7 ways to lower health care costs and save money

No one can fully predict future health care needs or medical expenses, but there are proactive steps you can take to manage your costs today and save money in the long run. 

An Ameriprise financial advisor will provide personalized guidance on preparing for big medical costs in the long-term and review benefits options to potentially save you money in the short-term.

Here are seven ways to help you keep medical expenses under control.

In this article:

1. Make sure your health insurance coverage is working for you
2. Anticipate future medical needs and expenses, when possible
3. Comparison shop
4. Enroll in an HSA or FSA
5. Take medical expense deductions
6. Consider insurance to pay for the high costs of long-term care
7. If you’re near retirement, consider strategies to lower your Medicare premiums

1. Make sure your health insurance coverage is working for you

Many assume the health care plan with the most coverage is the best option. But that's not always the case — especially if you're younger and in good health.

Check your current health care plan and past medical expenses to see if you’re adequately using the benefits your policy provides. Low usage of the policy may indicate that you’re over-insured. If bills for out-of-pocket costs are accumulating at a fast rate, it may signal that you’re under-insured.

As you evaluate your coverage, here are some of the pros and cons of the two major types of insurance plans:

• Low-deductible health plans have lower payments upfront and higher monthly premium. These plans may be a better choice for those with chronic health conditions or costly prescriptions or participate in high-risk sports/activities.
• High-deductible health plans have higher out-of-pocket costs before plan benefits kick in, but they may come with the option to fund a health savings account (HSA), which has significant tax benefits. These plans are generally optimal for healthy individuals who don’t anticipate major health care needs.

2. Anticipate future medical needs and expenses, when possible

Medical emergencies and health surprises are impossible to predict. However, certain expenses you may be able to plan for, such as:

• Prescription medication
• Specialty services such as allergy shots, or treatment for chronic illness
• Expenses related to the birth of a new child
• Elective surgery or other non-time-sensitive medical procedures

Review your health care plan options, considering the medical needs of you and your family members. A long-term mindset can help you better determine the right level of coverage and find opportunities for potential savings. 

3. Comparison shop

When you are able to plan ahead for medical expenses, use the extra time to comparison shop. Seek out and identify lower-cost options for medications, procedures and appointments. For example, many generic drug prescriptions cost less than their name-brand peers.

Work with your health care provider and insurer to get the most accurate cost estimate. You’ll also want to consult with your doctor for guidance on whether the lower-cost option will adequately meet a comparable quality of care.

4. Enroll in an HSA or FSA

If you have a high-deductible health plan, you may have access to a health savings account (HSA); and in some cases, your employer may also offer a health care flexible savings account (FSA). These tax-advantaged accounts can be used to pay for common medical expenses like:

• Co-pays
• Dental expenses
• Prescriptions
• Vision exams and eyeglasses

HSAs, in particular, can offer a triple tax advantage, meaning that contributions are pre-tax dollars, the invested assets grow tax-free, and withdrawals are not taxed if you use the distributions for eligible medical expenses. This translates into big tax savings on medical expenses.

FSAs are funded with pre-tax dollars. However, you generally don’t have the option to invest the contributions and funds generally must be used that same year based on employer provisions.