How to Make Smarter Health Care Decisions for Your Wallet

February is Wise Health Care Consumer Month, a time to reflect on how we can make smarter health care choices. As a certified financial planner, I often see how health care expenses can have a significant impact on long-term financial well-being. The decisions you make about your health care—not just how you manage your health but also how you navigate costs—can affect your budget, your savings, and your overall financial security. Here are a few ways you can be a more informed, wise health care consumer while keeping your finances in mind.

1. Understand Your Health Insurance Plan

One of the first steps in becoming a wise health care consumer is understanding your health insurance coverage. Health insurance is a major part of your financial planning, and being familiar with what your plan covers can save you money and prevent surprise expenses. Take time to review your plan’s details, such as deductibles, copays, and out-of-pocket maximums. Knowing these details allows you to make more informed decisions when choosing providers and services.

If you’re considering switching plans or don’t have insurance through your employer, carefully compare different options available through the Health Insurance Marketplace or private insurers. Evaluate factors such as premiums, network coverage, and coverage for prescriptions, specialty care, and preventive services to determine the best plan for both your health and your budget.

2. Preventive Care is Key to Saving Money

Taking advantage of preventive health care services can save you money in the long run by helping you avoid more costly treatments later on. Most insurance plans offer free or low-cost preventive services, such as annual check-ups, screenings, and vaccines. These services can help catch potential health issues early before they become more serious—and expensive—problems.

In addition to the physical benefits of preventive care, it can help protect your financial future. A proactive approach to health care can reduce the risk of chronic conditions, hospitalizations, and emergency room visits, which are all significant financial drains. Make sure you are using your insurance benefits to stay healthy and avoid high-cost medical treatments down the road.

3. Shop Around for Health Care Services

Health care costs can vary significantly depending on where you go for treatment. The price of a medical procedure, test, or even a routine visit can differ drastically from one provider to another. Just like shopping for anything else, it pays to shop around. Many hospitals, medical centers, and doctors’ offices offer price transparency, and you can often find out the cost of common services online or by calling directly.

For non-emergency services, it can be worthwhile to call multiple providers to compare costs before making a decision. Many insurance plans also have tools that help you compare costs for different procedures, tests, and prescriptions in-network. By taking the time to compare prices, you can make smarter choices that help keep your health care expenses lower.

4. Review Your Prescription Medications

Prescription medications can be one of the biggest ongoing expenses in your health care plan. To be a wise consumer, consider looking into lower-cost alternatives. Ask your doctor about generic medications or less expensive brands, as they often work just as well as their name-brand counterparts. Many insurance plans cover generics at a lower rate, which can significantly reduce your out-of-pocket costs.

Additionally, consider using a mail-order pharmacy, which may offer lower prices or bulk discounts for long-term medications. Some online tools and apps also compare prices across pharmacies to help you find the best deal on your prescriptions. By staying informed about your medication options, you can make choices that save you money without sacrificing your health.

5. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are powerful tools that can help you save money on health care costs. These accounts allow you to set aside pre-tax dollars for qualified medical expenses, such as doctor visits, prescriptions, and over-the-counter medications.

If you’re eligible, an HSA is often the better option because it offers tax-free growth and can be rolled over year after year, making it an excellent way to save for future medical expenses. FSAs, on the other hand, are typically use-it-or-lose-it accounts, but they can still be beneficial for covering annual out-of-pocket expenses like deductibles and copays.

Maximizing these accounts can help reduce your tax burden while setting aside money for health care expenses, so it’s important to take full advantage of these benefits. Be sure to track your medical expenses and make contributions to these accounts based on your expected needs for the year.

6. Plan for the Future

Healthcare costs will only rise as you age, so it’s important to plan for those expenses early. Consider including health care costs in your long-term financial plan, especially if you’re nearing retirement. Medicare can help cover some of your health care needs after age 65, but it doesn’t cover everything. Make sure you understand what Medicare covers and what you might need to supplement, such as a Medicare Advantage plan or supplemental insurance.

Additionally, long-term care is something many people overlook in their retirement planning. As health care costs increase, the potential need for long-term care, either in-home or in a facility, becomes a real concern. Planning for this expense can help ensure you’re not caught off guard in the future.

Make Smarter Health Care Choices for Financial Peace of Mind

Being a wise health care consumer is not only about managing your health but also about managing your finances effectively. By understanding your health insurance, utilizing preventive care, shopping around for services, and exploring options like HSAs, you can save money and make smarter decisions that benefit both your health and your wallet. As a financial planner, I encourage you to make health care an integral part of your financial plan. The more proactive you are now, the better positioned you will be to handle health care costs down the road, ensuring your long-term financial security.

If you have any questions or want help creating a comprehensive plan for your health care expenses, fill out our contact form or give us a call (216) 236-1106. We're here to help guide you to a healthier, financially secure future.