Is Cash Pay Worth it? Part 3

How to save on your healthcare costs

Congratulations! You’ve made it to part three! And as a reward for your perseverance, I’m gonna do my best to help you save some cash money on your healthcare expenses. In part one, we looked at why so many practitioners are ditching insurance. Part two, we talked about how to weigh the cost of paying cash with the quality of care you’ll be receiving. Now finally for part three, where we’ll discuss a few common ways of recouping your healthcare costs…

Option 1 - HSAs/FSAs:

HSAs (Health Savings Accounts) and FSAs (Flexible Savings Accounts) are a way of setting aside a certain amount of pre-tax money that can then be used for qualified medical expenses. HSAs are linked to high-deductible insurance plans only while FSAs are a benefit provided by your employer regardless of your insurance plan. Pre-tax money means that whatever amount (up to the yearly maximum allowed) you set aside will not be counted towards your overall income and is therefore not subject to income taxes. So essentially, you’re saving yourself from paying some income tax to pay medical bills and expenses you’d likely be paying anyway. With HSAs, because you have a high deductible, you’ll be paying out of pocket towards that deductible for a while. Using your HSA funds to pay helps lower your deductible with tax free money. 

As physical therapists, we are considered a HSA/FSA eligible medical expense. If you have this type of plan, you are given a card (like a debit card) that is compatible with any card reader. As long as there is money in your account, when you come into the office, you swipe to pay, you get the care you need, and you legally avoid paying some taxes. But generally speaking, it’s important to do your research because it’s not always clear or logical as to what counts as a “qualified medical expense”. Using your card is truly on the honor system and you are legally responsible for not defrauding the IRS. If you are audited and they find you misused your HSA/FSA, there are fees and penalties that would wipe out any savings you had hoped to gain, so keep track of your receipts and ask your providers to be extra sure. Just an example…band aids from CVS are covered, but something like a massage may require a doctor's note to prove it’s medical necessity.

HSAs especially can be a sound longer term investment. Contributions you make do not expire. Their value rolls over year to year. And you don’t pay taxes when you put the money in or when you use the money for your healthcare costs. I’d highly recommend chatting with a financial advisor about having one and wouldn’t be surprised if they encouraged you NOT to use it at the doctors office. Because pre-tax money put into a HSA can be invested and grown over time and at age 65 can essentially be used like 401(k)s  - no longer set aside only for medical expenses - so it can be a solid investment if you leave it be long term. Under the current rules, it can actually be a pretty savvy tax dodge. Bottom line: If you use them in the short term…you save. If you invest for the long haul…you could save even more.  

Option 2 - Submit a Superbill and Get Reimbursed Directly by your Insurance Company!

Remember how I told you about my hip rehab and how I was prepared to pay a lot of cash money to get the care I needed? Surprise! After all was said and done, because my insurance plan was still decent for out of network providers, I didn’t actually have to shell out much money at all and I got to work with the PT of my choosing. So here’s the deal…

Your insurance provider may still cover a portion of your treatment, even if your care provider is “out of network.”

It’s usually always worth a try to submit a claim to your insurance company for your medical expenses, and based on the terms of your policy, they might still cover a portion of your out of pocket costs. It may be a smaller percentage compared to an in network provider, but if their reimbursement is potentially more than zero dollars, it’s worth taking a shot and submitting a claim. They might not pay out, but it costs you very little, just a few minutes of your time, to try to recoup some of your costs. Some providers are happy to bill your insurance as an out of network provider, but many cash-pay modeled clinics who want nothing to do with insurance claims will hand over that responsibility to you. In order to submit your own claim you’ll need to do the following…

1. Pay cash for your medical expenses in full: I recommend using your favorite rewards credit card…get those points!

2. Obtain a Superbill: A superbill is a document that your provider creates that lists in detail the types of services that were provided and shows how much you were charged and paid for them. 

3. Submit a claim to your insurance company: Your insurance provider will likely have a form on their website that you must fill out, then you staple the superbill to that completed form and mail it to the address they provide.

4. Wait: Any payment they reimburse will ideally be sent directly through the mail to you. Sometimes they send it to your care provider. Make sure when you ask for a Superbill to have it state very clearly that reimbursement should be remitted directly to you…the patient. 

Now every policy is different and some may be very stingy in paying out for care that was out of network, but as your care providers are charging you cash pay prices which tend to be lower than what they would usually bill directly to insurance companies, oftentimes you’ll get a decent amount back. With high deductible plans, you’ll not likely be reimbursed for anything unless you’ve met your deductible, but what you’ve paid may be applied towards your deductible. 

A few other considerations…

Colorado, like many but not all other states, is a direct access state. This means you are, from a care perspective, legally allowed to see a physical therapist without a prescription from your doctor. While this is generally a non-issue when you know you’ll be paying cash or using an HSA/FSA, for some people who want to submit for reimbursement to their insurance companies, your specific insurance policy plan might require a doctor’s prescription before they are willing to pay for anything. So again…it’s vital to read and understand your policy. 

Lastly, and this one is super important, you can’t pay with an HSA/FSA card AND then submit a claim for reimbursement. This is basically insurance fraud. If you’re caught, the IRS will charge you taxes and then some in penalties/fees. Not surprisingly, the IRS doesn’t enjoy when you double dip…avoiding income tax then generating income through reimbursement without paying taxes. It’s an illegal tax dodge to combine the strategies. So just be sensible and careful and ask questions whenever you need a bit more guidance on how best to go about saving your cash money. 

I truly hope that all this information has helped you better understand the current landscape of America's healthcare system and how you can better navigate within it to get the care you deserve without breaking the bank. It truly is a mess so best of luck out there! Thanks for reading.