The flexible spending account deadline is one that you don’t want to miss if you still have funds from last year in your FSA.  As you’re probably well aware, you lose any money left in your flexible spending account that’s not spent by the FSA deadline.

Flexible Spending Account Grace Period

A few years ago the IRS created a grace period so that you can spend money from your FSA into the first few months of the following year.  It seems like our family always uses this FSA extension, spending our money through the Spring of the next year.  It’s hard to forecast exactly how much money you’ll spend on qualifiying expenses for the entire next year so the grace period does offer a little flexibility in the whole FSA system.

Flexible Spending Account Contributions

If you underestimate what your medical expenses will be the upside is that you don’t leave any money sitting in your account at the end of the year; and the downside is that you pay tax on more of your income.  If you overestimate what you’ll spend then you pay tax on less of your income BUT you have money in your FSA account in danger of being lost. 

That’s where the grace period comes in handy, you can still spend your flexible spending account contributions into the following year.  Since we haven’t qualified for medical expense income tax deductions in years past we’ve tended to overestimate our FSA contributions to help bring down our income and then spent the remaining amount January & February of the next year.

Flexible Spending Account Deadline

The time has come this year, the deadline to spend your FSA money from last year is Monday. You earned that money so don’t let it go to waste!  Here are some flexible spending account strategies if you still have a lot of money left to spend. 

If you’re not sure if you still have money from last year, most FSA adminstrators allow you to access your balances by phone or online, so check them out today.  Spend what you can on eligible expenses this weekend and fax in your claim forms on Monday. You typically have until sometime in May to actually submit your reciepts but it’s better to send them in right away so you don’t forget.

Your medical expenses can be income tax deductions depending on how you file your taxes and how high your medical bills are. We all know that health care costs just keep going up, lets take a look at how you might be able to get tax deductions for these expenses.

Tax Deduction Requirements

In order to be able to claim medical expenses as income tax deductions, your health care costs for the past year must be greater than 7.5% of your adjusted gross income (line 38 of tax form 1040).  If you are eligible you can claim all of the covered expenses in excess of the 7.5% of adjusted gross income threshold.   The other requirement is that you have to itemize your deductions.  If you use form 1040 EZ and claim the standard deduction then you can’t deduct your medical expenses.

The idea behind using a percentage threshold as opposed to a dollar amount was to prevent wealthier tax payers from claiming expenses that they can actually afford while assisting less wealthy taxpayers who could get in serious financial trouble due to medical expenses.  Of course, 7.5% of your AGI is still a lot of money for most people so many of us won’t be able to claim these expenses as deductions.

If you are able to claim them, the expenses would are calculated and included on Schedule A of your tax returns, when filing IRS form 1040.

What Medical Expenses Can You Claim?

In the eyes of the Internal Revenue Service the term medical expenses should be thought of in more of a health care expenses frame of mind; meaning virtually any expenses that you incurred throughout the year to provide for the health of you, your spouse, your children and anyone else that would be considered your dependent for tax filing purposes.

Health care would include the costs for some health insurance coverages, dental care, eye care, as well as physical and mental health care costs. The list includes doctors’ visits, tests, surgery, therapies and medications. If it is not covered by your insurance and if you are not reimbursed for it, it can be claimed as one of your expenses. Essentially anything that is medically necessary to restore you to good health can be considered deductible medical expense, from abortions to x-rays.

Also included are things such as capital improvements to where you live like a wheelchair ramp, elevator or special bathroom fixtures. You can include medical expenses for transportation; to and from appointments, bus fare, cab fare, ambulances, as well as special modifications or equipment to make your vehicle handicap accessible.

Of course, there are things that you can not include when adding up your total medical expenses. For an understanding of what types of things cannot be included as deductible expenses you have to consider whether it is something that could be considered voluntary or cosmetic as opposed to medically necessary.

Simple examples of items that are not deductible would be: cosmetic surgeries, non-prescription treatments of any kind, health club memberships, hair transplants, maternity clothes, and funeral arrangements.

For a complete list and explanation of all the medical expenses that can and cannot be included check the U.S. Department of the Treasury, Internal Revenue Service, Publication 502.

Flexible Spending Accounts

One alternative to using medical expense deductions to offset your health care costs is to check if your employer offers a section 125 plan, frequently known as a flexible spending plan or cafeteria plan.

A flexible spending account (FSA) allows you to put a portion of your salary into a special account that can later be used to pay for medical expenses.  That money comes out of your salary pre-tax. This means that it lowers the total amount of your paycheck subject to federal income tax, and in doing so lowers your tax bill.

