Putting money aside is a common New Year’s goal.
If you want to reduce spending in 2023, health care is a sensible area to examine.
U.S. health care expenditures reached $4.1 trillion — about $12,530 per person — in 2020 (the latest figures available), according to the Centers for Medicare & Medicaid Services.
Yikes!
6 Strategies to Lower Medical Expenses in 2023
Below are six approaches to help you spend less on medical care in 2023 so you can keep your physical health, mental well-being and finances in better shape this year.
- Obtain health insurance.
- Or reassess your current coverage.
- If you’re on Medicare, evaluate options during open enrollment.
- Look for free or inexpensive mental health resources.
- Haggle over medical bills.
- Monitor your credit report.
1. Obtain Health Insurance
Skipping health insurance might look like an easy monthly saving. If you’re young and fit, paying premiums for coverage you rarely use can feel wasteful.
But that short-term thrift can cost you dearly if you face a major health emergency.
Open enrollment for plans on HealthCare.gov — the marketplace where you can compare and enroll in affordable policies — runs now through Jan. 15.
The Health Insurance Marketplace was created under the Affordable Care Act to help people without employer coverage find plans. That includes part-time workers, freelancers, gig economy workers, students, the self-employed or unemployed, and early retirees under 65, among others.
Most of the roughly 14.5 million people signed up through the public marketplace get subsidies to reduce their premiums.
Those subsidies can lower your health insurance costs in 2023.
How the subsidies generally work:
- If your income is up to 150% of the federal poverty level ($20,385 for an individual and $27,465 for a couple): You may qualify for an ACA plan with no monthly premium.
- If you earn up to 400% of the federal poverty level ($54,360 for an individual and $73,240 for a couple): You can receive sliding-scale subsidies to cut your premiums.
- If you make more than 400% of the federal poverty level: You may still be eligible for savings on a 2023 marketplace plan, and you won’t pay more than 8.5% of your household income toward premiums.
Ready to enroll? Here’s how to sign up for 2023 Affordable Care Act health coverage.
2. Or Reassess Your Current Health Insurance
Many employers run open enrollment toward year-end. It might be easy to pick the same plan again, but comparing options is the smartest way to save.
One cost-efficient alternative employers often offer is a high-deductible health plan (HDHP). These plans have lower monthly premiums but require more out-of-pocket spending before insurance pays.
Because HDHPs are less costly for employers, companies often encourage enrollment by contributing pre-tax dollars to a health savings account (HSA), which can only be used for qualified medical expenses.
HDHPs can be a good money-saving choice if you’re healthy. Preventive services and annual checkups are covered under HDHPs because of Affordable Care Act rules.
Be realistic about your medical needs. While premiums are lower with an HDHP, deductibles could be $3,000 or higher.
If you have chronic conditions or ongoing care needs, a plan with a higher premium and a lower deductible might be less expensive overall.
3. If You’re on Medicare, Reevaluate During Open Enrollment
Each year from Oct. 15 to Dec. 7, current Medicare beneficiaries can review and make changes to their plans during open enrollment.
If your Medicare coverage still meets your needs, no action is necessary.
However, reviewing your plan — ideally with a trained nonprofit counselor — can help make sure you’re not paying more than necessary.
The State Health Insurance Assistance Program (SHIP) is a national network of trained volunteers who offer one-on-one assistance, counseling and education to Medicare recipients and their families.
Unlike insurance salespeople, SHIP advisors won’t try to sell you anything. They can help examine your current coverage and, if your Part D or Medicare Advantage plan isn’t right for you, assist in choosing a better option using the Medicare Plan Finder.
They can also determine whether you qualify for a Medicare Savings Program or other income-based assistance.
Locate your SHIP using the online SHIP Regional Locator tool, or call the national hotline at 1-877-839-2675.
4. Seek Free and Low-Cost Mental Health Care
Your insurance may include mental health coverage, but there are other ways to save on therapy and counseling whether you’re insured or not.
The NAMI HelpLine is a free, nationwide peer-support service that offers mental health information, resource referrals and suggestions.
You can reach NAMI (the National Alliance on Mental Illness) in several ways, including by phone (800-950-6264), text, chat and email.
The helpline doesn’t provide therapy itself, but it can help you find free or low-cost programs nearby.
Another avenue is an employee assistance program (EAP). Increasingly, companies provide EAPs that cover some free counseling sessions in addition to your health plan’s mental health benefits.
Ask your HR department whether your workplace offers this perk and how to access it.
5. Haggle Over Your Medical Bills
If you’re staring at a large medical bill, there’s a good chance you can negotiate it down.
You can negotiate with both the provider and the insurer, and there are a few tactics to try.
One approach is calling the hospital or doctor’s billing office and offering a lump-sum cash payment in exchange for a reduced balance.
For example, if you get a $1,000 hospital bill, call and propose paying $250 immediately to settle the account. Asking, “I don’t have $1,000, but I can give $250 today if we can settle this bill. Can you work with me?” can sometimes lead to a substantial reduction.
Another route is requesting a payment plan from your provider. While that may not lower the total, spreading out payments can reduce the immediate strain on your budget. (Confirm they won’t charge interest.) A payment plan can also prevent the bill from going to collections.
Here’s a step-by-step guide on how to negotiate medical bills and save money in 2023.
6. Medical Debt Under $500 in Collections May Be Removed From Credit Reports in 2023
In the first half of 2023, collection accounts for medical bills of $500 or less will be removed from credit reports.
That’s welcome news for millions of Americans carrying medical debt.
Part of the rationale: medical debt is a poor indicator of whether a person will repay other debts.
Keep in mind you’ll still owe the full medical balance even if it’s removed from your credit report after being paid down to $500 or less.
Nevertheless, the change could notably improve credit scores. An account sent to collections can reduce a credit score by 100 points or more; getting it removed from reports may help you qualify for better auto loan rates or mortgage terms.
That’s something to anticipate in 2023.
Jordan Hayes is a Certified Educator in Personal Finance and a senior writer for Savinly.
