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6 Tips to Save on Healthcare and Fitness in the New Year

6 Tips to Save on Healthcare and Fitness in the New Year

Feeling good, looking good, and living the lifestyle you want are just a few of the well-known benefits that come from improving your physical fitness. But did you know that getting in shape can also boost your finances?

Here are six ways to get fit and save on healthcare in the New Year:

1. Use a Health Savings Account (HSA)

Surveys continue to show that too few Americans take advantage of health savings accounts, or “HSAs.” Either they just don’t know that they exist or they underestimate how much they save on healthcare.

You’re eligible to contribute to an HSA when you’re covered by a high deductible health plan. High deductible plans are becoming more popular because they’re more affordable. The higher your deductible, the lower your premium will be.

The beauty of an HSA is that as long as you spend it on qualified medial expenses, the funds are never taxed. Contributions to an HSA, other than those from an employer, are deductible on your tax return, no matter if you itemize deductions or not.

That means that if your average income tax rate is 25%, you get an immediate 25% discount on all your out-of-pocket medical expenses. That’s huge!

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You can take distributions from the account to pay for medical expenses—such as doctor co-pays, prescriptions, and supplies—before your deductible is satisfied and your health benefits kick in. But if you spend money in an HSA on non-qualified expenses, the amount you withdraw will be subject to income tax, plus a 20% penalty.

You can also use HSA funds for a long list of other types of expenses, even if you don’t have insurance for them, such as going to a dentist, ophthalmologist, chiropractor, or psychologist. One of my favorite ways to use HSA money is to get new pair of prescription sunglasses every couple of years.

Another benefit of an HSA is that you don’t have to take any distributions each year; you can let the savings accumulate indefinitely without penalty.

Find out if your health insurance qualifies as a high deductible plan. If so, open up an HSA and begin funding it as soon as possible so you can get a tax break on your next medical expense. For 2017, you can contribute up to $3,400 if you have individual coverage or $6,650 for a family plan.

2. Use a Health Flexible Savings Arrangement (FSA)

Flexible spending arrangements have some similarities to HSAs, but are only offered by employers. An FSA allows you or your employer to make contributions on a pre-tax basis, usually through payroll deductions. For 2017, eligible employees can contribute up to $2,600.

As long as you spend FSA funds on qualified medical expenses, they’re never taxed. So, just like with an HSA, you save an amount equal to the income taxes you would have paid on the money.

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But unlike an HSA, an FSA is a “use-it-or-lose-it” plan. That means you generally must empty the account every year or else only carry over a small amount, while funds in an HSA can roll over from year to year without penalty.

3. Get Healthcare Subsidies 

The Affordable Care Act, also known as Obamacare, mandates every American to have health insurance. Even if Obamacare is eventually repealed, you’re required to have it until changes are officially made. If you can afford heath insurance but choose not to buy it, you’ll be subject to a tax penalty.

Depending on your income, the state where you live, and the number of people in your household, you may be eligible for financial assistance to save on healthcare. In most states, if you earn less than 400% of the Federal Poverty Level, you can get a healthcare subsidy, which reduces your monthly health insurance premium.

The open enrollment period to get health insurance for 2017 began on November 1, 2016 and ends January 31, 2017. So if you remain uninsured, don’t miss the opportunity to get the coverage you need to protect your health and your finances. Use the Obamacare Subsidy Calculator to estimate your monthly health insurance costs.

4. Max Out Your Health Insurance Benefits

Health insurance benefits, such as free preventative checkups and deductibles, are tied to an annual schedule. That means you need to pay attention to the calendar in order to max out your benefits.

For instance, if you burn through your health deductible and need a medical procedure, make sure to get it before the end of the year. If you wait until the following year, you could end up paying more than you have to.

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In other words, take advantage of the time each year after you reach your deductible so you can get your insurance company to pay for as much of your medical expenses as possible.

If there are capped benefits, like a certain number of therapy sessions or an allowable amount of dental work, get part completed in December and the rest in January, in order to take advantage of 2 years’ worth of benefits.

And don’t skimp on the free preventative appointments, like annual physicals, well-woman visits, mammograms, prostate screenings, dental cleanings, and eye exams.

