Consumers are Using Payday Loans to Fund Medical Costs
Rising medical costs
Consumers are using payday loans to fund their growing medical costs, and the practice may be necessary for a while longer. Although people were hoping for a swift-ending recession, medical costs may be one thing that rises steadily in coming years.
According to a survey done by benefits consultant company Hewitt, the average “insured worker at a big company is likely to spend $3,826 on insurance premiums and out-of-pocket medical costs in 2009.” That cost is up by 9 percent since last year, which is an almost unbelievable statistic considering the inflation rate is nearly 0 percent. In difficult recessionary times, health care is one industry that seems impervious to cutbacks. Another Hewitt study showed that the average retiring couple will need $250,000 in savings for medical expenses alone, despite Medicare and Medicaid.
Finding savings in health care
Despite predictions, there are ways for consumers to minimize their losses. The recession has brought about a new frugality and method of handling unplanned bills, including medical ones. Here are some strategies many consumers are using.
Negotiate your medical bill
First, be sure to negotiate. Ruth Levin of Continuum Health Partners stated, “The uninsured frequently ask for a discount or a payment plan, but most insured customers don’t realize that they can (also) negotiate.” In particular if consumers have a large deductible, negotiating can make a huge difference in the out-of-pocket expense. Doctors are willing to charge less if the services are paid for up front because they understand that in the end this saves them billing/processing money. Another tip is if consumers have large bills, they shouldn’t automatically use their credit cards to pay up. Many providers work out interest-free payment plans with customers.
Consumers should comparison shop, the same way they would if purchasing a high-priced item. If a test is needed, patients should ask doctors to recommend more than one facility. Then, call insurance providers to find out which one will complete the test at the least cost to the patient. Cigna Insurance offers an online payment estimator where patients can compare pricing on common tests such as MRIs or CT scans.
Medications can provide savings
When an emergency prescription is needed, many consumers use payday loans to cover the immediate cost. Although this may be a knee-jerk reaction, all patients should try generic equivalents. They can be a fraction of the price and bring medical expenses down substantially.
Patients also can go to Drx.com. This site allows users to compare retail prices on medications to find the equivalent at a cheaper price. Research is involved, but consumers can find cost-effective alternatives to their prescription needs.
FSA, flexible spending accounts
Another way to save money is to use the FSA. Studies show that 80 percent of employers offer this type of savings account, but only about 22 percent of employees enroll. The account allows people to set aside a portion of their monthly pay for health care expenses. Consumers don’t have to pay payroll or income taxes on funds that go into an FSA. This fund can be used for co-pays, deductibles, prescriptions and sometimes even over-the-counter medications. Many companies are making their usage simple by issuing debit cards that work just like a bank-issued card but can only be used for medical expenses.
There are two catches to the FSA. If you don’t use your fund, you lose the money. For this reason, estimating how much to put aside is key. Workers should look at past medical expenses and gauge how much may be needed to store away in the fund. At the end of the year consumers can normally deplete any leftover funds with purchases like eye glasses, OTC drugs or other small medical purchases.
The second thing to remember with FSAs is that timing is everything. Normally consumers can sign up for the accounts only after a major life status change such as the birth of a child, or marriage. There also is an open-enrollment period to watch for. Consumers need to be sure to watch for when their employer’s enrollment begins and be ready to sign up.
Handle the growing costs of health care
Regardless of the economy, the reality is that medical costs are on the rise and projected to keep moving up as time goes by. Consumers need to be wise and use new techniques to bring costs down. Some people use savings and payday loans to manage emergency costs, but there are other ways of minimizing expenses. Be wise and use negotiating, generic medications and FSA accounts to handle the growing costs of health care.