Author Topic: HSA strategies? Strategies for paying health care bills up front to save $$?  (Read 12102 times)

Trudie

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I have an HSA for the first time this year and will be maxing it as long as I have it.  I do want to accumulate in it to help during ER.  For those who have them, some questions:

(1) What is your threshold amount for deciding when to reimburse yourself for expenses?  (I've reimbursed myself about $150 so far, then thought it was probably foolish for the small stuff I can absorb now while working and hardly notice.)

(2)  I already know of some tests my husband will need to have this year and want to negotiate up front with the provider to save some cash.  Of course, I assume they will apply insurance discounts first to figure out the UCR, then I can eek out additional discounts for paying right away.  Please discuss your strategies for doing similar.  Thanks.
« Last Edit: April 12, 2016, 12:29:45 PM by Trudie »

ZiziPB

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I use the HSA to pay for medical expenses as I go along but I understand that a lot of people don't.  I think the common approach is to save your receipts and get the reimbursement at a much later date (i.e. when you retire - apparently there is no time limit to do this).
As to negotiating an additional discount with the provider, I have never tried it.  I assumed that the insurance discount (which most of the time is significant) is all I could get.  I'll be interested to see if people have a different experience here.

Trudie

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Quote
As to negotiating an additional discount with the provider, I have never tried it.  I assumed that the insurance discount (which most of the time is significant) is all I could get.  I'll be interested to see if people have a different experience here.

I have not done a lot with this, but by paying my balance (of $1000) last year I think I got a 5% discount by paying before they billed me.  So, I pocketed an extra $50 by paying about a month early -- after it had been processed through insurance, but before the hospital had to bill me.  Saves them administrative costs and the risk of collections.

Roadsidetreasurehunter

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Can anyone open an HSA account or is it employer-sponsored only?  If anyone can, is it thru a bank or credit union?  Thx.

JZinCO

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Quote
As to negotiating an additional discount with the provider, I have never tried it.  I assumed that the insurance discount (which most of the time is significant) is all I could get.  I'll be interested to see if people have a different experience here.

That's a great question. I'll have to ask my retired doctor friend.

Mother Fussbudget

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Can anyone open an HSA account or is it employer-sponsored only?  If anyone can, is it thru a bank or credit union?  Thx.

To be eligible for an HSA, there are three (3x) primary requirements:
1) be in a HDHP (High Deductible Health Plan) either purchased on-your-own, or through your employer.
2) have no other health care coverage except that permitted by the IRS (http://www.irs.gov/pub/irs-pdf/p969.pdf).
3) you are not enrolled in Medicare.

Seagal

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I often get 10% off of out-of-pocket medical bills, just by asking.  I wait until I get the bill, then call the billing department, tell them I want to make a payment, and ask if there is any discount available for making a full payment at that time.  10% is the usual for the hospitals and providers that offer such discount. 

Some providers don't offer any discounts for payment in full (my kids' pediatrician, my naturopath, and a lab I have used are a few that I have run into). 

I have also gotten 15-20% off a few times by asking for a bigger discount after the secret automatic 10% discount was offered.  I explained that I had a bunch of medical expenses hit within a short period of time (true) and that I was trying to decide what to pay first (not true).  I offered to pay their particular bill in full for a 20% discount.  That worked on a couple of them.  However, some providers require financial information in order to provide a discount larger than 10% (in which case I just take the 10%).

 

Paul der Krake

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Like many posters here, I plan on reimbursing expenses during the first 5 years of ER, while the construction workers dig out the trenches and lay the tubes for the Roth pipeline. My only "problem" right now is that I have next to no health expenses. I will be amazed if I manage to squeeze out 5k out of it by the time comes. Not trying to tempt fate though.

To people who have successfully negotiated smaller bills, how likely is it that large providers would agree to reduce an already small-ish bill (say, under $300). I have tried it twice with one of the largest health providers in my area (Duke), and they basically laughed in my face.

chemistk

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I can't speak to the discounts, but I'm sure it depends greatly with the procedure and the people you are dealing with.

