How to Manage Your Family's Health Care Costs

Health care costs can strain any family budget. Premiums, deductibles, copays, prescriptions and unexpected medical bills add up quickly, especially with children who need regular checkups, vaccinations and occasional sick visits. But with smart planning and a few strategies, you can get the coverage your family needs while keeping costs manageable.

Choose the right plan

If you have options, such as during your employer’s open enrollment or on the Health Insurance Marketplace, compare family plans by estimating your total yearly costs rather than just looking at premiums.

Total costs include your premiums for the year plus expected out-of-pocket costs, such as deductibles, copays and coinsurance, up to the plan’s out-of-pocket maximum. A plan with low premiums but a high deductible may cost more if your family uses a lot of care, while a plan with higher premiums but lower out-of-pocket costs may be cheaper if you expect frequent doctor visits or ongoing prescriptions.

Consider how often your family sees doctors, what prescriptions family members take and whether anyone has ongoing health needs. Check whether your pediatrician, other doctors and preferred hospitals are in-network, since out-of-network care can be much more expensive.

Compare coverage for prescriptions by checking each plan’s list of covered drugs, called a formulary.

Use tax-advantaged accounts

Tax-advantaged accounts can significantly reduce your health care costs.

A health savings account, or HSA, is available if you’re enrolled in an eligible high-deductible health plan. HSAs offer triple tax advantages: money goes in tax-free, can grow through investments and comes out tax-free when used for qualified medical expenses. Unused money rolls over year to year, and the account stays with you even if you change jobs. Some employers contribute to employees’ HSAs.

A flexible spending account, or FSA, lets you set aside pre-tax money from your paycheck for qualified medical expenses, such as copays, prescriptions, dental care and eyeglasses. However, much of the money may need to be used within the plan year, though some plans offer a grace period or limited carryover. Estimate your expenses carefully before deciding how much to contribute.

A dependent care FSA is a different account used for childcare expenses, not medical costs. Don’t confuse the two when enrolling.

Annual contribution limits apply to these accounts and are adjusted periodically, so check current limits.

Coverage for kids

If your family’s income qualifies, the Children’s Health Insurance Program, known as CHIP, or Medicaid may cover your kids at low or no cost. These programs provide comprehensive coverage, including checkups, vaccinations, doctor visits, prescriptions, dental and vision care, and hospital care. Income limits vary by state and are often higher than many families expect.

You can check eligibility and apply at HealthCare.gov or InsureKidsNow.gov, or through your state’s Medicaid agency. You can apply at any time of year, not just during open enrollment.

Coverage for young adults

Under the Affordable Care Act, young adults can generally stay on a parent’s health plan until age 26, even if they’re married, not living with their parents, attending school or eligible for their employer’s plan. This can provide affordable coverage during the transition to adulthood.

Ways to save on care

Use in-network providers whenever possible to take advantage of negotiated rates.

Choose the right level of care. For non-emergencies, urgent care centers or telehealth visits are often much less expensive than emergency rooms. Many insurance plans offer low-cost or free telehealth visits. Of course, always go to the emergency room or call 911 for true emergencies.

Ask for generic prescriptions, which are typically much cheaper than brand-name drugs and work the same way. Compare prescription prices at different pharmacies, consider mail-order pharmacies for ongoing medications and ask your doctor about lower-cost alternatives.

Take advantage of free preventive care. Under the Affordable Care Act, most health plans must cover many preventive services, such as well-child visits, vaccinations and certain screenings, without charging a copay or coinsurance when you see an in-network provider.

Review medical bills carefully for errors, and ask for an itemized bill if anything looks wrong. Compare bills with your insurer’s explanation of benefits.

Ask about financial assistance. Many hospitals offer financial assistance programs for families who qualify based on income.

Dental and vision care

Dental and vision coverage is often separate from medical insurance. Pediatric dental and vision coverage may be included in some plans. Community health centers and dental schools may offer lower-cost care.

Build health costs into your budget

Include health care costs, such as premiums, expected copays, prescriptions and contributions to an HSA or FSA, in your family budget. Planning for these costs helps prevent surprises and ensures your family can get the care it needs.