The holiday season has arrived and your calendar is filling up with obligations. But, even though your time is already limited, it might be worthwhile to add a few medical and dental appointments to your schedule. Yes, you'll be extra busy, but you might save a significant amount of money by taking care of these appointments now, instead of waiting until 2012. Below, we tell you how.(For more year-end strategies, read 10 Money-Saving Year-End Tax Tips.)
TUTORIAL: Budgeting Basics
Get Treatment Before Your Annual Deductible Resets
Let's say your health and dental insurance provides little to no coverage until you spend a certain amount out of your own pocket - your annual deductible. If you've used your insurance at all this year, you've probably made some progress towards meeting that deductible. In fact, you may have already met it completely.
Let's say you've been having trouble sleeping for months, and you'd really like to go to the doctor to see if there's anything they can do about it. Let's also say that you have a $500 annual deductible that you've already met for 2011. Consider these two scenarios.
Scenario 1: You decide to put off the visit to the doctor until January. When you go, your doctor says that you need a sleep study. The sleep study costs $500 and your insurance covers 90% of the cost, after you meet your deductible. You haven't met any of your deductible yet, so the sleep study costs you $500.
Scenario 2: You decide to go to the doctor now. Since you've already met your deductible, your insurance pays for 90% of the $500 sleep study, or $450. You only pay $50. (For more on health care, check out Fighting The High Costs Of Healthcare.)
Use Up Your Annual Maximums
With dental insurance, the same logic about annual deductibles applies, but you should also take annual maximums into account. Once you reach your annual maximum, which is a limit on how much your insurance will pay for the year, you'll have to pay for any further dental treatments out of pocket. If you've ever paid the full price for a root canal, you know how costly a lack of dental coverage can be.
The annual maximums for dental insurance are usually fairly low, ranging from $1,000 to $2,000. If you need any significant work during the year, you can use up these maximums fairly quickly.
If you haven't met your annual maximum for 2011 yet and you know or suspect you may need dental work, take care of it now so you have a clean slate in 2012.
Here's an example:
If you have an annual maximum of $1,500, you've used up $1,000 of it and you need fillings that will cost $500, get them now. You'll use your full annual maximum of $1,500 for 2011 and you'll have $1,500 available for 2012.
If you wait until 2012 to get the fillings, you don't take advantage of all the benefits you've paid insurance premiums for in 2011, and you could end up with a shortage of coverage in 2012.
Furthermore, addressing medical and dental problems now rather than putting off treatment can prevent the problems from getting worse, which could save you even more money compared to waiting. (If you are worried about a lack of dental coverage, read Should You Bite On Dental Insurance?)
Use Up Your Existing FSA Contributions
Another good reason to take care of medical and dental work now is to spend any remaining balance in your flexible spending account (FSA). This is an account that you establish through your employer, and that you may have elected to have some of your pre-tax pay put into. If you don't use all of your FSA contributions by the end of the year, you lose them.
FSA money can no longer be spent on over-the-counter drugs unless you get a doctor's prescription for them, and even then some pharmacies are reluctant to fill such prescriptions because of the extra paperwork involved.
Despite this new restriction, you can probably find ways to use the money wisely. Here are a few ideas for spending any remaining money in your FSA account before the end of the year:
- Eye exams
- Contact lens disinfectant solution and saline
- Annual physical (the exam itself may be completely covered by your insurance, but additional blood work and tests that your doctor orders may not be)
- Co-payments for doctor visits
- Dental work (non-cosmetic)
- Orthodontic work
- Prescription refills
Take Advantage of Benefits That Will Disappear or Be Reduced In 2012
Read the packet of information your employer gave you for open enrollment season. Carefully review the information about your insurance benefits, and see if any benefits are being cut or reduced in 2012. If so, and if you will be affected by the changes, get the most out of your coverage now before the cost of your treatment goes up.
The Bottom Line
There are many ways of addressing medical and dental needs now, instead of waiting until next year that can save you money. Check with your insurer to see what benefits you've used, and what you still have available for the year. Also, check your FSA balance. Then make sure to take full advantage of your benefits before January 1. (For year-end moves you should make, see Smart Money Moves For The End Of The Year.)
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