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EightWays to Reduce the Amount You Spend on Healthcare

Eight Ways to Reduce the Amount You Spend on Healthcare

Whether you’re living on a fixed income or not, trimming expenses is always a welcome option—especially when you can do so without sacrificing the quality of the goods or services you need. In the case of healthcare—a big expenditure for many seniors—implementing these easy tips to reduce the amount you spend can result in significant annual savings.

1. Pay cash in exchange for a discount.

Insurance paperwork processing costs practices money. Offer to pay cash for your exam or test and you may score a discount of 10 percent or more according to the AARP. Of course, you’ll need to make the payment immediately with cash or a personal check.

2. Use the emergency room for life-or-death emergencies only.

Urgent care facilities can treat less serious conditions—such as fractures, sprains, cuts and abrasions—for a fraction of what you’ll pay at the ER. Your wait time may be shorter as well.

3. Take advantage of free advice.

You can avoid many doctors’ office visits by calling a telephone help line staffed by nurses to have your questions answered instead. These trained professionals can advise you on at-home treatment options and will tell you if you need to go to the ER or make an appointment with your physician.

4. Buy generic medications.

Whether prescription or over-the-counter, generic medications are always less expensive than the brand name versions are. Fill your prescription at a big-box store such as Walmart or Target—which offer special generic medication programs—and you may be able to pay as little as $10 for a three-month supply.

5. Ask about a manufacturer’s “savings card.”

Whether the medication you need is unavailable as a generic or you’re allergic to the “filler” used in the generic version, you may still be able to save if the manufacturer offers a savings card program. Eligibility generally depends on your income and insurance, so talk to your pharmacist.

6. Shop around for your medications.

If you’re willing to drive across town or fill your prescription online, you may be able to save. Call several pharmacies and research the lowest price available for your particular medications. You can always ask your preferred pharmacist if he can meet or beat the price.

7. “Split” your pills.

It is possible to split some medications in half, doubling your number of doses for the same out-of-pocket cost. If your medication comes in an uncoated pill—and is not an extended-release drug—ask your doctor if she’ll prescribe double your recommended dosage so you can take half a pill each day.

8. Stay “in-network” whenever possible.

Whether you need to see a primary care physician, a geriatric specialist, have surgery or fill a prescription, a provider who is in-network works for fees your health insurer has pre-negotiated. Out-of-network providers can charge you whatever they want—and that often means as much as 20 percent more according to the AARP. Take particular care with elective surgeries. Physicians are not always aware of who is in- or out-of-network for your particular health insurance and may make a referral to the latter. Confirm the network status of any referred provider with your insurance company before scheduling a procedure.

If you’d like to review your health insurance policy or discuss additional ways to trim your healthcare costs, contact your insurance agent today.

Should You Sell Your Pension for a Lump Sum or Insurer’s Annuity?

Should You Sell Your Pension for a Lump Sum or Insurer’s Annuity?

Pensions are becoming less popular with American employers—and many are choosing to offer their retirees and older workers lump sums or annuities in exchange for removing the pension obligation from their books. Why are companies moving away from this traditional retirement vehicle? Experts say it’s because pensions are so difficult to maintain. Frequent regulatory changes and rising Pension Benefit Guaranty Corp (PBGC) insurance premiums are playing a major role. Unfortunately, this has left numerous seniors with a difficult decision: should they take a lump sum or insurer’s annuity?

Insurer’s Annuity

With a traditional pension, the PBGC guarantees the benefits, protecting seniors in the event that their former employer goes bankrupt. With an annuity, the insurance company itself is the source of security. Should the insurer fail, the state guaranty association will step in, but coverage limits vary. According to the AARP, maximum lifetime coverage for insurer’s annuities range from $100,000 to $500,000 and are subject to the rules of your particular annuity product.

If you are considering selling your pension for an annuity, evaluate the financial health of the insurer. Credit ratings are important, and AM Best, Fitch, Moody’s, and Standard and Poor’s regularly rate insurance companies. Those considered superior score A+ or A++ ratings with AM Best and A, AA and AAA ratings with the other three. If the annuity offered is not through a highly rated insurer, you may want to pass.

Lump Sum

Lump sum pension buy-outs worry retiree advocates much more than insurer’s annuities do because it’s all too easy to make a bad investment or otherwise squander the money, leaving nothing for later years. If you’re considering a lump sum in exchange for your pension, The Pension Rights Center suggests you roll the money immediately into your IRA. This will keep the government from treating it like taxable income and facilitate further investment over impulse purchases.

Additionally, consider your health and life expectancy. Lump sum calculations rely on average life expectancies. If you’re health is poor and your spouse does not require survivor’s benefits, it can make sense to take a lump sum and enjoy the money now. However, if you beat the odds and live longer than expected, you may find that your retirement savings fall short as a result.

Whether your former employer is offering you a lump sum, an insurer’s annuity or a combination of the two in exchange for your pension, you may wish to contact a trusted financial advisor before making a decision. He or she can help you evaluate your current financial situation, interest rates, risk of inflation and other factors to choose the best option for you.