Health Insurance 101: How to get the most from your health insurance
Make the Most of Your Health Insurance Before the Year Ends
As you begin to plan for next year, don’t forget to use your remaining healthcare benefits for this one.
By Lacie Glover, NerdWallet Health
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Between the holidays, social obligations, and health insurance decisions, the end of the year usually means we’re short on two things: time and money. But counterintuitively, this busy and strapped-for-cash season could be the best time of year for you to schedule a doctor’s visit or purchase medical supplies. Here’s why.
Use Up Those FSA Funds Now
If you have a flexible spending account with funds remaining, use them now. FSA funds, which are employer-offered benefits, don’t roll over at the end of the year except in two cases: Some employers allow a two-and-a-half-month grace period to use up FSA funds, while others allow up to 0 to roll over into the next year. Depending on your specific FSA, you may have funds that you’ll need to use or lose — at least by March 15, when the grace period ends.
The good news is those funds can be used for practically anything health related, from bandages to eyeglasses. The money can also be used for therapist fees, addiction treatment, and holistic treatments like acupuncture. Check out the official IRS listing of eligible medical expenses for a clearer sense of what’s covered.
You may also be eligible to receive cash reimbursements out of your FSA for expenses you already paid out of pocket earlier this year. It’s important that any qualifying expenses you withdraw from your account have documentation or else you could face a tax penalty.
Don’t confuse FSAs with HSAs, however. If you have a health savings account (HSA) rather than an FSA, spend those funds only when you need to. Unlike FSA funds, you can roll over HSA funds from year to year. In this sense, HSAs have an advantage in that they can accumulate and pay for something more costly down the road, like surgery or prolonged hospitalization.
Additionally, an HSA can be a type of retirement savings plan because once you turn 65, it can be used to pay for Medicare B and D premiums. According to Fidelity Investments, which tracks healthcare costs in retirement, a couple turning 65 this year will have about 0,000 in healthcare expenses during retirement. Using an HSA to fund that expense could drastically improve quality of life during retirement. Take note, however, that HSA accounts cannot be opened or contributed to after age 65.
Use Your Maximums to Your Advantage
If you’ve met your out-of-pocket limit, your health insurance is now covering all of your care needs, so now is the time to have costly exams done. The maximum out-of-pocket amount in 2014 is ,350 for individuals and ,700 for families, not including premiums.
If you’ve only met your deductible, which is different from your maximum, your health insurance is still covering most — but probably not all — of your expenses. Deductibles vary by plan, from zero for some HMOs to thousands for other types of plans. If you’ve paid the deductible for your plan, your health insurance will start to kick in, paying for many of your expenses minus coinsurance if it applies to your plan.
If you’ve already paid a lot in health expenses this year, chances are anything covered by your health insurance plan will be much cheaper now than in January.
Video: Why Is Health Insurance so Complicated?
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