If you decide to use an FSA you have to carefully manage your receipts for medical expenses and submit them to the plan administrator, who reimburses you for qualified costs out of your FSA account balance.  Here are some tips for getting the most from your flexible spending account payments. 

The most important thing to remember is that you lose any unspent balance in your FSA at the end of the period so you need to estimate as closely as you can what your expenses will be in the coming year.  Since this is so difficult to do, the IRS now allows you to spend money from your FSA balance through the middle of March of the following year. Make sure that your FSA plan administrator offers this option in your flexible spending account.

High deductible health insurance plans have lower premiums, much higher deductibles, and are often tied into a Health Savings Account where you can accumulate money pre-tax year after year; as long as you don’t spend it all on health care costs.

Of course if you have very high medical costs and/or don’t put much money into a Health Savings Account then a high deductible health plan may not work in your favor.  A recent letter from our doctor’s office is a good example of this, stating that 25% of their patients using high deductible health insurance plans can’t/don’t pay their medical bills.

Dear Patient:

Over the last five years, many of our patients have changed their health insurance coverage to a high deductible health plan.  It may be a Preferred Provider Organization or a Health Savings Account.  Many of these plans no longer have a copay with an office visit. They either have a co-insurance of 20% of the cost or 100% of the cost of the office visit goes to the deductible until it is met.

Twenty-five per cent of our patients who have these plans are not able to pay for their services after the insurance processes the claim.  Because of this, our medical group has changed the financial policy regarding the care of patients with high deductible health plans.

At the time of service, if you have a high deductible health plan, you will be asked to pre-authorize payment on a credit card for the services you receive that day.  It will be a one-time charge to your credit card for those services only.   After the claim is processed by the insurance company and you are notified of the amount of payment, you will be given ten days notice to make other arrangements to pay your balance.  If we do not hear from you after 10 days, we will charge your credit card for the service.  We will destroy credit card information after the payment transaction is complete.

High deductible insurance plans may sound good during Open Enrollment when you’re eyeing the reductions in monthly premiums compared to regular insurance plans but they can be rather unpleasant when you have a several thousand dollar medical bill you have to pay because you haven’t met your high deductible yet.

If you save hundreds a month on insurance premiums with a high deductible insurance plan but end up having to pay interest on hundreds or thousands of dollars of medical costs you charge on credit cards then this type of plan doesn’t really make sense for you.

We’ve never been on a high deductible health plan, partly because my new employer doesn’t offer one and also because our kids delivery & care costs over the last 4 years would have eaten through any savings in premiums we would have realized.  Because I’ve never used one I don’t know how much education is offered to people signing up for a high deductible health plan but I hope that people are being informed of and considering the potential financial liabilities that come along with the plan.

Help paying medical bills is one of the biggest challenges facing families on the verge of debt or bankruptcy. Medical debt and the rising costs of health care and insurance continue to ruin the credit and lives of people across the country.

In August, The Commonwealth Fund, a nonprofit healthcare action group, reported that family premiums for employer-sponsored health insurance rose 119 percent between 1999 and 2008 and were destined to rise another 94 percent by 2020 to an average annual cost per family of $23,842 “if cost growth continues on its current course.”

Health Insurance & Debt

Most individuals know that present-day health insurance isn’t a protection against massive amounts of uncovered medical debt. The American Journal of Medicine reported the results of a random sample study in June. The results stated that in 2007, before the current economic downturn, an American family filed for bankruptcy every 90 seconds in the aftermath of illness even though three-quarters of them were insured. The study added that 60 percent of all bankruptcies in the United States in 2007 were driven by medical incidents.

One of the most damaging aspects of medical debt is that it may occur suddenly and pile up at lightning speed. An overnight hospital stay – depending on tests and treatments – may easily cost several thousand dollars.

The bottom line: Your health could be your biggest money issue.

Health Insurance Planning

Whether you’re facing a planned medical procedure or have to undergo treatment in an emergency, it pays to devise a battle plan to keep costs under control, and keep the person you’ve designated as your health power of attorney in the loop. A financial planning professional, health insurance agent or your employer’s human resource department might be good places to start a discussion about avoiding unnecessary costs during physician’s office visit or hospital procedures. 

One of the main things all individuals should do if they have time before an exam or procedure is check whether their insurance covers it.

