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How to Cut Your Health-Care Costs

Health-care costs are crushing us. The average family pays $4,000 in premiums for a work-sponsored health-care insurance plan -- which doesn't include prescriptions, co-pays, and myriad other out-of-pocket expenses. However, with a little effort, you can cut those costs considerably.

Get the right plan
For starters, shop around. You may find a much better deal on prescription drugs at a different pharmacy. Be sure to ask your doctor for generic medications whenever possible. If you're really feeling frugal, see whether your physician has any free samples of medication you could try.

While you're comparison-shopping, search for the best value in a health-care plan. An HMO may meet your needs just fine, while costing less than your current plan. A high-deductible plan might also make sense for you, particularly if you're young and healthy. In exchange for deductibles of $1,500 to $3,000 or more, these plans can offer significantly lower premiums.

Once you have a plan, use it. Take advantage of any special benefits it may provide; among other perks, some plans include discounted gym memberships, free flu shots, smoking cessation programs, or weight-loss classes. Regular check-ups can catch potentially life-threatening problems early, and treating small problems before they snowball into serious conditions can save money as well.

Save on taxes
A high-deductible plan may let you set up a Health Savings Account (HSA), where you can sock away tax-deductible dollars that will grow tax-free until spent on qualifying health-care expenses. If you don't qualify for an HSA, look into Flexible Spending Accounts (FSAs), which are somewhat similar, but require you to use up the cash you put into them each year -- or lose it. If you plan and execute well, these savings accounts can help you save hundreds of dollars per year in taxes. Park $1,500 into one, for instance, and if you're in the 25% tax bracket, you'll save $375 in income taxes.

To further save on your taxes, especially if you rack up a lot of medical costs each year, itemize your medical expenses on your tax return. Expenses that exceed 7.5% of your adjusted gross income (AGI) are often deductible on your federal tax forms. Look into your state tax laws first, however; they may be more generous than Uncle Sam.

Smart health care
Don't go to the doctor if an urgent-care clinic is a cheaper, more convenient option. Similarly, avoid the emergency room unless you're facing an emergency situation; a trip to your doctor will probably cost less. Neither doctors' nor hospitals' rates are set in stone; if you're strapped for cash, let them know, and you may be able to secure lower prices, a less expensive but equally effective treatment, or a favorable payment plan. Both doctors and hospitals may also lower your bill if you pay in cash.

Once you receive bills from a doctor or hospital, look them over closely; you may catch errors that could save you money. One study found a 97% error rate among bills, nearly all of which involved overcharges.

Also, in dealing with your insurance company, you don't have to accept its word if they deny a claim. If you argue, you might win -- and your doctor, hospital, or employer may be able to help you fight. (It helps to keep good records of who you've spoken with regarding your claims, and what they said.) There are even services you can tap that specialize in fighting claim denials. They may charge a fee, but the ultimate savings can be worth it.

Take care of yourself, be proactive on health matters, and you could save a lot of money.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is Fools writing for Fools.

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