As for strategy, my wife and I are planning on maxing ours out each year and paying for expenses as they come. Apart from childbirth, our medical expenses amount to less that $750 a year, so even if we stooped after 10 years, we would still have a huge sum of cash for the future. 

myhotrs

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Paul der Krake, be sure to read a list of whats eligible. For instance, dental counts and I did not know that until recently. From the IRS:

"The expenses must be primarily to alleviate or prevent a physical or mental defect or illness, including dental and vision."

georgicus

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I just pay all our medical stuff out-of-pocket, and keep a giant spreadsheet of all health care expenses going back to 2005 for eventual reimbursement.  (No time limit -- see IRS Notice 2004-50, Q-39.)  Also, I keep all our EOBs and receipts on disk along with the spreadsheet.  Note also that you can take medical mileage for all those drives to the doctors and pharmacy. 

Meanwhile, the HSA remains fully invested in an SP500 index fund.

That works if you don't get hit with a huge bill.  Fortunately, my family has been ridiculously healthy.

I really like the idea of asking for the discount!  Two providers automatically gave me 10% when I wrote a check at the appointment, but I never thought of asking for it every time.

ZiziPB

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Since we are on this topic, does anyone know if medical expenses incurred abroad can be paid from HSA?  I will be moving to Europe when I FIRE and expect to have about $30K in my HSA with no accrued medical expenses (I pay as I go).  It would be nice if I could use the money tax free to pay for medical expenses in FIRE.

dkaid

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I'm worried now that I'm going about my HSA the wrong way.  I pay my expenses out of my own pocket (not the HSA account).  I do not keep my receipts as I figured I would build up the HSA balances for future medical costs, like during retirement.  Bad strategy? 

MayDay

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To people who have successfully negotiated smaller bills, how likely is it that large providers would agree to reduce an already small-ish bill (say, under $300). I have tried it twice with one of the largest health providers in my area (Duke), and they basically laughed in my face.

This has been my experience even with larger bills, at multiple health systems. 

The answers is NOPE but you can apply for financial assistance if you want (and I know we wouldn't be eligible).  Maybe it works for smaller independent clinics? 

The idea of negotiating a lower bill is nice in theory but hasn't worked in practice.  People say "if you don't have insurance its ok, just negotiate a lower bill and pay in cash".  First off, insurance often cuts the bill in half, not a measly 5-10% discount.  Second, like I said, it doesn't usually work to even get 5-10% off. 

Paul der Krake

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I'm worried now that I'm going about my HSA the wrong way.  I pay my expenses out of my own pocket (not the HSA account).  I do not keep my receipts as I figured I would build up the HSA balances for future medical costs, like during retirement.  Bad strategy? 
Not a bad strategy, but by not keeping your receipts you prevent yourself from withdrawing tax-free money in the future.

The future is murky. Keep your receipts. It's a minimal burden that adds a lot of future flexibility. It literally takes me 30 second to add a line in the spreadsheet, snap a picture and file the paper receipt after each eligible visit. And another 10 minutes at the end of each calendar year to double check my records. There is no good reason not to do it.

bacchi

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Keeping receipts makes the HSA a great emergency fund.

PhysicianOnFIRE

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I'm worried now that I'm going about my HSA the wrong way.  I pay my expenses out of my own pocket (not the HSA account).  I do not keep my receipts as I figured I would build up the HSA balances for future medical costs, like during retirement.  Bad strategy?

Yes, bad strategy.

If you keep the receipts, you can withdraw money from your HSA tax free, like a Roth only better because you get the tax deduction when you contribute to the HSA, unlike a Roth contribution.  Like a Roth, it grows tax free, and when you withdraw to pay for medical expenses, the withdrawal is tax free.

If you don't save any receipts, you can access the money at 65 for any expenses, but you will pay income tax on the withdrawals.  It's treated like a traditional tax-deferred IRA / 401(k).

Save those receipts!  I recently switched from paying for medical expenses from my HSA to paying with my credit card, saving receipts and keeping an Excel sheet detailing the expenses I've paid for out of pocket.  When I'm old(er), I'll take a lump sum.

PhysicianOnFIRE

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Paul der Krake, be sure to read a list of whats eligible. For instance, dental counts and I did not know that until recently. From the IRS:

"The expenses must be primarily to alleviate or prevent a physical or mental defect or illness, including dental and vision."

Orthodontics, too.  I almost missed this one.  That $2400 receipt is a good one to hold onto!

Trudie

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This has been my experience even with larger bills, at multiple health systems.

The answers is NOPE but you can apply for financial assistance if you want (and I know we wouldn't be eligible).  Maybe it works for smaller independent clinics?

