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Most people aren't looking for a high-deductible health insurance plan. But as more companies offer them, many don't have a choice. For self-employed folks, high-deductible plans often have some of the cheapest monthly premiums.
As a single, full-time freelancer for more than three years, I've shopped for my own health insurance more than once. I've been paying about $350 per month for a bronze high-deductible plan through Healthcare.gov in Tennessee and expect 2020's premiums to be similar.
I'm a relatively healthy 35 year old, so I've had the privilege of avoiding the catastrophic bills others have wrestled with. But I do manage a couple of ongoing mental health and skin issues, neither of which are cheap.
After a few years of trial and error - including some surprise bills - I've developed a system for budgeting for out-of-pocket expenses. Here's my strategy.
The first year with a high-deductible health plan is the hardest
When you're ambushed by high medical bills, it's easy to feel overwhelmed by a high-deductible plan, and it can be maddening when you're trying to pay for costly monthly prescriptions.
It may feel like you have little control - especially during the first year - but here are a few things I did to cut costs.
Take advantage of free services
Thanks to the Affordable Care Act, health insurance plans offer free access to preventive services, even if you haven't met your deductible. These services may include - but aren't limited to - blood pressure, cholesterol, and mental health screenings, diet counseling, and more.
I make the most of my plan's free annual checkups, vaccines, gynecology visits, and birth control.
Shop around for prescriptions
As you start comparing prices, you'll notice a wide range of costs for drugs. Check GoodRx for prices and coupons at more than 70,000 U.S. pharmacies. I compared prices for my two monthly prescriptions before deciding where to fill them.
Compare prices for procedures
You'll also notice a big difference in the cost of procedures. To save on bigger expenses, ask your doctor for referrals. Try Healthcare Bluebook's search tool to find out the fair cost for a procedure in your area.
My doctor asks for an ultrasound every two years to monitor my thyroid. By comparing options, I've been able to score a reasonable price for an otherwise costly test.
Leverage your insurance company's tools
Most insurance companies allow you to search for in-network providers. You can also call them in advance to get an estimate of what to expect for out-of-pocket costs. Recently, I called to learn where to avoid copayments for the HPV vaccine and flu shots.
Save on taxes
If your high-deductible health plan is eligible to pair with a health savings account (HSA), you may qualify for a tax deduction. Your employer may offer an HSA - and may even deposit money on your behalf. Otherwise, you can open and contribute to one on your own, which I've done for the past three years.
How to budget for out-of-pocket expenses after the first year
Once December rolls around, you may want to drown your sorrows of high bills with the nearest glass of eggnog. But it's the perfect time for a medical spending audit.
I start by combing through 12 months of checking and credit card statements, using the data to draft a list of the year's expenses. Then I separate them into two categories for next year - one-time expenses and ongoing costs.
It's an opportunity to look at my spending. I've made mistakes, like using out-of-network providers or overpaying for prescriptions. I'll make a mental note, or set reminders, to make different choices for next year.
By the end of my audit, I tally my total out-of-pocket expenses. I divide the number by 12 and add a line item to my monthly budget. By setting the money aside every month, it's often less painful when the bigger bills arrive.
Start planning for bigger out-of-pocket expenses
If you've been putting off a non-emergency procedure, start planning for it now. Like other out-of-pocket expenses, you can start saving for it every month. One benefit of this strategy is some providers may offer a discount for paying in cash.
You can also explore financing options. With a good to excellent credit score, you may qualify for some of the most competitive 0% credit card offers. Some offers may give you over a year to pay off your bill, offering more wiggle room in your monthly budget.
The catch is, you'll have to stay disciplined with your payoff schedule. If you miss the 0% promotional offer deadline, you may be stuck with high interest rates until you can pay off the balance.
If you have to pay for a major unexpected medical expense, you have a few options. First, mistakes happen. Start by reviewing every line of your bill to make sure it's correct. You can also try to negotiate with the provider. They may be willing to offer you a payment plan, or even a one-time discount. By communicating early, you will have more options to get it resolved.
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