Whether it is something you planned for or something unexpected following an accident, paying for medical expenses can be painful for your finances. As with any major expense, it's important to do your research. Before it's necessary to commit to and finance healthcare costs, do your homework to understand how it could impact your annual budget.
The Affordable Care Act (ACA) made it possible for all Americans to get some form of healthcare coverage regardless of their medical history. That's the good news. The bad news is that everyone's personal health circumstances and solutions are different, and we're still far away from the day when the coverage we buy - either individually or through our employers - can prevent us from getting unexpected bills for services and procedures our insurer didn't cover. Many health insurers are adjusting to the reality of universal coverage by narrowing the assortment of doctors in their networks, leaving more patients at risk of "surprise" bills if they are treated by practitioners outside their insurer's network.
There are some helpful resources -- both public and private -- which have emerged that price health procedures. Using those resources can help avoid some major out-of-pocket healthcare expenses, but it is essential to determine what practitioners may be in or out of network, particularly if it's an emergency.
So what can you do to prevent these unexpected health costs? You're going to be doing a fair amount of price-comparing research, unless you are on Medicare, which tends to have more standardized pricing and coverage. Depending on your local medical resources, you may have the option to conduct your research online. Here are some ways to begin.
Know how you're covered for both emergencies and non-emergencies. It's easier to plan for a hip replacement you'll need in six months than for emergency surgery after an accident or sudden illness. Advance planning for both possibilities begins by understanding how your health coverage works:
•Emergency: It's difficult to say specifically which practitioners and services you'll need in a health emergency. The key is to make a plan for emergencies. Speak to your insurer now - and consult your primary care physician - to confirm that you have a good range of in-network emergency doctors at the hospital of your choice. If not, you might want to think about switching plans during your next enrollment period. Put an easy-to-find "in case of emergency" card in your wallet next to your health insurance card that makes your preferred hospital visible to first responders or other helpers. Also, list your primary care doctor's and your health care power of attorney's contact information. Finally, make sure the person you designate as your health care power of attorney has access to your insurance and physician network information so he or she can guide your care more affordably if you're incapacitated.
•Non-emergency: If your doctor is recommending a particular in-hospital or outpatient procedure in the coming weeks or months, you've got time to plan. Ask your physician or his or her billing department about the cost of the procedure and what other practitioners (such as an anesthesiologist) might be involved. Then spend equal time speaking with your insurer about what you've learned and how extensively the procedure in question will be covered. Make sure you understand if your insurer covers the procedure on an inpatient (hospital) or outpatient (office) basis - some insurers are reportedly cutting back on outpatient coverage.
Know your deductible. The latest annual Kaiser Foundation employer health benefits survey indicated some whopping figures for health care deductibles - the out-of-pocket total you have to pay before the bulk of your health coverage kicks in. For example, if you have a $3,000 deductible that you haven't touched this year, that's the initial out-of-pocket amount you're going to have to pay for any big procedure. Keep that figure in mind as you continue your research on medical options. That's why it's important to keep such amounts in an emergency fund or, if you have the option, set aside in a health savings account where you can keep funds not only for the deductible, but for other potential out-of-pocket health costs.
Know what your provider charges for procedures, lab work and other related services. If your insurer says it's going to cover the procedure, don't leave it at that. It's important for you to know what the doctor, surgeon or other provider will bill your insurer. That's because your coverage may be subject to certain co-pays after the deductible, or in some cases, you may be charged a percentage of the bill. These are good questions to ask your insurer as well. Be sure you gather all the codes assigned to the procedure before you talk to the billing department of the practice, hospital or outpatient facility where the procedure will be done. If comparison amounts among different providers come in high or low, ask why.
Consider paying directly for services. You may find it worthwhile to investigate paying out-of-pocket for certain treatments or procedures - some providers may charge much less for them if they don't have to process an insurance claim. It's important to check if paying directly provides any problems with your coverage - in fact, some insurers may let you apply such payments toward your deductible. Even if you don't have that option, you may also consider maxing out your flexible spending or health savings account to fund direct payments for maximum savings.
Review bills closely. One recent study has reported significant errors in medical bills, particularly for hospital stays. Keep in mind that the price-comparison exercise doesn't stop on the way in to a procedure. You need to keep an eye on pre- and post-procedure bills from practitioners, hospitals and your health insurer for accuracy. If you see an error, contact the appropriate party or parties immediately to correct the problem.
Know your provider's record. It's not all about the money - the quality of your care should take priority. You should ask about the average success, failure and complication rate your provider has with the particular procedure you're considering. Consider getting a second opinion to determine whether a suggested procedure is really necessary. Also, check your state's medical licensing board to check for pending disciplinary or licensing matters that reflect their performance.
Bottom line: Having health insurance is important, but it's also critical to pay attention to unexpected costs for individual procedures. Whether such care is an emergency or planned, there are ways to prepare and learn ahead of time. Learning to save money now can preserve your budget later.
Nathaniel Sillin directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.