Monthly Finance Message:

How to Cut Health Care Costs

August 2010

Barbara O'Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

In recent years, health case costs have taken a big bite out of family budgets. Even if you have "good health insurance," chances are you are paying more than you did five years ago for premiums and out-of-pocket expenses. What to do? Consider the following to strategies to lower health care expenses:

  1. Negotiate With Medical Providers - One study that found that about two-thirds of patients who negotiated for lower prices with a hospital or dentist were successful, as were 3 in 5 who bargained with doctors.
  2. Get the Facts - Costs for common medical procedures can be found online at the Centers for Medicare and Medicaid Services (CMS) Web site. When you know the cost of health care services, you're in a better position to negotiate discounts.
  3. Track Your Expenses - Develop a spreadsheet in a notebook or Microsoft Excel to keep track of annual deductibles, co-payments, and the amount of money remaining in flexible savings accounts.
  4. Bring Your Own Equipment - If you need medical equipment, such as crutches, buy it yourself or borrow it from a friend to avoid high hospital markups.
  5. Check Bills for Errors - As many as 8 in 10 hospital bills contain errors. To avoid getting over-billed, patients (or their loved ones) should keep a log of doctor visits, tests, and medications administered during their hospital stay to check against an itemized bill.
  6. Follow the Rules - The "fine print" in health plan documents explains requirements regarding referrals and pre-certification. Ignore it and you may have to pay for a procedure that is not covered.
  7. Consider an HSA - If you select a high deductible health plan to reduce premium costs, consider establishing a tax-deductible health savings account (HSA) to fund out-of-pocket medical expenses. Get further information about HSAs.
  8. Use It or Lose It - Spend down funds contributed to a flexible savings account (FSA) for health care by year-end or March of the following year (depending on the plan). If you don't have doctor bills, you can stock up on drug store items such as cold medicine, aspirin, and contact lens solution.
  9. Go Generic - Whenever possible, buy generic drugs, which cost less than their brand name equivalents. In addition, ordering a 90-day supply of drugs by mail is often cheaper than using a local pharmacy.
  10. Time Your Expenses - If you're close to your health plan annual limit for doctor and dentist visits, split your appointments over two calendar years (e.g., December 2010 and January 2011).
  11. Split Your Pills - High-dose prescription drugs often cost the same as lower doses. If (and only if) your doctor approves, split a higher dose pill in half to save on drug plan co-payments.
  12. Sample the Samples - Doctors regularly receive prescription drug samples from pharmaceutical company representatives. Ask your doctor if a sample is available before filling a prescription.
  13. Use the Internet - Compare prescription drug prices at local retailers with online merchants that carry the Verified Internet Pharmacy Practice Site (VIPPS) seal.
  14. Quit Smoking - Not only do cigarettes cost more than $1,500 a year for pack-a-day smokers, but smokers pay $1,600 more a year in health-care costs than non-smokers as well as higher premiums for health and life insurance.
  15. Wash and Floss - One of the best ways to avoid paying for cold and flu remedies is to scrub your hands frequently with soap and water for 20 seconds. One of the best ways to prevent periodontal disease is to floss your teeth daily.


  1. Rutgers
  2. Executive Dean of Agriculture and Natural Resources
  3. School of Environmental and Biological Sciences