Medical Debt

But if you’re currently facing significant medical debt without insurance or after insurance refuses to pay a significant portion of your bill, here are some steps you can follow:

Relax first and then check for errors: Medical Billing Advocates of America, a Salem, VA organization of businesses that consult with individuals and companies to examine bills for mistakes and correct insurance mistakes, says that there are duplicate charges in almost every medical bill. Watch the bill closely, write down questions you have and then make an appointment with the doctor or hospital’s billing office to politely review those questions.

Make sure the insurer is dealing with the bill: If you undergo a hospital visit or a procedure, you may get a summary of fees from the hospital or the physician that say “not a bill,” which may lead you to put it aside and forget about it. Check in with your insurer to check the status of the claim before you get a surprise weeks later that they have refused to cover the bill. Make sure you’re watching every step of the process from the moment you leave the hospital or doctor’s office.

You can negotiate: If you are stuck paying out-of-pocket for a significant portion of the bill, see if you can negotiate that fee downward. Call the physician or hospital billing office to see if you can get a discount on the total bill, and see if there is a financial counselor at the hospital you can deal with.

Get help: A medical billing advocate generally works on major uninsured medical debts – ranging from the tens to the hundreds of thousands of dollars – and typically charges anywhere from 15 to 50 percent of the bill as a collection fee for negotiating with the hospital, physician or the insurance company. That’s a hefty price to pay for someone else’s expertise, but in certain cases, it can make sense. Failing that, many states have indigent care funds that offer some relief for individuals with substantial medical debt.

Ask for a payment plan: If you have a substantial cash balance to pay, ask the medical center or physician if you can pay on time. Just make sure you know what they’re charging you to do that.

Remember – attitude is everything: Keep in mind that many medical practitioners and their staff members have as many problems with the way the system runs as you do. Do you research first – learn all you can about conventional charges for certain procedures before you call and question the billing center. Ask questions calmly and politely. Show appreciation for their help. If you have to discuss more billing issues with them in the future, it might make it easier. 

This post about paying medical bills & avoiding medical debt is produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

How can we make health care more affordable?  How about cutting the cost of providing care?

My dad runs a micro-medical practice, where he’s a one man show (actually one man + one part-time woman since my mom helps out with office stuff some evenings). 

His startup costs were pretty low since he bought most of his equipment used and his overhead is low since he doesn’t have a staff. He’s automated and optimized a lot that goes on in his office, using electronic medical records and digitzing everything that he can.

Since his costs are lower that means he doesn’t have to charge as much; which is important to him since his efforts are to provide care for underserved parts of the population. He’s a member of a group of doctors who are taking this approach to medicine. One of them recently sent out a list of ways that he keeps his cost down by using cheap or free technology across his practice.  Here are some of the ways he lowers his cost of running his practice:

Patient Records

Practice Fusion – Electronic Health Record Software; free

Accounting

Office Ally – Billing; cheap

QuickBooks Simple Start – small-business accounting software; free download

FreshBooks - invoicing, time-tracking and expense service; free basic service

Information Technology

Adrive – : 50GB of online storage and backup for all file types; free basic service

Mozy – 2GB of online, data and remote backup solutions; free basic service 

Jott – voice-to-text service for creating notes, lists, e-mails and text messages; free basic service.

LogMeIn - remotely support and access digital information; free basic service

YouSendIt – send files up to 2GB; free basic service

Security

BitDefender Online Scanner: virus scanners; free basic service

ZoneAlarm: firewall protection from hackers and threats; free basic service

Office Productivity

Google Calendar: shareable calendar and schedule organizer; free

Google Docs – collaborative word processor and spreadsheet applications; free

OpenOffice - open-source office software suite for word processing, spreadsheets; free

Project Management/Collaboration

ProjectStat.us -project management solution and updates

Dimdim – open-source web conferencing application; free basic service

Marketing / Networking

Microsoft Office Live Small Business: create a company website, domain and e-mail; free basic service

Blogger – blog publishing tool; free

Entrepreneur Connect - Entrepreneur’s social networking site; free

LinkedIn: business social networking site; free

What do you think? Would you go a doctor that used technology to run a one person practice? What if it meant better rates or better access to your doctor?

Flu season is almost here and we have to worry about the swine flu again.  It seems like the flu starts to take off once kids go back to school with all their coughing, sneezing, and not washing their hands. 

One of my co-workers already had two of his kids catch the swine flu at school.  When they got sick he took them into the doctor and the pediatrician confirmed it was the H1N1 virus. Luckily his other two kids, his wife, and he were able to avoid catching thier bug.  I asked what they did to avoid getting swine flu and he sent me the email below with some tips for prevention and treatment.

