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How to Lower Your Out-of-Pocket Medical Costs

Even if you have insurance, not everything is covered

Cut Health Care Expenses: In this video and accompanying article, AARP Financial Ambassador Jean Chatzky offers seven tips for reducing your health care spending.

What hurts more than ripping off a Band-Aid? Taking a good, hard look at your medical bills. Annual out-of-pocket health care spending jumped 4.6 percent, to an average of $735, in 2011 (the most recent year for which figures are available) for people with employer-sponsored insurance, the Health Care Cost Institute reports. To ease the sting, consider these three strategies — but be sure you're not compromising on your health.

1. Avoid unnecessary or duplicative care

The biggest way to save — by far — is to avoid treatments or tests you don't need. Not rushing into questionable back surgery, for example, will "save you a lot of pain and money," says Jeffrey Rice, M.D., CEO of Healthcare Blue Book, a Kelley Blue Book-type guide to medical care. Before you give that blood sample or get that MRI, ask your physician if this needs to be done immediately. He or she might suggest a more financially conservative approach, or propose a safe amount of time to wait and see if the problem improves on its own. "Doctors might be inclined to order sophisticated tests to be protected from malpractice or to be extra safe," says Rice. "If you ask, they may say, 'Well, if it doesn't get better in six weeks, we'll do it then.' " Plus, watch out for duplicate tests, especially when you're seeing multiple doctors for the same condition.

2. Compare the costs of treatment

Many of us purchase health care services without a clue as to the cost. Before treatment, ask doctors and facilities how much they're going to charge. Compare the answers with typical costs in your area at Call around to check prices at specific facilities near you. It can save you thousands of dollars, especially if you have not met your deductible or decide to go out of network. Also, ask your doctor about cheaper versions of any drug you take. If you feel uncomfortable talking prices with a doctor, consult your pharmacist.

3. Pay with a flexible spending account (FSA)

If your employer offers an FSA, take advantage of it. Estimate your out-of-pocket expenses and have that amount deducted tax-free from your paycheck — up to the 2013 cap of $2,500. You can use the money on everything from contact lenses to first-aid supplies, and could save 25 percent.

Jean Chatzky is AARP's financial ambassador. She writes the Back to Basics column for AARP. Additional reporting for this article was provided by Arielle O'Shea.