Paying for healthcare is challenging, especially when insurance won’t cover it. Enter CareCredit cards, which are becoming more and more popular as medical expenses continue to rise. But what are they exactly? How can you get one? And should you? Woman’s World recently sat down with experts to discuss all of that and more. Read what they had to say below.
What is a CareCredit card?
Carla Haubenschild, a financial advisor from Northwestern Mutual describes CareCredit cards as something “specifically designed to help pay for out-of-pocket medical expenses that insurance may not cover. It’s accepted by many healthcare providers and offers facilities for services like dental work, vision care, veterinary care and certain elective procedures. Essentially, it works like a traditional credit card but only for healthcare-related expenses.”
Currently, CareCredit cards are accepted at 270,000+ locations, according to their website. The cards don’t have an annual fee, and on some purchases customers can earn rewards points. As with any credit card, CareCredit does have a spending limit, which can be increased over time depending on how much you use it and what your current credit score is.
“You can apply for it through the company’s website or at participating healthcare providers’ offices. Approval is based on credit history, and once approved, individuals can use the card for eligible medical services within the CareCredit network,” Haubenschild says. “As with any credit card, it’s important to review the terms, interest rates and repayment requirements before applying and using it.”
Does a CareCredit card actually save you money?
A CareCredit card does have its advantages, because it allows patients to pay off their bills over a longer period of time. But with that comes added fees and interest rates, meaning you can end up paying more in the long run.
“It’s always wise to have conversations with your providers directly. Many doctors or hospitals are open to setting up payment plans, which can make larger bills more manageable without turning to credit,” Haubenschild says. “Consider also taking a close look at your health insurance coverage each year. Understanding what is and isn’t included can help you plan for out-of-pocket expenses and avoid surprises.”
How to save money on your medical bills
Whether you use a CareCredit card or not, Isabel Barrow, a financial planner from Edelman Financial Engines, wants people to know that understanding your medical bills is critical.
“For Americans, one of the most devastating financial events can be a major medical expense that is not covered by insurance. While it’s true that you can’t plan for everything, you can put yourself in a position when you are more prepared to deal with surprises like this without having to resort to credit cards or other high interest loans,” she says.
She recommends looking into setting up a Health Savings Account (HSA), which helps you save money and set aside cash for health expensese or building up an emergency fund.
“This needs to be the number one priority for our financial planning,” Barrow says of an emergency fund. “You can’t save for your future if you are digging yourself into a hole today, and we avoid the debt hole by having money for surprises. Your emergency fund should be 6 to 24 months of your normal monthly living expenses. Yes, it will take time to build this, but it will take even longer to pay off a credit card bill you’ll have if you haven’t saved cash for an emergency and then it happens.”
Haubenschild has similar advice, saying “With healthcare costs playing a growing role in our expenses, it’s smart to include them in your bigger financial picture. A financial advisor can help you see how tools like HSAs, FSAs (Flexible Spending Account) and insurance choices can work together to keep your financial plan on track.”
“A Health Savings Account could be a great tool if you have a high-deductible health plan. HSAs let you set aside and invest pre-tax dollars for qualified medical expenses and if you want, you can also invest that money to grow over time with tax advantages. Any money you don’t use can roll over year-to-year, making it a great option for long-term planning,” she continues. “Flexible Spending Accounts can also help you save pre-tax money for eligible healthcare costs, though those typically need to be used within the plan year. A key difference between the two is that HSA funds are yours to keep, even if you change employers. With FSAs, a change of employer would mean a forfeiture of the dollars.”