The new H1N1 virus, also referred to as the swine flu, has caused the first influenza pandemic in more than 40 years. Because many people do not have immune protection against the new virus, it is essential to take extra precautions. It’s important to note that H1N1 and the regular seasonal flu are two different strains and require separate vaccinations.

The Centers for Disease Control and Prevention urges you to take the following actions to protect yourself and others from the influenza virus:

Get a Flu Vaccine

CDC recommends a yearly seasonal flu vaccine as the first and most important step in protecting against seasonal influenza

Vaccination is especially important for people at high risk of serious flu complications, including young children, pregnant women or people with chronic health conditions, such as asthma, diabetes, heart and lung disease and people 65 years and older

A seasonal flu vaccine will not protect against the new H1N1 virus. However, individuals are still encouraged to get their seasonal flu vaccine as soon as it is available 

Everyday Preventive Actions

• Cover your nose and mouth with a tissue when you cough or sneeze
• Wash your hands often with soap and water, especially after you cough or sneeze
• Avoid touching your eyes, nose or mouth which spreads germs
• Stay home when you are sick 

Antiviral drugs (Doctor Recommendation Required)

Antiviral drugs are prescription medicines (pills, liquid or an inhaled powder) that fight against the flu by keeping viruses from reproducing in your body

Antiviral drugs can make your illness milder and make you feel better faster and may also prevent serious flu complications

For treatment, antiviral drugs work best if started within the first two days of symptoms

It is important to take action now in order to protect yourself in the future. Remember, the CDC considers getting the flu vaccine the most important step in protecting yourself from the flu this season.

As the health care debate rages across the country, one of the things that’s often overlooked is how much money we could save with better preventative medicine.  It’s often much cheaper to invest time and money up front to help prevent, delay, or minimize expensive medical conditions, yet our insurance system is setup with the mindset of covering treatments and procedures rather than prevention.

Here are some resources you can use to screen for and help prevent some of these medical conditions, especially if they run in your family.  I also included some healthy lifestyle tips for men and women at different stages of thier lives:

Family Health History

• My Family Health Portrait
• Family History: Resources and Tools

Health Screenings & Tests

• Screening & Immunization Guidelines for Men
• Screening & Immunization Guidelines for Women
• Depression Screening Test
• FAQ about HIV & HIV Testing
• Prostate Cancer Screening
• Screening & Testing to Detect Cancer
• Breast Self-exam
• Cervical Cancer Screening
• Colorectal Cancer Screening
• American Cancer Society Guidelines
• Screenings & Mammograms

Disease Prevention

• ABCs of Heart Disease Prevention
• Healthy Weight Tips
• Childhood Obestiy
• Diabetes – Causes and Prevention
• Lower Heart Disease Risk

Guides to Healthy Living

• Men: Stay Hhealthy at Any Age
• Women: Stay Healthy at Any Age
• Pocket Guide to Good Health for Adults
• Pocket Guide to Good Health for Children
• Pocket Guide to Staying Healthy over 50
• Teenager’s Guide to Better Health

Hopefully you found some of those resources useful.  Have a healthy weekend!

Being healthy isn’t just a matter of feeling good and living longer, it can have a big impact on your wallet as well. I’ve made some poor decisions about my health over the last few years and it ended up costing me a big chunk of change and time off work.

I was lucky compared to many people, the cost of a major health issue is all it takes to financiallly devastate some U.S. families.   During his March healthcare summit, President Obama referenced statistics that the cost of health care now causes a bankruptcy in America every 30 seconds and by the end of 2009, could cause 1.5 million Americans to lose their homes.

Some medical conditions we have no control over but there are definitely ways we can help reduce our risks and control our health care costs, here are a few:

Take off the weight: While dealing first with the numbers on your bathroom scale will have immediate health benefits, it will also make your health insurance options and potential out-of-pocket costs more affordable over time. A recent Stanford University and Rand Corporation study reported that lifetime medical costs related to diabetes, heart disease, high cholesterol, hypertension and stroke among the obese are $10,000 higher than among the non-obese. It added that lifetime medical costs could be reduced by $2,200 to $5,300 following a 10 percent reduction in body weight.

Grill your agent or HR person: Whether you buy health insurance through an agent or your employer, insist that they explain exactly what you’re getting for your premium, and where deductibles do and don’t apply. If you’re purchasing your own insurance policy, compare the premium savings from a higher deductible plan with your usage pattern of health services. What you save can often cover your high deductible.

