We knew it was coming – not our bundle of joy, she arrived last month. We were expecting something else – our doctor and hospital bill. They arrived and they were a doozy. The billing department kindly waited until we had a couple of weeks with our daughter before sending us the bills.
We received two separate bills- one for our OB/GYN care for the pregnancy and the actual labor and delivery costs from the hospital. Total for our portion of the bill?
This matched the $2,500 deductible on the policy. Supposedly we’ll pay the hospital and doctor and my husband will get a portion of that payment reimbursed. However, we aren’t going to plan that scenario into our budget, in case there’s a problem or delay.
Prompt Payment Discount
We reviewed the bill to make sure it matched what we were expecting. After confirming it looked alright, I noticed a small blurb on the bottom that mentioned a prompt payment incentive. I was going to just use our bank’s billpay feature for the hospital, but decided to instead call and see about this possible discount.
After connecting to a customer service representative and identifying myself, I asked about getting a discount. He explained that the hospital had a policy of giving up to a 15% discount if you paid your balance within 10 days of the statement’s date.
I took advantage of the deal and paid the balance on the spot. Total saved? $375 in about 10 minutes.
It really is a win-win situation. The hospital benefits by getting it’s money upfront and you get to shave down your bill. I would recommend asking for a bigger discount if the hospital offers 10% or less discount, especially if you have a large bill.
Saving for the Medical Deductible
For us automated savings is the main plan. Whenever we get a windfall such as a tax refund or bonus, having an automated deposit or transfer has helped us stay on course. While we have created some sub-savings accounts at ING Direct for specific goals, we decided to keep this in the general savings account.
If you can’t afford to pay your bill at once, check with the hospital and/or doctor to see if you can get a payment plan started. Many hospitals will be happy to work with you. Try to get a 0% interest rate if possible. I would also check and confirm that your account will be considered current as long as you make your payments.
Past due medical bills can harm your credit score, which can raise the interest rate you can get with loans like a mortgage.If we didn’t have the money, our hospital could’ve worked out a 12 month payment plan based on our balance.
Thoughts on Medical Bills
Have you ever lowered your hospital bill successfully? How did you do that? How much did you save?
As part of our goal to keep baby expenses in check, we’re looking at possible ways to save with upcoming bills. Something that we’re examining is the Flexible Spending Account offered at my husband’s job. It may help with our taxes and save us some money.
What is a Flexible Spending Account?
According to the IRS, a flexible spending account is defined as:
A health flexible spending arrangement (FSA) allows employees to be reimbursed for medical expenses. FSAs are usually funded through voluntary salary reduction agreements with your employer. No employment or federal income taxes are deducted from your contribution. The employer may also contribute
Benefits of a Flexible Spending Account
A big tax benefit with FSAs is that any funds you contribute are pre-tax. That means you can lower your tax obligation while getting your medical expenses paid. You have the entire calender year to use your account to cover your medical expenses.
Be Careful with FSAs
FSAs have a downside of expiring at the end of the year, meaning if you don’t use it, you’ll lose it. As of 2011, there has been a number of changes to what can be covered with your FSA. According to the IRS’ announcement:
The Affordable Care Act, enacted in March, established a new uniform standard that, effective Jan. 1, 2011, applies to FSAs and health reimbursement arrangements (HRAs). Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011…
That means that you should start calculating carefully what you’ll most likely need for next year so you won’t have some of your money wasted.
Calculating How Much to Save in Your Flexible Spending Account
The best way to approach it is by planning ahead, before your open enrollment deadline and estimated what you’ll need to save for the next year.
Look at Upcoming Eligible Expenses
Looking over the IRS’ list of eligible expenses, I noticed a few that could apply to our family:
Contact Lens: I have pretty bad vision since I was a kid. I have a heard time seeing the giant “E” on the chart without help. I perfer to use contacts, so I will be purchasing some this upcoming year.
Eyeglasses: As a back up every few years I get a pair of eyeglasses. It’s about time to replace the ones that I got. I’ll shop around to get an idea of what to expect. Since my vision is bad, it costs extra to thin the lens down.
Laboratory Expenses: If your doctor refers you to get lab tests done, you can include that as an eligible medical expense.
Lactation Expenses: A recent change in law allows you to deduct your breast pump and other location supplies.
Medicines: If prescribed by your doctor, OTC and pharmacy medicines are included for your FSA.
Physical Examinations: Your annual physical exam is an eligible medical expense according to the IRS.
For us, we’re estimating the biggest expenses health wise will be for the baby’s well visits. While lactation expenses would be great to use the flexible spendung account on,we’ll be purchasing this year, not next year when we’ll try the FSA.
My next step is to look at reasonable prices for the above items and then discuss with each other how to allocate his FSA contributions accordingly.
Thoughts on Flexible Spending Accounts
How many of you have a FSA offered at your job? How many of you take advantage of that?