5. Claim Medical Tax Deductions

The IRS allows you to save money by claiming medical expenses as deductions on your tax return. However, the catch is that you must itemize deductions, instead of taking the standard deduction for your tax filing status.

When you itemize, you can claim medical expenses paid for yourself, your spouse, and dependents, unless they’re already excluded from your taxable income, paid for using your HSA or FSA, or were reimbursed to you. In other words, you can’t double dip and get a tax deduction twice.

Another important point with medical deductions is that you can only claim amounts that exceed 10% of your adjusted gross income. For example, let’s say your AGI is $50,000 and your medical expenses for the tax year are $6,000. You could deduct the amount over $5,000, or $1,000. If your medical expenses are less than 10% of your income, then you can’t deduct any of them.

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There’s a long list of expenses that qualify for a tax deduction, and some of them, such as acupuncture, weight-loss programs, and transportation, may surprise you. You can even claim the cost of your health insurance premiums if you pay them as an individual—but not if they’re paid on a pre-tax basis from your paycheck at work.

I encourage your to take a look at the full list of deductible costs found on IRS Publication 502, Medical and Dental Expenses. There are probably many medical expenses that you might not realize are deductible.

6. Review Your Medical Bills Carefully

My last tip to save money on healthcare and fitness is to review your medical bills carefully. If you don’t understand a charge, don’t pay it until the medical provider and your insurance company can explain why you owe it.

If you believe that a health insurance claim has been denied in error, perhaps because of an administrative or coding error, fight for your rights and file an appeal if necessary.

Laura Adams is a personal finance expert, award-winning author, and host of the top-rated Money Girl Podcast. To learn more and connect, click here.

Featured photo credit: Little Perfect Stock via shutterstock.com

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Published on November 11, 2020

10 Best Ways to Save Money Faster and Smarter

10 Best Ways to Save Money Faster and Smarter

People love to talk about budgeting, reducing spending. and investing. But unfortunately, talk is cheap, and poor money management is expensive. It’s easy to talk about the best way to save money, but putting it into practice is a different thing.

What people need to talk about is the practical and efficient ways you can quickly save money to accomplish your goals. After all, they don’t teach this stuff in school.

Here are the 10 best ways to save money faster and smarter.

1. Cancel All Your Subscriptions

Yes, all of them.

Okay, you can keep your wifi and trash. But other than that, cancel all your monthly subscriptions for one month. You will survive, I promise. Better yet, you will realize you won’t miss all of them.

Now that you have had 30 days to examine what you really missed and what you never thought twice about, you can add some of them back in. The others? you never have to think about them again.

This is something you can and should do with every part of your life. If it’s clutter, cancel it. Being able to step back and see what is cluttering your life and what is excelling your forward helps improve your quality of life and financial standing.

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2. Automate Savings From Your Paycheck

Many of us are so excited about getting a new job that we rush through the paperwork during the hiring process. Good news for you, I have had lots of jobs so I have seen it a million times.

There is an option for a portion of your paycheck to go directly into a secondary savings account. This is by far the most effective way to save money every month. We tend to spend most of what we have. So, if we take it off the top first, then it’s less likely to be spent. Just head over to HR and ask. It will only take two minutes.

3. Cancel the Happy Hours for the Rest of the Pandemic

We are in the middle of a global pandemic, which means that there is no better time to buy some drinks from the local store and stop shelling out $5 a drink at the local cocktail bar. When we look back at our bank statements, we are always shocked that fast food and alcohol can add up so quickly. You can easily save a couple of hundred dollars just by taking this step.

A great exercise is to print out your last bank statement and highlight all the areas of alcohol and fast food. The amount may surprise you and make you think twice about that old fashion.

4. Online Grocery Shopping

Some people think online shopping increases the amount they spend. For the most part, I would agree—except for this category.

Online grocery shopping is now a no-brainer, though. Whenever you walk through a grocery store, two things always happen: you always grab impulse items, and you never know the total of your cart until you checkout. This means that we always spend more than we originally planned.

With online shopping, you can see your total as you add items to your cart. You are way less inclined to make those impulse purchases and because of that, I would venture to say that you could even pay to have them delivered to your door and still save money each month by choosing online grocery shopping.

