Medical savings account exhausted before the end of the year? What to do

  • You can make your medical savings last longer by using cheaper doctors, drugs, and procedures, making sure your prescribed minimum benefit claims are paid for by your medical aid, and using preventative health care benefits.
  • But your savings may not be enough yet.
  • Consider your out-of-pocket expenses over the past three years: you might qualify for a higher option or you might be able to set aside additional savings for your out-of-pocket expenses yourself.

Many medical plan members who sign up for options that cover day-to-day healthcare costs through a medical savings account see their accounts depleted before the end of the year – sometimes long before.

There are a number of steps you can take to make your savings last longer, but there may also be times when you have to deal with the fact that your savings aren’t enough and you need to set aside extra savings for your life. needs.

Make your savings last

  • If you want your savings to last, you need to make good decisions about how to use the money
  • Don’t use your savings account to pay for over-the-counter drugs
  • Choose cheaper generic drugs whenever you can
  • Look for doctors and dentists who charge lower rates – if your plan refers you to doctors, it may have negotiated lower rates with them
  • Choose cheaper glasses frames
  • Opt for more affordable dental procedures
  • If you suffer from a chronic condition with prescribed minimum benefits (PMB), make sure that your consultations and your chronic medications are covered by the plan
  • If you have another PMB condition, such as pneumonia or depression, check how your plan covers this and try to get your claims covered
  • Check the benefits your plan offers — and use — the preventative benefits, such as those for pap smears, mammograms, prostate cancer screening, dental checkups, and flu shots.

It may not be enough yet

Although you’ve taken all the necessary steps to choose more affordable healthcare services and use your plan benefits to future-proof your medical savings account, it may not be enough.

Medical plans are not allowed by law to use more than 25% of your contributions to fund your medical savings account.

On a particular lower cost option, the rand amount may be low. And if your medical needs are high and not covered by PMB, your savings could soon run out.

In this case, you may consider upgrading your coverage or building up additional savings for medical costs yourself.

Consider how much you have spent on average on daily health care out of pocket over the past three years. If you have submitted all your healthcare costs to your scheme, the latter must provide you with a certificate indicating the amounts that the scheme has not covered.

If you have not submitted all of your expenses, you will need to determine how much you spent out of your own pocket.

If you regularly pay claims out of your own pocket, consider — or ask a health insurance broker to consider — a more expensive insurance option. Compare the amount allocated to a medical savings account for the year to what you are currently contributing.

Then compare that to the increase in dues you will pay in a year.

A higher medical plan option may allow you to save more or even provide you with the protection of an above-threshold benefit – a benefit that pays for part of your daily expenses once your savings are exhausted. But it can cost you a lot more in dues. You need to consider what additional benefits it will bring you and whether it is worth it.

If you are a disciplined saver, it may be more profitable to save the additional contributions yourself.

Your own dedicated savings

You should consider a dedicated savings account for your daily medical expenses if your medical savings account within your plan is regularly depleted before the end of the year.

You can save for medical expenses in any savings account that offers immediate access to your funds.

Some medical plan administrators offer savings accounts for medical expenses not covered by the plan. Use of these accounts may provide benefits from associated loyalty or rewards programs.

Any payments made by affiliates or their employers to these accounts are not considered to be contributions to the health insurance scheme for the purposes of the tax credit for health insurance fees.

Savings in such an account are also unlikely to qualify for a subsidy from your employer.

Fees paid through these products may be considered tax-deductible medical expenses. However, they will need to meet the criteria to be eligible expenses and exceed the thresholds for additional tax credits for medical expenses set out in the Income Tax Act.

This article was first published on initiative of South African Savings and Investment Association (ASIS).

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