The idea of negotiating a lower bill is nice in theory but hasn't worked in practice.  People say "if you don't have insurance its ok, just negotiate a lower bill and pay in cash".  First off, insurance often cuts the bill in half, not a measly 5-10% discount.  Second, like I said, it doesn't usually work to even get 5-10% off. 

I have had luck negotiating the provider down after it has been processed through insurance (and all insurance discounts applied; the EOB issued) but BEFORE the provider billed me for my remaining balance.  My portion of about $1000+ was coinsurance on a CT scan and some lab tests.  To most people $1000 is a chunk of change and the provider knows this.  There are costs to them for hounding people for payment, cutting the bills, and keeping the receivable on their books.  Plus, there's the whole issue of time value of money.  So, the provider has in many cases an incentive to negotiate.  I give them my credit card today, job done.

I do not use this to negotiate small items (prescriptions; office visits) but rather diagnostic tests, radiology, lab tests... the big ticket items that aren't preventative or relatively low cost.

dkaid

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Wow, I'm so glad I read this today and thanks for replying to me.  I will get on those receipts from here on out!  And excellent idea on the e-fund.  Never even crossed my mind.... 

couponvan

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I just pay all our medical stuff out-of-pocket, and keep a giant spreadsheet of all health care expenses going back to 2005 for eventual reimbursement.  (No time limit -- see IRS Notice 2004-50, Q-39.)  Also, I keep all our EOBs and receipts on disk along with the spreadsheet.  Note also that you can take medical mileage for all those drives to the doctors and pharmacy. 

Meanwhile, the HSA remains fully invested in an SP500 index fund.

That works if you don't get hit with a huge bill.  Fortunately, my family has been ridiculously healthy.

I really like the idea of asking for the discount!  Two providers automatically gave me 10% when I wrote a check at the appointment, but I never thought of asking for it every time.

We're maxing ours - I hadn't accounted for mileage in my "claimable" expenses.  Thank you for reminding me.  Could you share your spreadsheet format? 

I've gotten a 15% discount for quick cash payment on an ER bill....The bill was ridiculous though.  Never go to the ER unless you are dying.

JZinCO

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I would like to see a spreadsheet too. I can write one but I'd like to see an open source one in case I miss things.

goatmom

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As for asking for a discount - where I work we wouldn't give a discount to anyone just for asking.  Do you do this at the car mechanic?  The hairdressor?  We do cut people a break if they are truly having a financial hardship.

couponvan

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Wow, I'm so glad I read this today and thanks for replying to me.  I will get on those receipts from here on out!  And excellent idea on the e-fund.  Never even crossed my mind....

You can always ask your doctor's billing office for a statement going back the past couple years....same goes for the dentist, orthodontist, hospitals and pharmacist.  I'll be doing that as an easy way to calculate mileage since we have $0 copays but LOTS of doctor visits last year, including specialists that were 40+ miles away and included parking garage expenses.

N

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I max ours, but I use it to pay for expenses as we go, for the time being.
Actually, right now, Im trying to earn miles on my cc, so Im paying for medical expenses with my cc, then reimbursing myself monthly.
This year I have to pay for orthodontics, so...its gonna be rough.

Eventually, I hope to accrue enough balance to be able to invest it rather than using the HSA saviings/debit card approach.
Ideally, Id have enough income to absorb current medical expenses and take a payout later, but that is not feasible right now.

absolutely saving my receipts.

Paul der Krake

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As for asking for a discount - where I work we wouldn't give a discount to anyone just for asking.  Do you do this at the car mechanic?  The hairdressor?  We do cut people a break if they are truly having a financial hardship.
The places you mentioned quote a price before rendering service. The health industry doesn't, and all the actors (doctors, hospitals, tort lawyers, medical schools) blame each other for the convenient status quo that has turned the health industry in this monstrosity that cannibalizes almost 20% of the GDP.

Screw them. Not going to sleep for using their shit tactics against them. Besides, I only seek their services when it's a emergency that makes medical tourism impractical. They have me by the balls and know it.

dkaid

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I max ours, but I use it to pay for expenses as we go, for the time being.
Actually, right now, Im trying to earn miles on my cc, so Im paying for medical expenses with my cc, then reimbursing myself monthly.
This year I have to pay for orthodontics, so...its gonna be rough.

Eventually, I hope to accrue enough balance to be able to invest it rather than using the HSA saviings/debit card approach.
Ideally, Id have enough income to absorb current medical expenses and take a payout later, but that is not feasible right now.

absolutely saving my receipts.

