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Update: The offer mentioned below for the Capital One Venture Card has expired. View the current offer here.
With the Affordable Care Act going into effect, medical costs and spending are on everyone’s minds. As a major factor in everyone’s budget, healthcare costs can be both a big expense, but also a good opportunity to earn points and miles. TPG contributor Jason Steele fills us in on how and why.
Healthcare costs are a substantial percentage of most people’s spending, so the expenses related to healthcare are a good place to look for points and miles-earning opportunities. These expenses can include insurance premiums, payments to providers, as well as the purchase of prescription drugs and other medical supplies. Here are some strategies on how to maximize the points you earn on your healthcare costs.
Credit Cards for Maximizing Rewards on Medical Expenses
To my knowledge, there is no such thing as a “frequent patient” loyalty program yet. And besides, who would really want to be a member? Therefore, credit cards are the only path to earning rewards for healthcare spending. Unfortunately, payments to insurance companies and healthcare providers do not fall into any bonus reward categories of any credit card I am familiar with.
So until an enterprising bank begins offering double miles for doctor visits, we will have to consider such expenditures to be so-called “non-category” spending, and look for the most valuable rewards offered for general spending.
Here are some cards to consider to earn the most valuable rewards for general expenses such as medical bills and insurance premiums:
1. Amex Everyday Preferred. The Preferred version of Amex’s newest card also earns cardholders one point per dollar spent, but offers a 50% points bonus each month that cardholders make at least 30 transactions. That allows you to earn as much 1.5 points per dollar of medical expenses charged. Points can be transferred to 17 different airline programs, and American Express frequently offers transfer bonuses that can be quite valuable. There is a $95 annual fee for this card.
2. The Starwood Preferred Guest card from American Express. This card offers one Starpoint per dollar spent, which can be used for hotel award reservations starting at just 2,000 points per night. For many, the real value in this program is the ability to transfer points to miles with the frequent flier programs over 30 different carriers. When you transfer 20,000 points to miles, you also receive a 5,000-point bonus. So each dollar spent on this card is effectively worth 1.25 airline miles. There is a $65 annual fee for this card that is waived the first year.
3. The standard Amex Everyday card. For each dollar spent, this card offers one point in American Express’s Membership Rewards program. Cardholders who use their card to make at least 20 purchases a month will earn a 20% bonus. So medical expenses can earn as much as 1.2 points per dollar. There is no annual fee for this card.
4. Chase Sapphire Preferred. All charges earn one point in Chase’s Ultimate Rewards program, which adds up to 1.07 points per dollar after their annual 7% points bonus. These points can then be transferred to 12 different airline and hotel programs plus Amtrak Guest Rewards. Ultimate Rewards points are also worth 1.25 cents each when used to book travel directly through the Chase Ultimate Rewards site. There is a $95 annual fee for this card that is waived the first year.
5. Barclaycard Arrival. This card offers “double miles” for each dollar spent on all purchases, and their miles are worth one cent each as statement credits towards most travel expenses. Since a 10% mileage refund is offered on all redemptions, each dollar spent is worth 2.2 cents towards travel purchases. Furthermore, reward reservations are purchased normally, and travelers earn points or miles, qualify towards elite status, and are eligible for upgrades. There is an $89 annual fee for this card that is waived the first year.
6. Capital One Venture Rewards. Like the Barclaycard Arrival, this card offers double miles for all purchases, and each mile is worth one cent each as statement credits towards travel expenses. Likewise, travel is eligible for all the same rewards and upgrades as any paid booking. There is a $59 annual fee for this card that waived the first year.
Other ways to leverage healthcare spending
Without category bonuses, it is a challenge to use healthcare spending to earn more travel rewards, but it is possible.
1. Earning sign-up bonuses. There is a long-term trend in the credit card industry towards larger minimum spending requirements to receive sign-up bonuses. Products like the Southwest Airlines card from Chase that once offered points and miles after customers made their first purchase now require $2,000 of spending within three months of account opening. Others, like the Citi Executive AAdvantage card require relatively large layouts of $10,000 of spending within three months. To earn theses sign-up bonuses, many prospective cardholders must put every available expense on their credit cards, and healthcare charges can contribute significantly towards these spending goals.
2. Achieving threshold bonuses. Many credit cards offer valuable rewards when cardholders reach a certain annual spending threshold, and healthcare charges count equally towards these goals.
Here are some of the major cards that feature calendar year spending threshold bonuses.
- American Express Premier Rewards Gold Card. 15,000 bonus points for spending $30,000 on the card within a calendar year.
- British Airways Visa from Chase. Offers a “Travel Together” companion ticket when cardholders spend $30,000 within a calendar year.
- Starwood Preferred Guest card from American Express. Grants cardholders Gold status after spending $30,000 in calendar year.
- Southwest Airlines Rapid Rewards Premier Visa from Chase. Earn points towards companion pass as well as 1,500 Tier-Qualifying Points for every $10,000 in purchases, up to 15,000 Tier-Qualifying Points each calendar year.
- Citi Executive AAdvantage World Elite MasterCard. Offers 10,000 Elite Qualifying Miles with American Airlines after $40,000 in purchases each calendar year.
