Question: I am self-employed and looking for some relief with healthcare costs. I currently have a high deductible plan, whereas every time I go to the doctor, I have to pay a co-pay in addition to being hit with a high bill.
How can I reduce my medical costs? Also, as an entrepreneur, can my medical costs, including premiums and co-pays, be treated as a business expense?
Answer: Unfortunately, with high deductible plans every time you visit the doctor you will spend a good chunk of money before meeting your deductible, which you have already experienced.
To reduce your medical costs, you can establish a relationship with a direct primary care (DPC) doctor. DPC is essentially a membership plan. You pay a monthly fee to a doctor to cover routine expenses. My suggestion is that you do research in your area to see which practices offer DPC and explore whether they can meet your needs.
This will give you direct access to your primary care doctor without paying a co-payment or insurance bill. In fact, DPC doctors do not take insurance. That is a big part of why this an appealing option to doctors and patients alike. You are usually able to get in within the same or the next day, and the doctor can spend more time with you because s/he is not buried with insurance paperwork.
In the next few years, I anticipate that this option will become increasingly popular as people are out-priced by existing insurance models.
Since you already have that high deductible plan, you should hang on to it in the event you need to see a specialist or you have an emergency that forces you to go to the hospital. That is an area where working with a DPC physician cannot bring you financial relief.
Now for your second question, which is a timely one: taxes! You cannot deduct your healthcare costs as a business expense, because you are not incurring them as part of your business. However, you as an individual can offset these costs by including them in your personal deductions.
The advice gets complex based on the classification of your business and the details of your insurance, and whether or not you are covering expenses for any employees. You can find a great overview here. That said, as always your best bet is to speak with a tax professional with knowledge of the details of your particular situation to allow you to deduct the appropriate expenses.
I also encourage you to look into these additional resources provided by the IRS. Don’t even try their hotline right now–you’re not going to get through!
Thanks for those great questions. Best of luck to you!