Take a Mid-Year Review of Your Health Insurance Coverage

Many Americans spend thousands of dollars each year on health care, even if they have good insurance. But there are ways to reduce the amount you spend on everything from elective procedures to prescription drugs.

Start by reviewing how much you have left to meet your deductible. The average amount that employees have to pay before most health insurance coverage kicks in has increased by 10% over the past five years and 53% over the past 10 years, according to KFF (formerly the Kaiser Family Foundation). 

The average deductible for workers with single coverage was $1,735 in 2023, and 31% had a general annual deductible of $2,000 or more. If you’ve reached your deductible or are close to it, schedule appointments and elective procedures by the end of the year, before a new deductible kicks in for 2025.

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Even if your insurance company offers some level of coverage if you go out of the plan’s network, you’ll have lower co-payments on a lower negotiated rate if you choose in-network providers. You can save even more by comparing how much in-network providers charge for specific procedures. 

Employers and insurers are offering better tools to help you decide where to get care when you need it, says Regina Ihrke, managing director of health and benefits at WTW, a benefits consulting firm. Some employer health plans also offer one-on-one concierge services to help employees navigate their care options; by phone, a representative will walk you through your choices from providers covered by your insurance.

“Transparency tools have been around since about 2010, and now every carrier has them to at least show you what the range of the costs would be for certain procedures,” Ihrke says. The new generation of tools include quality measures in addition to cost data, she says. “The cheapest options may actually cost you more in the end because you may get misdiagnosed or have more readmissions.”

For example, Healthcare Bluebook, which is offered through some plans, lets you search by procedure to see the fair price in your area and look up cost and quality information for nearby doctors who perform the procedure. You’ll also see whether the provider falls in the top third, middle third or bottom third of quality ratings.

Other ways to make the most of employer and insurance benefits:

Take advantage of preventive care services. Even if you have a high-deductible health insurance plan, you likely qualify for many preventive care services, such as mammograms and colorectal cancer screenings, without having to pay the deductible or co-payments. 

Depending on your age, you may also be eligible to get vaccines for the flu, shingles and other diseases without having to pay the deductible or co-payments. Also, some services and medications for chronic conditions may not be subject to the deductible. Take advantage of these tests, screenings and programs without any cost to you.

Cash in on wellness benefits. Many employers offer additional benefits to keep their employees healthy. You may, for example, get a discounted gym membership, a reduced insurance premium or extra contributions to your health savings account if you take a health risk assessment and complete certain activities, Ihrke says. 

About 10% of employers offer lifestyle savings accounts, in which employees are given up to $1,000 to use for a variety of physical, mental or financial wellness expenses, such as a gym membership, a mindfulness resiliency app, nutrition counseling, financial wellness courses or student loan assistance. If you have access to these programs, make sure to use them by the end of the year.

Clear out your flexible spending account. An FSA allows you to set aside tax-free money from your paycheck to cover deductibles, co-payments and other out-of-pocket costs. And to use an FSA, you don’t need to enroll in a high-deductible health plan, as you do with a health savings account. 

But unlike HSAs, FSAs generally require you to use the money by December 31 of the plan year (or March 15 of the following year, if the plan offers a grace period); otherwise, you forfeit the unused balance. A study by the Employee Benefit Research Institute found that half of FSA contributors forfeited funds to their employers in 2022, with an average forfeiture of $441.

The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 made it possible for FSA (and HSA) users to buy over-the-counter medications such as aspirin or acetaminophen without a prescription, says Rachel Rouleau, chief compliance officer at Health-E Commerce, parent brand to FSA Store and HSA Store, which sell products that qualify for FSA and HSA reimbursement. You can also use FSA money for ibuprofen, cough syrups, and allergy pills and sprays.

Other items that you can buy with FSA money include glasses, contact lenses, prescription sunglasses, broad-spectrum sunscreens, certain lip balms and sun protection moisturizers with an SPF of 15 or higher, first aid kits, acne medications, menstrual care products, hearing aids, acupuncture devices, health monitors, and deep-tissue pain relief devices. 

“The list of eligible FSA expenses has expanded in recent years to include a wide variety of clinical services, an extensive list of everyday essentials and several surprisingly eligible products,” Rouleau says. See a list of eligible expenses at https://fsastore.com/fsa-eligibility-list.

Pay less for prescription drugs

The Inflation Reduction Act also eliminated deductibles and co-payments for all recommended adult vaccines. And starting in 2025, Medicare Part D will have a $2,000 spending cap on out-of-pocket drug costs.

Websites such as GoodRx.com, SingleCare.com and Amazon Pharmacy can help you save money on prescription drugs, and more employers are incorporating cost-saving tools — such as Rx Savings Solutions and Scripta — into their pharmacy benefits. “It further directs members to additional cost savings,” says Chantell Sell, senior director in the pharmacy practice at WTW. Using these resources can help you find the lowest-cost pharmacy to buy the drug, coupons to reduce the cost or similar drugs that may cost less under your insurance.

“This can help people save quite a bit of money because prescription drug prices can vary by up to $100 between pharmacies — even between pharmacies in the same neighborhood,” says Charlene Rhinehart, a certified public accountant and personal finance editor at GoodRx. Using a coupon can help if you’re paying cash, and sometimes it can reduce the cost to less than you’d pay by going through your insurance plan instead, says Rhinehart. Other ways to lower your prescription drug costs:

Explore generic and alternative drugs. If you’re prescribed a drug that isn’t covered by your health insurance or that has high co-payments, ask your doctor whether there’s another drug that can serve a similar purpose but costs less under your plan. You may save a lot of money by switching to a generic drug. And even if no generic medication is available, there may be a “therapeutic alternative” — another name-brand drug that has similar effects — with better coverage from your insurance and lower co-payments for you.

