Practical money matters by Nathaniel Sillin
Whether it’s a matter of comfort, appearance or safety, there are many medical procedures that you may want or need, but your health insurance won’t cover.
LASIK eye surgery may fall into the want category for most people and it can be a hefty investment with each eye costing several thousand dollars. For those wanting to start a family, infertility treatments, which can cost over $10,000, may be closer to a need. Yet most states don’t require health insurance to cover treatments.
Considering the lasting impact that these and other procedures can have on your life, you may not want to seek out the least expensive option. However, that doesn’t mean you should forgo attempts to save altogether. From tax-advantaged accounts to comparison shopping doctors, there are many approaches to safely cutting costs.
See if you could get a tax break. Although tax breaks don’t lower a medical procedure’s price, tax deductions can decrease your taxable income and by using a tax-advantaged account you may be able to pay for some medical procedures with income-tax-free money.
Take a medical expense tax deduction. If you itemize your tax deductions, you can get a deduction for your qualified medical expenses that exceed 10 percent of your adjusted gross income. LASIK and some fertility enhancement treatments may qualify. However, cosmetic surgery doesn’t unless it’s related to a congenital abnormality, disfiguring disease or an injury resulting from trauma or an accident.
Use an employer-sponsored flexible spending account (FSA). Some employers offer FSAs as an employee benefit. You can make tax-deductible contributions to the account each year and withdraw the money tax-free to pay for qualified medical expenses, including health insurance deductibles and copayments. However, this approach could require planning as you may forfeit remaining FSA money at the end of each year.
Enroll in health insurance with a health savings account (HSA). An HSA account is similar to an FSA in that you can contribute pre-tax money and withdraw funds to pay for eligible medical expenses tax-free. HSAs don’t have the use-it-or-lose-it requirement, but to qualify for an HSA account, you need to enroll in a High Deductible Health Plan (HDHP) and can’t be eligible for Medicare.
Ask your health insurance company about discounts. Even when a health insurance provider doesn’t cover a procedure, members may still be able to save money by going through their insurance. For example, health insurance generally won’t cover the cost of LASIK surgery, but your provider may offer a 5 to 15 percent discount if you get the surgery at partner eye care centers.
Health insurance requirements can also vary from one state to another, and you should double-check your benefits before assuming something isn’t covered. Infertility treatment is one of these gray areas, as some states require health insurance plans to provide coverage while others do not.
Compare costs from different providers. Varying medical costs sometimes make headlines when patients find out that a $3,000 medical procedure at a hospital could cost several hundred at a nearby clinic. If it’s not an emergency, there are websites that you can use to comparison shop nearby medical centers and get estimated prices.
Some people also look for savings in other countries. Medical tourism is a growing industry, and millions of people travel outside their home countries seeking lower costs, higher-quality services, treatments that aren’t available at home, a relaxing environment to recover in or a combination of several of these factors. While the U.S. is a destination for some medical tourists, Canada, Southeast Asia, Latin America and parts of Europe are also popular.
Bottom line: Although you may not be able to convince your health insurance company to cover what it considers an elective procedure; you can turn to other methods to save money. As with other large expenses, you can take a dual big- and little-picture approach by looking for tax breaks that lower your effective cost and savings opportunities that can reduce a procedure’s price.
Nathaniel Sillin directs Visa’s Practical Money Skills For Life financial education programs. Follow him on Twitter at twitter.com/PracticalMoney. His articles are intended to provide general information and should not be considered legal, tax or financial advice. Always consult a tax or financial adviser for information on how the law applies to your individual financial circumstances.