It’s no secret that the cost of having any chronic condition is high in the United States.
It’s no secret that the cost of having any chronic condition is high in the United States. Drug companies aren’t always thinking of people first, and their pricing shows it. If you have diabetes and are looking for ways to get all of the medication and supplies you need at a reasonable price, an HSA might be just the companion you’ve been looking for.
Some background info: a Health Savings Account (HSA) is a triple-tax advantaged savings vehicle that comes with a high-deductible health plan (HDHP). HDHPs have lower premiums and higher deductibles (hence the name), so HSAs were introduced with them to help combat higher out-of-pocket costs. So how exactly can an HDHP with an HSA help with diabetes treatment? We’re glad you asked.
As of July 2019, the IRS started allowing employers to offer healthcare coverage that treats medications and treatments like insulin, glucose-lowering drugs, and glucose meters as pre-deductible expenses. This means that insurance will step in and cover some of the cost, even if you haven’t hit your deductible yet. Marking items as pre-deductible expenses can be incredibly helpful in affording the medication you need, as well as planning out your yearly medical costs!
Going along with our first point, you’ll probably still have copays when insurance steps in. The good news is that you can absolutely use your HSA to cover those costs. So not only are you saving money because these are pre-deductible costs, but you’ll pay for these totally tax-free. Additionally, look at programs like GoodRx to verify you’re getting the best price for your medication. Always double check prescription prices because insurance copay prices aren’t always the lowest! If you’re looking for treatment or doctor’s check out First Dollar’s shop to get started.
There’s no such thing as too much planning when it comes to your HSA. One of the easiest ways to make sure there are enough savings in your HSA for when you need it is to plan accordingly. You’re usually aware of what you spend each year, so add up costs of medication, appointments, and any other expenses and make sure you set that aside. If your total is $1,200 for the year, make sure you set aside at least $100 every month. Better yet, try and max it out to the best of your ability, so there’s more than enough to take care of your medical needs!
There are plenty of other tools you can use daily to track, monitor, and manage your diabetes that might not be considered necessities covered by insurance. However, an HSA could step in and help out. Some items you could consider adding to your toolbox: pill organizers, food scales, pedometers, medical alert IDs, apps for your phone, continuous glucose monitors, and more. While not all of these are immediately HSA-eligible, you can always get a Letter of Medical Necessity or dispute it with your insurance. And don’t forget to save your receipts so you can be reimbursed later on!
Last year, the average cost of healthcare for a couple around the age of 65 had skyrocketed to $285,000 -- about $150,000 for an individual woman and $135,000 for men. This amount doesn’t even count things that are generally not covered by medicare (dental, vision, OTC meds, long-term care). Your HSA can be an integral tool for ensuring you get the care you need to manage your diabetes as you get older. Your HSA grows tax-free over time and can be invested, with gains coming back to you tax-free. If you’re maxing out your HSA now AND investing it, you’re building health and wealth at the same time. Here’s some math to show how impactful an HSA can be for the future.
Just because you have a chronic condition like diabetes doesn't mean an HDHP + an HSA isn't for you. At the end of the day, it can be incredibly helpful for planning for both your healthcare expenses and your future expenses!
*Updated on 7/23/21 First Dollar's partnership with RxSaver has been merged with GoodRx upon its acquisition. Find prescription savings via GoodRx on their website or app.