- Platinum Delta SkyMiles Credit Card from American Express. Offers 10,000 MQMs and 10,000 bonus miles to cardholders who spend $25,000 in a calendar year and an additional 10,000 MQMs and 10,000 bonus miles for those who spend $50,000 in that same year.
- Delta Reserve credit card from American Express. Offers 15,000 MQMs and 15,000 bonus miles to cardholders who spend $30,000 in a calendar year and an additional 15,000 MQMs and 15,000 bonus miles for those who spend $60,000 in that same year.
- Hilton HHonors Card from American Express. Earn an upgrade to HHonors Gold status when your total purchases reach $20,000 in a calendar year.
- Hilton HHonors Surpass Card from American Express. Earn an upgrade to HHonors Diamond Status if in any calendar year of Card Membership your total eligible purchases reach $40,000.
- Citi Hilton HHonors Reserve Card. Earn an upgrade to HHonors Diamond status when you make $40,000 or more in eligible purchases with your card each calendar year.
- Chase United MileagePlus Explorer. Earn 10,000 bonus award miles each calendar year you spend at least $25,000 on this card.
- Virgin Atlantic American Express. This card, which lets you earn 15,000 bonus miles on every cardmembership anniversary upon spending $25,000 annually.
3. Annual fee waivers. I never pay an annual fee without at least calling the card issuer to request that it be waived. Over the years, I have noticed a correlation between my spending on a card and the card issuer’s willingness to waive the annual fee, or at least offset it by offering me some extra points or miles. So if charging a monthly insurance premium, or a large healthcare expense will make it more likely to receive a generous retention offer for a card with a high annual fee, I might use that card.
Tips for maximizing rewards for paying insurance premiums
Most Americans receive health insurance through their employer, and their insurance premiums are deducted from their paychecks on a pre-tax basis. Yet a growing number are now purchasing insurance on the individual market, and paying their premiums out of pocket.
In many cases, insurers will accept credit cards for payments, but they won’t make it easy. For example, Anthem Blue Cross/Blue Shield of Colorado will not accept credit cards online. It took several minutes for me to reach a representative who would accept a credit card for payment, and I had to make the call every month as they could not set up an automatic recurring payment.
Still, if you have the time and you find your insurer will accept credit card payments through one avenue or another, it can definitely be worth paying this way to rack up points every month with your premium.
Tips for earning rewards for payments to healthcare providers
In my experience, most doctors and hospitals will accept credit cards for payment. Yet for some reason, emergency room physicians seem to be the least likely to accept credit cards. Sometimes the bills received in the mail indicate that they accept credit cards, but in other cases you have to call their office and request to pay by credit card.
Tips for earning rewards for the purchase of prescription drugs and medical supplies
Here, credit card users have some chance of earning rewards in their card’s bonus categories of spending. For instance, medications and supplies can often be purchased at both supermarkets and drugstores.
Here are the cards that offer bonus points or miles at drugstores and supermarkets:
- IHG Rewards Club Select Visa offers double points.
- Premier Rewards Gold Card offers double Membership Rewards points.
- Hilton HHonors card from American Express offers 5x HHonors points.
- Hilton HHonors Surpass card from American Express offers 6x HHonors points.
- Amex EveryDay offers 2x Membership Rewards points plus a 20% bonus when cardholders make at least 20 transactions in a month, but only on cardholder’s first $6,000 spent in a calendar year.
- Amex EveryDay Preferred offers 3x Membership Rewards points plus a 50% bonus when cardholders make at least 30 transactions in a month, but only on cardholder’s first $6,000 spent in a calendar year.
- Citi Hilton HHonors Visa Signature Card earns 3x rewards.
- Asiana Airlines American Express Card from Bank of America earns double miles.
- Citi Hilton HHonors Visa Signature Card earns 3x rewards.
Can you use prepaid debit cards to earn travel rewards while paying for healthcare?
Prepaid debit cards are valuable tools to earn rewards, but their use for healthcare expenses is limited. First of all, I have yet to find a healthcare provider that will accept a debit card transaction, but not a credit card charge, so why bother with the extra step of buying a prepaid card if you don’t already have one?
Using a prepaid card to pay healthcare bills may seem like a good way to use an existing balance, but it just results in additional labor. For example, while you might be able to pay your insurance company or health care provider with American Express Bluebird account, you can just as easily pay your credit card issuer. And if you insurance company or health care provider does accept credit cards, you are missing out on another opportunity to earn more credit card rewards.
The only instances where using a prepaid card will make sense is when you are able to buy generic gift cards from a store that offers a category bonus for credit card transactions such as office supply stores for the Ink Bold or Ink Plus (5x points per $1 up to $50,000 per year). If the value of the reward exceeds the fees imposed by the gift card, then it can be worth purchasing a gift card to pay a medical bill. That said, you need to be sure that the provider is willing to process multiple gift cards, if necessary, and that the rewards will also be worth hassle. On the other hand, health care bills are good candidates for gift card purchases as you will never need the purchase protection and travel insurance policies offered by a credit card.
Have any strategies of your own? Feel free to share your thoughts in the comments section below.