Affording health care costs: Part 3

By Brenda Long, Michigan State University Extension


You have health insurance, but not all expenses are included in the insurance premium. Doctor visits, medicine, braces and glasses are some expenses you may have to pay. The good news is there are ways to manage your health care costs to save money. This article will focus on health Flexible Spending Accounts (FSAs). Also, look for related articles on reasons to have health insurance (Part 1) and health savings accounts (Part 4).


Setting money aside to manage health care expenses helps reduce your need to use credit to pay medical bills and reduces your concerns that you can cover a bill, according to the University of Maryland Extension. You can save money in your emergency fund. You might qualify for a health Flexible Spending Account (FSA).


Health Flexible Spending Accounts allow you to contribute pre-tax dollars and then be reimbursed for qualified medical expenses based on IRS code. FSA accounts are only offered through employer’s benefits plan packages; you cannot open one as an individual consumer. Typically, you enroll once a year during your employer’s open enrollment season. The amount you choose is automatically deducted from your paycheck and is placed in an account managed by a third-party agency.


You choose the amount to save, up to certain dollar limits. It is important to plan carefully and not put more money in your FSA than you think you will spend during the year on things like co-payments, coinsurance, prescriptions and other allowed health care costs. Otherwise you may lose any money left over in your FSA.


How do you figure out how much to contribute? A good place to start is to calculate your out-of-pocket expenses for the past year. You can get this information from receipts, looking at your explanation of benefits, or obtaining a print out from your doctors’ offices and pharmacy for all visits and prescription purchases. Use the worksheet or online health care cost calculator.

Other articles in this series:

This article was published by Michigan State University Extension. For more information, visit http://www.msue.msu.edu. To have a digest of information delivered straight to your email inbox, visit http://www.msue.msu.edu/newsletters. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).



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