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5. Get a Famzoo Debit Card

This is something my wife and I swear by, and it’s great for the entire family! Famzoo strictly exists to help families and kids budget their money better. Each month, my wife and I have an allotted amount loaded onto our pre-paid Famzoo debit card. This amount has changed every year depending on promotions, kids, stage of life, etc.

The important part is that when you give yourself the freedom to spend a certain amount, you are more likely to only spend the allotted amount. Think of it as a diet. If you are counting calories, you are more likely to stick close to the amount you set. You can also look for some tips online to better stick to your family budget.

6. Purge

This is actually my favorite to do, and it is actually one of the best ways to save money. Raise your hand if you have ever moved. Okay, so everyone.

When we move, we are always amazed at how much junk we have acquired. I have found that about every 6 months, I can find a couple of boxes to sell online of things that we never use. This not only gives you so extra quick cash, but it also keeps your house more tidy and organized.

Now, go clean out that garage!

7. Amazon Subscribe and Save

32! That is how many items I have setup on amazon subscribe and save. Let me explain.

This sounds expensive, I know. But it actually saves us hundreds of dollars per year! We all need toothpaste, shampoo, razors, laundry detergent, toilet paper right? This feature is truly a triple threat. When you have more than 5 items on subscribe and save, you automatically unlock the max savings for every product on your list. This can be up to 20% per item!

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Now, even better is that it ships straight to your door on the exact day you want the item, maybe monthly or maybe you only need it every 4 months. This way, you never have too much or never run out. Either way, it’s totally customizable.

Lastly, there is no contract for any items, which means you can switch brands or items at any given time at no cost. My advice: every single staple item should be on your subscribe and save.

8. Rewards

This may ruffle some feathers, but if you are using your debit card for purchases, you are missing out on free money! We have this notion that credit cards are evil but in reality, they are the same piece of plastic as your debit card.

How you use it can be bad, don’t get me wrong. But if you want my opinion though, ditch the debit card and get a rewards credit card. Use it just like you would your debit card and make sure to pay it off as soon as the statement comes in!

Just to give you an idea of how powerful this can be in terms of money, here are some things that our miles have paid for:

  • 4 nights in Vail with Flight
  • Rental car in Vail (convertible might I add)
  • Flight to Ireland
  • Flight to Hawaii
  • Multiple staycations at very nice Hotels

That’s roughly about 7 thousand dollars in travel expenses so far! Remember that the credit card is just a tool and can be one that benefits you if you use it wisely. Ironically, this can be an effective way to save money.

Pro tip: If you don’t trust yourself carrying around a credit card, then set up all your monthly bills with your credit and leave it in a drawer at home. This way, you rack up miles but don’t get tempted to overspend.

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9. Vacation With Friends

Now, I know travel is hard right now but what a perfect time to go grab an Airbnb in the woods with a couple of friends and detox from the world right now!

Vacationing alone can be pricey and get rather boring quickly, but if you split lodging and set out for a road trip, it can become affordable quickly! For a couple of hundred bucks apiece, you can have one of the most relaxing vacations ever. Don’t forget to pick up your food at the local grocery store to avoid eating out every meal!

10. Make a Budget

When is the last time you updated your budget or made one for that matter? Making a budget is like writing down your goals. If you don’t make a budget, then you will struggle to save.

How can you know if you are spending wisely if you are not tracking everything?

Our advice would be to get a finance app like Mint, Every dollar, or personal capital. All these apps are free and do a tremendous job of tracking spending and budgeting. I still am old-school and have an excel spreadsheet which I do highly recommend.

Work Smarter, Not Harder

The entire goal is to boost your bank account while reducing the effort required. Efficiency is the name of the game, and automation is the key player. Luckily, we live in a world that has more perks than we can ever take advantage of. But if I were to choose a few, it would be the ones above.

Taking on all 10 of these steps may seem a little daunting. You can first try to pick three of your favorite and start there. Saving money doesn’t have to be a chore as long. As we use the tools correctly, it can be quite effortless. And now, you have a great blueprint to get started!

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Featured photo credit: Sharon McCutcheon via unsplash.com

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