Re: ortho.....  I received a tip on this site to check out local dental schools if you have that option.  My youngest needs braces and I was able to get into the dental school program which will cost half of other quotes I received.  It's not income/need based and they will take the insurance I have available. 

georgicus

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About getting a discount on medical  ... I see it as a discount for prompt payment.

The few times I had a bill from the nearby hospital, they automatically offered 10% off if you paid it online within 15 days of the first billing, which happened after insurance paid.  For them, it saves a future hassle.   My dentist gave me 10% (without me even asking) because I wrote a check on the way out, but they also knew I didn't have any dental coverage.

I think it's reasonable to ask for a discount, but not to be a pain about it.   I suspect that medical providers might be inclined to give you the discount because you are paying "early" compared to waiting out the whole insurance cycle.  Might even help to pay by cash/check vs. credit card.

For me, it's a natural since I have had high-deductible coverage for years and never come close to the deductible.  But one nuance here is that it's straightforward only if your provider knows what the insurer's discount is -- my dentist is on top of this (when I did have coverage through my employer), where my wife's doctor is not.  Nonetheless, don't cite me as an expert -- we've had maybe 6 medical visits in a couple years.

georgicus

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couponvan, here's the spreadsheet that I use.

The way I handle mileage is a little clunky.

couponvan

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couponvan, here's the spreadsheet that I use.

The way I handle mileage is a little clunky.

Thank you! I love spreadsheets and seeing what others are coming up with!

Trudie

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As for asking for a discount - where I work we wouldn't give a discount to anyone just for asking.  Do you do this at the car mechanic?  The hairdressor?  We do cut people a break if they are truly having a financial hardship.

When you get a discount in health care it is a discount for prompt payment.  Such discounts are common in other industries.  I'm an accountant.  We get discounts all the time -- often up to 10% -- if we pay within certain terms.  It's posted right on the invoices.

Health care bills are generally so high and so much work goes into getting payments collected that the providers have an incentive to provide discounts.  I see nothing unsavory about this.  They wouldn't do it if it weren't beneficial.  In fact, I've had financial clerks say, "I notice you have a future bill out there.  If you pay today, I'll discount it 5%."  They offered.  I did not ask.

Paul der Krake

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Health care bills are generally so high and so much work goes into getting payments collected that the providers have an incentive to provide discounts.  I see nothing unsavory about this.  They wouldn't do it if it weren't beneficial.  In fact, I've had financial clerks say, "I notice you have a future bill out there.  If you pay today, I'll discount it 5%."  They offered.  I did not ask.
Now if only credit card issuers were so nice...

waldo

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Does anyone worry about law changes in the future limiting how long you have to reimburse yourself?  I'm sure any changes would have a grace period or otherwise grandfather in existing expenses, but the idea of a future change eliminating the possibility of reimbursing expenses >7 years old makes me hesitate to use this strategy.

Paul der Krake

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Does anyone worry about law changes in the future limiting how long you have to reimburse yourself?  I'm sure any changes would have a grace period or otherwise grandfather in existing expenses, but the idea of a future change eliminating the possibility of reimbursing expenses >7 years old makes me hesitate to use this strategy.
One can hope their would be advance notice. Always a good idea to stay on top of tax news.

goatmom

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Well, I guess at my place we are really straightforward and tell prices upfront.  Our patients pay at time of service.  No insurance company involvement.  We are booked solid with a waiting list.  I guess that is why we don't negotiate lower fees.  We do see people for free sometimes if they are in need. 

My kid's pediatrician is the same.  One hundred dollars per visit.  Cash or credit at time of service.  Love it.  Same with the orthdo who does offer a discount for full payment upfront.  I wouldn't dream of haggling for a lower price. 


ender

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Does anyone worry about law changes in the future limiting how long you have to reimburse yourself?  I'm sure any changes would have a grace period or otherwise grandfather in existing expenses, but the idea of a future change eliminating the possibility of reimbursing expenses >7 years old makes me hesitate to use this strategy.

I sometimes think about this. Right now our medical expenses each year are considerably less than my HSA balances (previous employer HSA and current employer HSA) so we just take withdrawals as we use medical money.

Perhaps if we end up with a family and have children this will become less advantageous, but unless we're also making our IRA/401k options it matters less if you save receipts for future withdrawals or pay now.