Weigh life insurance options while you’re healthy: Make sure you’re carrying the right amount of life insurance to support your family and other heirs as well as cover any remaining medical bills that might remain after you die.

Discuss potential cost of any diagnosis: If your physician diagnoses a particular illness that requires tests, prescription drugs, a hospital stay or ongoing therapy, be very blunt about what you’ll be charged, from the doctor’s bills to ongoing ancillary costs associated with treatment. Ask the doctor or his office manager to possibly negotiate a discounted fee for service. It’s possible to get discounts through cash payments as well.

Ask for generics and samples: Many physicians are willing to recommend a generic substitute or at least supply you with a few samples of the drug they’re already prescribing. While doctors can’t get away with passing sample drugs to all their patients, always ask.  As long as they are prescribing the medication, samples with the proper dosage can provide cost savings to patients.

Check local pricing resources: In non-emergency situations, you should always compare prices on treatments. Check with local medical boards and state health officials to see if they have online databases on costs for various medical procedures. Also, if there is a support group for your condition, talk to members about what they paid locally for care.

Investigate long-term care: If you or a family member is diagnosed with a chronic illness, that’s a financial issue that requires a plan. As tough as it may be to focus on money issues at a stressful time, make an appointment with a tax professional or planner to discuss affordability options that will safeguard your assets.

Begin negotiations before there’s a problem:  The best time to speak with hospital bean counters isn’t when you’re behind on your payments. Once a diagnosis is made, either you or someone you designate as your agent needs to contact the hospital business office to check on payment schedules and possible discount plans if you are uninsured or fear your insurance may not cover a significant portion of costs. Any creditor appreciates a customer who’s willing to come to the table first.

This post about money and your health is produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

Getting in shape isn’t just a matter of being healthy and feeling good, it can have a big impact on your wallet as well. I’ve been getting some big medical bills from the end of last year when I ran into some health issues, which could have been avoided had I been taking care of myself.

Skipping Exercise

As I mentioned in my new years action plan, my life has become substantially busier over the last two years.  Before our son and this site entered our world, I used to jog at least five times a week but that came to an end once our life got busy.  I did want to exercise I just didn’t have the time, sound familiar?

I kept telling myself things would slow down a little and I’d get back into exercising then.  Well, as life would have it, I found myself busier than ever at the end of 2008 and I made zero time for working out until I ran into some health issues.

Time off work, major pain, and medical bills reminded me that you can’t ignore your health forever.  So I sat down with my wife at the beginning of 2009 and made a plan for the year.

Simple Exercise Plan

Now I exercise about 30 minutes, 4 days a week.  Three days of the week I come home from work and head down into our basement with our son, where I hit the treadmill and he plays in the big open space in the middle of the room.  Then we fit in a session on Saturday or Sunday afternoon to make 4 days of exercise.  It’s been working out well, we’re still spending the time together and I get a workout at the same time.

It started off at the beginning of January where I was at the lowest setting for the entire session.  Each day I’ve increased the setting a little more and now that the first month of working is over, I’ve gotten to the point where I work my way up to the 4th setting by the end of the session.

Making it a Habit

I think the most important part of my plan is that it’s easy to follow.  I have a set time and I’m in and out so it’s not a big mental challenge.  Since it’s easy to do, it makes it easier to stick with the routine.

I’m taking a slow approach, not stressing out about how much weight I’ve lost at all.  In fact, I haven’t gotten on the scale since I’ve begun.  I just know if I keep up the exercising that eventually the weight will start to come off and if I incorporate it as a routine in my life the weight (and hopefully the medical bills) will stay away.

Health care costs are a growing concern for all consumers in the US.  It’s not just the elderly living on fixed incomes whose lives are affected by high drug costs. 

Everyone scraping to save for retirement has this concern somewhere in the back of their mind.  One of the reasons we’re all encouraged to save so much for retirement is that the costs of living as you get older keep increasing as health care costs shoot up.

Doc Gurley, an internal medicine specialist and health care blogger, recently shared 10 ways to help cut your drug costs.  Below is a summary of the 10 suggestions, check out her article for the details.

• Ask Your Doctor for the Cheapest Drug
• Price Shop Around Different Pharmacies on the Phone
• Split Pills (If Your Doctor Approves)
• Buy Generic Drugs
• Read 13 Ways to Save On Prescriptions
• Ask About Shorter Duration of Prescription
• Beware Free Samples for Chronic Conditions
• Double Check Expiration Dates
• Focus on Prevention
• Ask Doctor Before Stopping Your Prescription