No matter who you are, healthcare can be pricey. No matter how good your insurance is, a hospital stay is going to rack up some hefty bills. To offset that cost in the case of a large expense, you should look at building up a savings account. If you want to get the best bang for your buck, you need to know these five things:
You Have Options
Saving for your health expenses doesn’t have to be a hassle. You could set up a special savings account, money market account, or other separate account, or you could just open a second account with your current financial institution. Weigh convenience against potential benefits of a different account to come up with a solution that works for you.
Health Savings Account
A health savings account is a great option. An HSA plan allows you to set money aside before taxes to use toward HSA eligible expenses, like copays or prescription medications. For people under 55, HSA contribution limits are $3,250 for individuals and $6,450 for families. Unfortunately, HSA rules limit health savings accounts to people who are enrolled in a High Deductible Health Care Plan, but if you are eligible, look for a bank that offers no-fee HSAs. Bonus? If you have an insurance plan eligible for an HSA, then you’re probably saving on your month premiums as well.
Flexible Spending Account
Unlike a health savings account, which you can get through a bank, you have to open your Flex Spending Account through your employer. FSA benefits include having dedicated funds set aside for your health expenses and saving money on the taxes on those funds. For example, FSA rules set the contribution limit at $2,500. Since that $2,500 can be used on any FSA eligible expenses, tax fee, if your federal and state taxes amount to about 40% of your income, then you’ve saved $1,000!
Don’t Skimp
Putting $3 in a savings account isn’t going to do you much good when you need to cash in on those savings. Go ahead and fork over a pretty penny; it’s not like you won’t be able to use it. If you’re putting money in a FSA or HSA account, then your savings are even tax exempt!
Keep Your Expenses Low
Can you use a generic medication? Then use a generic! Unless you’re having a really complicated health problem, there is no reason that you have to spend more than the minimum to stay healthy. Look into local community programs, like county health clinic vaccinations, or check your insurance plan to see if it’s cheaper for you to visit a walk-in clinic or your regular primary care physician. Like any other aspect of your household budgeting, a little bit of legwork can go a long way.