“If your medication isn’t on the formulary, then in some cases there are generic versions or drugs within the same class that work the same, and they might be covered by insurance,” says Rhinehart. For example, several types of statins are prescribed to lower cholesterol and treat heart disease. 

“There are many different options within the drug class, so you may have a better shot at finding an affordable alternative,” she says. When you look up a drug on GoodRx, you’ll see a list of alternatives you can ask your doctor about.

Use a preferred pharmacy. Many drug plans have preferred pharmacies with lower co-payments than other in-network pharmacies. If you have a Medicare Part D prescription drug plan, you can use the Medicare Plan Finder to compare costs for your medications at several pharmacies in your area. If you and your spouse have different health plans, make sure you know the preferred pharmacies for each one because you may need to go to different pharmacies to get the best deals. Using your prescription plan’s mail order pharmacy may save you even more money.

Buy in bulk. If you take maintenance medications every month, it can cost less to buy them in larger quantities. For example, ordering a 90-day supply of your medications instead of a 30-day supply could save you money, Rhinehart says. Ask your pharmacist for other ideas to trim costs.

Find out about pharmaceutical assistance programs. Several types of programs can help you spend less on prescription drugs. People with low incomes who have Medicare Part D drug coverage may be able to save money on premiums and co-payments through the government’s Extra Help program, which was recently expanded to include those with higher income levels. You may also be able to save through a state pharmaceutical assistance program or state discount program. Many pharmaceutical companies have programs to help with the cost of drugs that aren’t covered by insurance or co-pay assistance programs. Check with the drug manufacturer or go to this Medicare page.

Manufacturers also sometimes offer co-pay cards for certain name-brand drugs that don’t have generic alternatives, Rhinehart says. These cards cover part or all of the costs that aren’t covered by your health insurance. They don’t have income requirements, but most are available only to people who have private health insurance. You can find these co-pay cards either on the manufacturer’s website or through GoodRx.

Check out new benefits for Medicare Part D. The Inflation Reduction Act of 2022 included several changes to make prescription drugs more affordable under Medicare Part D. It capped the cost of a monthly supply of insulin at $35, but not all Part D plans cover all types of insulin. Use the Medicare Plan Finder to find out what the plans available in your area cover.

Use a health savings account

You can stretch your health care dollars by taking advantage of a health savings account, and it’s not too late to sign up for an HSA and make contributions for 2024. You can contribute to an HSA in 2024 if you have an eligible health insurance policy with a deductible of at least $1,600 for single coverage or $3,200 for family coverage — whether you get your health insurance through an employer or on your own. Maximum contributions for 2024 are $4,150 for self-only coverage and $8,300 for family coverage, plus $1,000 if you are 55 or older. 

Many employers offer incentives to participate in an HSA, such as by matching contributions or contributing a fixed amount for all employees who have a high-deductible health insurance plan. Some employers provide HSA contributions for employees who participate in a wellness program or take a health risk assessment, Ihrke says.

Contributions to an HSA are pretax if you have a plan through your employer (or tax-deductible if you don’t have an employer plan), the money grows tax-deferred through the years, and you can withdraw it tax-free for eligible medical expenses at any time in the future; there are no use-it-or-lose-it rules. You can withdraw money from the HSA tax-free for out-of-pocket medical expenses, such as your deductible and co-payments, as well as your costs for vision, dental and hearing care, prescription drugs, and over-the-counter medications. 

Once you reach age 65, you can even use HSA money to pay premiums for Medicare Part B (and Part A, if you have to pay premiums for it), Part D prescription drug coverage, or a Medicare Advantage plan. You can also pay a portion of long-term-care insurance premiums with HSA money (the amount you can cover with HSA funds is based on your age).

You’ll get an even bigger tax benefit if you keep the money growing tax-deferred in the HSA for future health care costs. You have an unlimited amount of time to with-draw money for eligible expenses you incurred since you opened the account — you can even claim re-imbursement for expenses years after you paid them out of pocket. Just keep your receipts for the health care costs you paid with cash, and then you can withdraw the money tax-free at any time.

If you plan to keep the HSA money growing in the account for future expenses, make sure your investments match your time frame. Many people keep HSA money in the plan’s savings account and don’t realize that they may have a menu of mutual funds to choose from. 

If you plan to use money in the account for medical expenses soon, check out the HSA’s interest rates on savings, which can also vary significantly by administrator. “It’s shocking to me how low the interest rates being offered by some major providers are,” says Greg Carlson, senior manager and research analyst at Morningstar and coauthor of the firm’s annual HSA landscape study.

In addition to comparing investment options and interest rates, pay attention to fees, which can vary significantly among HSAs. A study by the Consumer Financial Protection Bureau found that some HSAs charged monthly maintenance fees, paper statement fees, outbound transfer fees and account closure fees. “This complex fee structure may obscure the true cost of the product, and the financial impact of these fees directly reduces the funds consumers can spend on health care expenses,” the report said. 

If your employer offers an HSA, look for ways to minimize the fees, such as by receiving online account statements and keeping a minimum balance to avoid or reduce fees. For example, Carlson says, some plans don’t charge a maintenance fee if you have a certain account balance.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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