiropractic care and the cost of prescriptions. It's important to remember that you must use your FSA contributions in the year they are made or you will lose them, although your employer can give you an additional two-and-one-half months to spend the funds. That's why it's a good idea to perform a careful estimate of your out-of-pocket health care costs during a recent year-"”and consider how that amount may change in the coming year--before contributing to an FSA account.

Another option, health savings accounts, generally are open to people under 65 who are covered by one high-deductible health insurance plan. Contributions are tax deductible and can be used to pay for the expenses that your insurance doesn't cover. The earnings accumulate tax free and withdrawals are tax free when used to pay for qualified medical expenses"”-but you will face a 10% penalty if you withdraw money for another purpose.

Examine your plan options

As another cost-cutting step, be aware that the health care plan with the lowest premium may not be the best one for you. In fact, you may find that it is more expensive in the end due to higher costs for copays or unreimbursed charges.

A cheaper bare-bones plan also may cover fewer services or providers, which means you may face more out-of-pocket costs.

When picking a plan, your family situation will be an important factor. A family with young children may do better selecting one with low copays or deductibles-"”even if the premiums are a little higher than other options-"”because they may have frequent doctor visits. A younger single person or couple, on the other hand, might select a plan with lower premiums and higher copays if they rarely see the doctor outside of annual check-ups.

Be alert for errors

Check your medical bills for accuracy. Common hospital billing errors, for example, include duplicated charges, charging for extra days or for services that weren't actually rendered or simple typos that can add dollars to your bill. Also review the statements you receive from your insurer to verify that the facts are correct and that you received the right reimbursements.

Appeal decision

Finally, if your insurance company denies coverage, be aware that you don't have to take no for an answer. You have the right to appeal their decision and try to negotiate a better outcome.

Your CPA can help you understand the health care options open to you. Turn to your local CPA for advice on making the most of your health care dollars.

Information and resources are available to the public on the MNCPA Web site (www.mncpa.org/information) including state and federal tax forms and information and financial planning information for individuals and small businesses. A free CPA referral service is also available on the Web site or by calling 800-331-4288. The MNCPA is part of the national 360 Degrees of Financial Literacy campaign to help Americans' improve financial literacy; information and resources are available at www.mncpa.org/360.



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