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Season 3 | Bonus Episode

One Thing Today: Understanding Medical Expense Accounts

A side of your health that is often overlooked is how to save for and manage care costs.

June 6, 2023 | 6 minutes


There are financial tools that could be available to you — financial influencer Michela Allocca joins us to break down medical expense accounts.

Speaker 1: Welcome back to another bonus episode of Until It's Fixed. I'm Callie Chamberlain.

Speaker 2: And I'm Dr. Kenny Poole.

Speaker 1: As we cover ways to make health care work better for everyone, these bonus episodes will draw connections between the topic we recently discussed and our daily lives.

Speaker 2: We'll talk about one thing you and I can do today related to that topic to take charge of our health and wellbeing.

Speaker 2: In today's episode, we're taking a look at a side of health that is often top [00:00:30] of mind for consumers: health care costs and how to pay for them. So like any product or service you buy for yourself or a loved one, you probably have a budget and you're using your bank account, cash credit cards to determine what you get and how to pay for the items. What's different about health care is that most people have another layer in paying for those visits to the doctor or other services, and that's insurance. So first, there's the cost of insurance coverage you pay directly or that comes outta your paycheck, [00:01:00] and then there's payments for doctor's appointments, lab work and other things that are made on your behalf by your insurance company. But what insurance doesn't cover may actually need to come outta your pocket.

Speaker 1: Yeah. Kenny, when you explain that out loud at paints, a picture of why many people feel paying for health care can be complicated. There's so much to think about and it does add to the mental load like we talked about with Eve Rodsky on a recent episode. So I think most of us can agree that just like any other area of our life that is getting better through technology [00:01:30] and innovation, managing our health care costs should be simpler and more convenient.

Speaker 2: Yeah. And today we're gonna talk about one thing we can do here, which is to understand medical expense accounts, which can save you money on health care costs. Some common ones are HSAs, which are health savings accounts and FSAs, which are flexible spending accounts. You've probably heard of them, but there are things you may not know, like the dollars you put in them aren't taxed, which is huge. People have access to these [00:02:00] accounts and they're not using them and are leaving money on the table. Also, you can't add to both an HSA and a traditional FSA at the same time, so you have to choose. So what's different about them and what can you use them to pay for to she more light? On this topic, we talked with Mikayla Aloka, an entrepreneur, content creator, financial author and fellow podcast host.

Speaker 1: Mikayla, thank you so much for joining us today. And to just get us started, can you tell us a little [00:02:30] bit about who you are and how you got into the work that you do?

Speaker 3: Sure. So my name's Michaela. I am a financial analyst, turned entrepreneur, creator, and author, and I have a platform called Break Your Budget across various social media channels. So I started Break Your Budget as really a way for me to share what I was learning at work because I realized that my friends and even my coworkers were coming to me for advice on their finances breaker. Budget teaches sustainable, healthy ways [00:03:00] to manage and approach money. Really, anything that impacts the way you show up and the way you approach your finances as a whole. So I talk about budgeting, investing, how to create a financial plan, healthy financial routine, so how to stick to your financial plan, all those kinds of things.

Speaker 2: Got it. Got it. Thanks.

Speaker 1: And can you talk a little bit about your experience with money growing up and how that relationship evolved?

Speaker 3: Sure. So growing up, I always had a fascination [00:03:30] with finances and money, and I don't really know exactly where that stemmed from, but I was always the kid that had a lemonade stand and I was always collecting my allowance and looking for odd jobs. And my mom one year for Christmas got me a digital bank and anytime I would make money or had coins or something like I'd input it into the little arm and that was my savings. It was something that I looked forward to doing, and I think that was the beginning of my interest in understanding money [00:04:00] and applying it to my own life, and then ultimately learning enough about it to feel comfortable talking about it online and answering questions for other people.

Speaker 2: That's a really great story, and I appreciate you sharing more about your path and where you are today. So speaking of answering questions, can you tell us more about medical expense accounts like HSAs and FSAs?

Speaker 3: Mm-hmm. <affirmative>, there are financial tools that you can use to mitigate your health costs, like a health savings account [00:04:30] or a flexible savings account. I get questions all the time about what's in HSA. I think there's just a lot of confusion. If you have access to an HSA, the health savings account, that money is triple tax advantage. So it's deducted from your paycheck pre-tax. It's not taxable at all. Essentially, what you do is set money aside automatically every month into your HSA, and then if you have qualified medical expenses, you can just pay for it [00:05:00] out of there and it rolls over it for a year. So if you have a year where maybe you don't have any issues and then you have the next year, it's like, oh, I need to go to therapy, or you have to get prescriptions, you have the money.

