There’s a difference between being good with your money and having good financial health literacy. Whether you’re great at budgeting or a little behind in keeping up with your family’s money matters, learning about and practicing financial health literacy comes with a lot of benefits that can be very empowering.
What Is Financial Health Literacy?
Since it’s now an elective class in Texas high schools, you might already know what financial literacy means. It’s the basic but important concept that people should have a decent understanding of how personal finances work—things like keeping a budget, planning for retirement, choosing good investments. Financial health literacy is having a full understanding about what your insurance covers, what costs you might be responsible for if you need unexpected care and how to choose the best place to get care.
Understanding the Real Cost of Health Care
Health care costs often vary between different hospitals, clinics, doctors and surgeons. Yet most Americans don’t know this, according to a poll that found 38 percent of people surveyed didn’t know medical costs can differ between hospitals. Although many people know how to manage a basic budget based on the cost of living, the majority of Americans don’t understand the true costs of health care or understand their insurance policy. Only 14 percent of non-elderly respondents could define common health insurance terms such as “deductible,” “copay,” “coinsurance” and “out-of-pocket maximum” according to research published a couple years ago.
What This Means for You
If you’re younger or in good health, you may think you don’t need to worry so much about financial health literacy right now. Maybe you think a cancer diagnosis or a chronic condition like heart disease isn’t going to happen anytime soon—but health emergencies can happen at any time. What if you need medical care after being in a car accident? One day your child or marital partner could unexpectedly need surgery. Are you prepared to process and handle all the different financial aspects these health care situations require on top of the emotional strain they cause?
How Financial Health Literacy Can Help You
With a decent understanding of financial health literacy, you will be better able to answer those important questions by closely evaluating your health plan to assess how it is or isn’t meeting your family’s health needs. This can help you make confident choices during your next open enrollment period—that small window of time you’re given to choose a health plan—especially if you are looking at high-deductible options.
High-deductible plans are a common choice for many people these days, as they tend to have a much cheaper monthly premium than traditional plans with copays—which is when you pay a flat fee to go to certain doctors or appointments. For example, if you sign up for a plan with a $7,500 deductible, you might think you’ll never need to use your insurance beyond an annual checkup, which is covered at no cost to you. But if a major accident or serious illness occurs, you would suddenly find yourself having to pay $7,500 toward your medical bills before your insurance benefit kicks in. That’s a hard pill to swallow for many people.
Educating yourself upfront about the costs of your plan and preparing for how your family would deal with a worst-case scenario can help alleviate stress in the long run. Research shows people with high financial health literacy have lower levels of financial hardship after expensive diagnoses, such as breast cancer or colon cancer. Financial health literacy can also help you become your own advocate in managing health care costs. If you have a decent level of knowledge about your plan benefits, you’ll know when to ask about costs or charges you weren’t expecting.
Doctors’ offices and insurance companies usually bill correctly, but mistakes do happen. If you’re able to recognize when something doesn’t look right, you could save a significant amount of money by making a call to the biller and pointing out the mistake. You are always your own best advocate.
Take Advantage of Price Transparency
Over the past few years, hospitals across the country have started posting the estimated costs of receiving care for common medical procedures on their websites. This new price transparency rule is required by the federal government and is intended to help patients get a better understanding of what their actual out-of-pocket medical costs might be before they schedule a surgery or get an MRI.
You might not be able to plan ahead if an emergency happens, but you can compare the costs of common events such as giving birth, getting a knee replacement, or six weeks of chemotherapy for breast cancer. You might also be surprised to see how much the cost varies for the same procedure at different hospitals and clinics. Although the costs provided are only estimates, they definitely can give you a better idea of what to expect—and whether you should save up for a procedure beforehand, or what your estimated monthly payments will look like afterwards.
Financial Health Literacy at St. Luke’s Health
At St. Luke’s Health, we try to make financial health literacy easier for patients because we think it’s the right thing to do. If you call to schedule an appointment with one of our doctors, you can ask questions and receive answers about your benefits and costs before you hang up the phone.
Want to run some numbers before making an appointment? St. Luke’s Health offers an easy to access online price transparency cost estimator that makes it easy to plug in your insurance provider and find the estimated price of the procedure you’re considering. St. Luke’s Health also ensures its billing statements are easy to understand. If you still have questions you can always call and ask us to explain and provide answers you will understand. For example, we can help you make sense of any differences you find between our bill and your insurance company’s explanation of benefits.
Find out more about St. Luke’s Health price transparency tools to help boost your financial health literacy.