Money For Medical Expenses

Buying health insurance online is the best way to keep your medical expenses low. Health care providers who are members of insurers' networks are the best option for getting the lowest prices. But money still needs to come out of the patient's pocket. There are ways to handle medical expenses that include premiums and deductibles.

• Co-payments: This is usually the lowest share of medical costs. This is the fixed amount the patient pays after treatments are provided by the physician or hospital. The amount is pre-determined when employers negotiate on behalf of employees who participate in company-sponsored medical plans. Even though health care costs can increase, co-payments usually are the lowest share of the entire bill.
• College students as dependents: An employee who participates in a health care plan usually gets the option of including other immediate family members or partners in coverage. Among married couples, the spouse is usually a beneficiary of the plan as are minor children. College students also can continue to enjoy the benefit of their parents' insurance. That is the case as long as they are enrolled full time in school and are younger than a designated maximum age.
• Health Savings Account: Commonly known as an HSA, this is an account that allows an employee to make deposits that are earmarked for medical expenses during the course of the year. Participation allows the employee to have a pre-tax savings reflected in a paycheck as lower net taxable earnings. When medical expenses are incurred, the employee can make a request for reimbursement from this private account. As long as there is money in the account, reimbursements for qualified expenses can continue.
• Medicare: This program of the federal government helps lower the medical costs of participants. But not everyone is eligible to participate. A person needs to be older than age 65 or have a disability of some kind. The costs for the patient are only reduced, not eliminated. Also, nursing homes are not covered by Medicare.
• Retirement distributions: Anyone tapping into a retirement account to pay for certain medical expenses is exempt from paying the 10 percent penalty usually imposed for early withdrawal. This waiver also is allowed for medical expenses of spouses and children. Note the regular federal tax rate still applies to the distribution amount.
• Loan to yourself: Anyone with a self-employed 401(k) plan is allowed to take out a loan from that account to cover medical costs. There are no taxes or penalties owed due to the withdrawal as long as the plan is paid back the same amount.