Generating health and fitness resolutions at the beginning of a new year will not only save consumers money long-term but can boost the utilization of their medical coverage.
As some consumers are still researching their options for health insurance coverage before the nationwide open enrollment period ends on January 31, following some of these tips can net them decrease their monthly expenditures.
Save Money On Your Premiums
Start by quitting smoking, because your insurance premiums will decline immediately and the savings produced could be directed to other goals such as opening a health savings account where the funds accumulate tax free. In many states, health insurance companies are allowed to charge smokers more for their health coverage, said Nate Purpura, vice president of consumer affairs at eHealth.com, an online health insurance exchange based in Mountain View, Calif. In 2015, people who smoked paid an average $311 each month for their premium while non-smokers only shelled out $272, a $39 difference, according to eHealth data on consumers who did not utilize government subsidies.
“If you can beat smoking this year you may qualify for lower premiums next year,” he said.When you wind up spraining an ankle or injured from a car accident, the bills from unexpected doctor’s visits can add up quickly. Saving money ahead of time in a health savings account, which are commonly referred to as HSAs, can help you defray some of the costs and receive a discount. The contributions are not subject to federal income taxes and can be invested like an IRA. The advantage of an HSA is that any unused funds roll over each year and any remaining money can be used for retirement after the age of 65.
People who buy coverage on the public health insurance exchanges are especially good candidates, since most of the plans, including silver and bronze plans under Obamacare, are high deductible plans. A high deductible plan is defined as at least $1,300 for an individual and at least $2,600 for a family in 2016, according to the IRS.
While only 8% of Americans have am HSA account, 50% said they are somewhat or very likely to use an HSA to lower their taxes, according to a 2014 insuranceQuotes.com report.
Popular expenses that HSAs can be used for include prescription medications, doctor visits, dentist visits and eyeglasses. They can also pay for continuing coverage such as COBRA and long-term care insurance.
Pay Less in Taxes
Lower your income that is taxed each year by increasing your contributions to your HSA. The IRA allows consumers to allocate funds into their account until April 15 for the 2015 tax year, Purpura said.
“This can come in handy if you earned a bit too much to qualify for the health insurance subsidies you received in 2015,” he said. “By depositing money into your HSA, you could potentially avoid needing to repay subsidies to the government. Talk to your accountant for more information.”
When you receive your medical bills after your insurance company has paid its allotted amount, review the amount and check the details since up to 80% of medical bills contain errors and “are more expensive than they should be,” said Rebecca Palm, co-founder at CoPatient, healthcare expense management company based in Boston, Mass.
“Don't be afraid to question anything that doesn't look right,” she said.
Insurance plans change rapidly from year to year and a specialist that you have not seen in over a year might not accept your new coverage. Before you make the appointment, check to see the physician is in your current network.
“Be sure that your preferred providers are still in-network and note what your deductibles and copays are for the various types of procedures you're likely to get over the next year,” said Palm.
Deductibles started over on January 1, so review your budget to plan ahead for any out-of-pocket expenses.
“You can put money away in a health savings account or a flexible spending account in the meantime to plan for any big expenses and since those accounts come with tax benefits, you'll save on any money you put in them,” she said.
Avoid skipping your annual physical, because this exam is included as part of your coverage under the Affordable Care Act. Your doctor might discover some minor ailments or issues which could be easily remedied if they are caught early on and can “prevent more serious, costly health problems later on down the line,” Palm said.
Keeping Your Resolutions
Some health insurance plans include discounted gym memberships or access to health management tools and health living programs such as apps which will help you incorporate and track progress when you embark on your workout program. Find out your options by contacting your insurance company or visit their website, said Purpura.
Watching your diet, exercise, alcohol consumption and cigarette smoking are lifestyle changes which can prevent chronic diseases in the future and “help avoid unnecessary medical complications, said Sherry Ross, an OB/GYN at Providence Saint John’s Health Center in Santa Monica, Calif.
“Regular exercise can reduce blood pressure and blood sugar levels, lower cholesterol levels and control body weight,” she said. “Physical activity also helps to increases lean muscle mass, strengthens the immune system and improves mental and emotional well-being. Being realistic and keeping it simple makes you more likely to be successful with your healthcare resolutions.”
Buy Obamacare Now
With less than a month until open enrollment ends, consumers who still lack coverage should try to buy a plan now and not wait until the last minute when websites are overwhelmed with capacity and getting through to a customer service representative to ask a question might take awhile. The penalty for not purchasing health insurance for 2016 is a tax penalty of $695 per adult or 2.5% of your taxable income, whichever is greater.
Gen Y-ers are likely candidates to qualify for subsidies, which makes their insurance premium cheaper. Earning $47,000 a year or less means you are eligible for them.
One major caveat: if you wind up earning more money than what was estimated, save up some money to pay it back next spring when you are filing for taxes.
“Your subsidies will be based on the money you actually earn during the year you’re receiving subsidies, so be careful not to underestimate your income or you could end up paying some of your subsidies back at tax time,” Purpura said.