Speaker 3: I think that peace of mind will really impact how you approach your life knowing that healthcare isn't something that's preventing you from being the best version of you, or that if something did arise, you're able to pay for it. And an FSA [00:05:30] is a flexible savings plan, so that's another option. An FSA is very similar to an HSA. The only thing is you can't carry it over year to year. Mm-hmm. <affirmative>. So if you put money into it, you have to spend it at the end of the year. You can use it to buy sunscreen and things like that if you didn't actually use it. That's another really great tool.

Speaker 2: Yeah, that's a good one that maybe people don't know. Sunscreen that is SPF 15 or higher. There are actually a lot of surprising things you can use these accounts for. Hey [00:06:00] Mikayla, let's put Callie to the test with a quick quiz. <laugh>.

Speaker 3: Okay.

Speaker 2: So Callie, I'm gonna list some things and you tell me if an HSA or FSA covers them, yes or no. So what about glasses or contacts?

Speaker 1: I say yes.

Speaker 2: What about menstrual products?

Speaker 1: Yes.

Speaker 2: Acupuncture?

Speaker 1: No.

Speaker 2: So all of those things are covered.

Speaker 1: All right, Kenny, we're gonna turn the tables. Acne treatments.

Speaker 2: I'm gonna say yes.

Speaker 1: What [00:06:30] about teeth whitening? Yes. What about funeral expenses?

Speaker 2: You know what? I think we're stretching it there, so I'll probably say no.

Speaker 1: Okay. So acne treatments and teeth whitening are sometimes covered with a doctor's letter, and you're right, funeral expenses are unfortunately not covered. That was interesting. I also wanna mention that we'll have a link in our show notes to a qualified medical expense tool where you can search specific items to see if they're generally covered by your HSA or FSA.

Speaker 2: [00:07:00] Yeah, and HSA accounts can look intimidating and I'm a physician and I would fill out my insurance and say, you know what? I really don't understand this stuff. <laugh>

Speaker 1: For me, too, when I'm enrolling in health insurance, I'm spending a couple hours trying to research things. Yeah. A lot of people don't have that time. There are things I read that I'm like, I don't know what this means, and I have an advanced degree and I work in the industry. You know? Yeah.

Speaker 3: Yeah. I think talking about it is really a big thing. I think just the whole idea of dismissing, I don't know what this is, so like I'm not going to explore [00:07:30] it. Mm-hmm. <affirmative> is something that culturally we need to work on. Cuz yes, that happens with medical stuff, but it also happens with other financial concepts. Yeah. And lots of other topics. If somebody doesn't know about it, they're not gonna put the energy into it, but it is a very important thing to have a baseline understanding of and it can actually really help you save a lot of money and make sure the money that you are spending is being spent effectively.

Speaker 1: I love it.

Speaker 2: Yep, me too.

Speaker 1: [00:08:00] This was so great. Thank you so much for being here.

Speaker 3: Thank you for having me.

Speaker 1: We've talked a lot this season about how health care is changing to meet people where they're at physically, emotionally, mentally, spiritually and financially, too. We really expect experiences to be simple and convenient in all areas of our lives, and that includes paying for health care. I know in my life some of the ways that I personally use my HSA include paying for therapy. Now I know I can pay for my acupuncture, so I'll do [00:08:30] that as well. I also use it for some of my dental costs. What about you, Kenny? How do you manage your health care costs and then how do you use your HSA or FSA?

Speaker 2: I haven't really put together a financial strategy from a medical cost perspective. It's one of the things on my checklist to get a better handle on, because like we talked about in the episode today, if you're not taking advantage of those things in the right way, you're essentially leaving money on the table.

Speaker 1: Well, that's today's episode. We really hope that we gave you some insight into medical expense accounts [00:09:00] and how they can save you money on your health care costs. And thank you so much for listening. As always. Next week we'll get into why a good relationship with your doctor or care team is important, and how studies show that it's not just a nice to have, but it really can result in a healthier life.

Speaker 2: Make sure the followers subscribe wherever you listen so you can get notified when a new episode is live. Catch you next time.