Healthcare costs are going up: Here’s how to manage them
Healthcare has long been a major expense for Americans, and that extends to people with insurance. But the cost of just about everything seems to be rising this year, and healthcare is no exception.
One-third of working Americans say their healthcare costs have increased in 2021, according to a recent survey by the Employee Benefit Research Institute. Not shockingly, among those people who say their costs have increased, 40% are having trouble paying the associated bills or covering basic living expenses. That's up from 29% in 2020.
If you're struggling with rising healthcare costs, here are some steps worth taking.
1. Rework your budget
It may be the case that you're already living very frugally and only spending money minimally outside of your necessities. But if there's any wiggle room in your budget, it may be time to cut back on those discretionary expenses, like cable and streaming services, so you can keep up with your medical bills.
Take a look at your monthly budget -- or set up a budget if you don't already have one in place. Even if you only manage to free up another $30 or so a month toward healthcare, that could cover the cost of an additional prescription or copay.
2. Get a second job
If you're already struggling to keep up with work and household responsibilities, then a side hustle may be the last thing you want to pursue. But if healthcare costs are driving you into debt or forcing you to deplete your savings, then it's important to nip that cycle in the bud.
The good news is that many side gigs have flexible schedules. For example, say you decide to start driving for a ride-hailing service. If there are weeks when you really don't have time to shuttle passengers around town, don't accept any fares. But if you have weeks when work or life is a little less busy, you might manage to earn a decent chunk of cash that can make your medical care more affordable.
3. Take advantage of the right savings accounts
There are a few savings options that let you set aside money for healthcare and save money on taxes as a result. And by saving on taxes, you'll free up more cash for those medical bills.
The first is a flexible spending account, or FSA, which lets you set aside money for healthcare bills for a year at a time. With an FSA, you have to estimate your medical costs carefully because money you don't use is money you may have to forfeit. Many employers offer FSAs, and you can generally sign up in the fall and allocate money for the upcoming calendar year.
The second account worth looking into is a health savings account, or HSA. HSAs let you set aside money for healthcare that never gets forfeited, so there's less pressure to estimate your costs on a yearly basis. And HSAs also let you invest money in your account that you're not using, so it could grow into a larger sum.
You can only enroll in an HSA if you're on a high-deductible health insurance plan, so not everyone is eligible (whereas FSAs are open to a lot more savers). Be aware that you generally can't have an FSA and HSA at the same time.
Medical bills are, unfortunately, a major source of debt for U.S. consumers. If your costs have risen, do your best to keep up so you can avoid that fate.
This article was written by Maurie Backman from The Motley Fool and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.
