5 financial mistakes you might be making with your healthcare

Woman checking in and signing paper work at doctor's office

The Centers for Medicare & Medicaid Services (CMS) reported health-related spending in 2022 skyrocketed to $4.4 trillion. While those numbers have come down since the highs of 2020, Americans are still spending a ton on healthcare. How are patients managing? NerdWallet reports that up to 27 million adults in the United States are charging medical expenses on credit cards—that’s how.

But charging off medical debt isn’t the best idea. In fact, according to the Urban Institute’s Health Reform Monitoring Survey (HRMS), 15% of adults reported that they or their families had unpaid medical bills that were past due, and nearly a quarter of those reported using a credit card to pay for some or all of their medical bills.

These numbers are scary, especially since most medical costs aren’t optional. But managing your finances, especially related to healthcare and insurance, can help set you up for success. Below, we’ll cover five common healthcare-related financial mistakes that you may be making right now, and how you can turn them around.

1. Not comparing healthcare plans

The best way to find the most affordable healthcare coverage is to shop and compare prices, features, coverage, deductibles, prescription benefits, and provider networks for different insurance plans. We know that sounds tedious and time-consuming, but some websites allow you to compare plans on your own, or you can simply contact a local insurance agent to help.

If you qualify for your employer’s healthcare plan, you should review and compare your options there, too. Many employers still pay a portion of the monthly premium, and since your premiums are paid with pre-tax dollars, it also lowers your taxable income. Those plans are generally hard to beat in terms of pricing and features, especially if you work for a mid or large-size company, but do your due diligence.

It’s easy to compare plans by their monthly premium, but there’s more to your plan than just the price tag. A less expensive premium will lower your monthly out-of-pocket cost, but, in the end, you may end up paying more on claims.

Consider your healthcare needs, the average number of times per year that you visit your doctor, your copay amount, the cost of your prescriptions, and whether your preferred doctors are in network. Keep in mind that the highest and most expensive plan is not necessarily the best option for everyone, even if your budget can afford it.

2. Not knowing how your plan works

Once your insurance plan is in place, it’s important to know how it works. It may be a bit confusing at first, but if you don’t take the time to understand the rules and features, you risk spending far more money than you should.

For example, your physician may be in network, but their in-house lab may not. Or, the hospital may be in network, but not the doctor you see. Check with your insurance company before any scheduled service or procedure to make sure you’re using as many in-network providers as possible. It’s also important to know when you need pre-authorization for an upcoming test or a procedure. Without it, your insurance company may not pay any portion of the cost, which can be pretty hefty.

Getting to know your plan isn’t only about discovering the limitations. If you’re lucky, you might find some hidden gems along the way, like reimbursement for your gym membership or a weight loss program, or a free smoking cessation program. If you have questions about your plan, don’t hesitate to call your insurance company’s customer service department. They’ll help you make better, more informed decisions and ultimately avoid unwelcome surprises.

3. Forgetting to compare service costs

If you’re in the market for a new television, want to hire a lawn service, or need to have your home painted, you shop around for the best price, right? Why not do the same when your doctor orders lab work or an MRI? Sometimes these can be big-ticket items, and there’s no standard price across the board.

Whether you’re choosing a doctor, planning to have surgery, or searching for a pharmacy, you should compare costs. Prices for these services vary widely. With a little research, you can save some cash and put those extra savings back into your emergency fund or a high-yield CD or Money Market. To get started, check out online cost comparison tools, like, for the latest pricing on common medical procedures, prescription drugs, and services.

Consider, too, the day of the week and the facility you choose when you need medical attention. Without question, in the case of an emergency, you should go directly to the nearest emergency room. However, you shouldn’t head there for every sniffle and sneeze, as those visits can add up.

If it’s after business hours or over a weekend, consider whether your condition can be handled by an urgent care clinic. During the week, a visit to your primary care physician is a financially smarter choice. Minor illnesses can even be handled through a virtual visit with an online physician if your insurance plan allows. All of these solutions are more cost and time-effective than an emergency room visit, so if it’s not a true emergency, you might want to explore another option.

4. Not inquiring about generic brands

The FDA requires generic medication to work the same and provide the same clinical benefit as the brand-name version. Dosage, safety, effectiveness, strength, stability, quality, and even the way it’s taken, are the same.

Generic brands have the same active ingredients, work in the same way, and come with the same risks and benefits as their brand-name counterpart. So, if a generic medication delivers the same result and is less expensive, why not use it?

The main difference between generic and name-brand drugs comes down to cost. Unlike brand companies, generic manufacturers compete directly on price, which results in a lower cost for patients. How much lower? Generics have saved Americans $408 billion just in 2022 by using FDA-approved generic and biosimilar drugs.

Any time your doctor orders a prescription, ask if there’s a generic alternative. You’ll feel better both medically and financially!

5. Neglecting to negotiate a payment plan

Sometimes an unexpected illness, an accident, or a hospital stay brings costly medical bills that your insurance plan won’t cover. Or, maybe you don’t have a medical insurance policy to help offset some of the cost.

While it’s easy to see how a situation like this could wreak havoc on your finances, there are ways to make the cost somewhat more palatable. Contact the billing department and ask about any discounts you may qualify for, especially if you’re able to pay a lump sum or a portion of it upfront.

Some hospitals, nonprofits in particular, have financial assistance programs designed to help people pay for medical care that they couldn’t normally afford, and others offer a 0% interest repayment loan. Neither you nor the provider wants the bill to go to collection, so you both have a vested interest in working together to find a comfortable solution.

Key takeaways

  • Be sure to shop around and compare all of your insurance options. Once you pick a plan, make sure you understand how it works, in terms of in-network care, prescriptions, and more.
  • Check for generic versions of prescribed meds. They have the same active ingredients without having to pay for brand names.
  • Unexpected issues are bound to happen. But if you find yourself in a situation where you can’t afford your care, don’t panic. Contact the billing department to see about available discounts or payment plans.

Finding the right healthcare providers and insurance plans can be daunting. Add in the bills and potential medical debt, and it can feel extremely overwhelming. But you’re not alone in feeling this way. Keep these tips in mind as we head into open enrollment and make healthcare a little easier—and put less strain on your wallet.

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