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Maximizing Points and Miles on Healthcare Spending

by on April 7, 2014 · 31 comments

in Maximize Monday, TPG Contributors

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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 can be a major expense - might as well maximize your points on them.

Healthcare costs can be a major expense – might as well maximize your points on them.

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 MasterCardOffers 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.

You should be able to pay that ER bill with a credit card.

You should be able to pay that ER bill with a credit 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.

Use a credit card that earns you bonus category points at drugstores and supermarkets.

Use a credit card that earns you bonus category points at drugstores and supermarkets.

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:

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.

Drugstores

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.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Ed

    What about fitness clubs?

  • Ed

    Also, don’t forget that the Citi Dividend Platinum Select card has drugstores and fitness clubs every first quarter of the year as bonus categories.

  • Lonetree

    I’m a big supporter of Obamacare (vs. previous status quo) but definitely wouldn’t call it Universal Healthcare.

  • Jonathan Brewer

    For those like me who have an HSA, you can use those funds to “pay yourself” for qualified healthcare expenses that you paid for with your credit card.

    For example, I recently paid ~$70 for a doctor’s visit and used my CSP. Then I went into my HSA, transferred $70 to my Chase account, and paid the credit card with those funds.

    While it’s not necessarily “free” money, it is potentially tax-free since HSA deductions come out of your paycheck pre-tax, so the savings is definitely real.

    Make sure, however, to always document the reason for those transfers in case Uncle Sam comes a knockin.

  • Jason Steele

    Good point, a lot of the cards with rotating categories of spend, such as Freedom and Discover will feature drug stores occasionally

  • Bo

    FIA AMEX for sure.

  • watergirl88

    I have lived with high deductible plans for decades,thankfully I don’t get sick . When I needed back surgery last year due to a freak accident I shopped around for the best card and hit the points lottery. I carefully planned on when I would get a new card, use it to pay the high deductibles right away, get the points and then drop the card before the annual fee kicked in.

  • Jason Steele

    I agree, that’s a great cash back card, but I was trying to focus on those that offer travel rewards.

  • yourPFpro

    Good article but I’d like to add one thing. If you have an HSA you can pay for all of your medical expenses with a credit card and earn rewards points(like one commenter mentioned earlier)!

    I actually take it one step further though since HSA expenses can be re-imbursed at any point in the future. Yes that’s right. So I can spend 10k on healthcare this year using my cc, invest that money and earn 5-8% over 30 years and take that 10k out and buy a new car if I want. All the earnings would be tax free too as long as I spent those on healthcare(or can withdraw like a normal 401k and pay taxes)

    http://yourpfpro.com/finally-invested-hsa-money/

  • scam

    ….and it’s not healthcare reform of any kind. It’s wealth re-distribution. As a self-employed single man, age 45 with no kids, I now get the privilege of paying double premiums (my previous plan was cancelled to conform with Obamaccare mandates) for maternity, dental care for kids, pap smears…and an assortment of things I don’t need…. or have the body parts for.

    Getting travel mileage to pay for health things I didn’t need to begin with doesn’t begin to re-coup the double premiums I got from Obamacare.

    It’s a scam to the first degree

  • Lonetree

    *rolls eyes* Trotting out tired old arguments again. Instead of venturing way off topic like yourself, I’ll end it here.

  • scam

    apparently you don’t read polls. This was crammed down our throats. An you won’t end it here. You believe that all of our stories are lies, according to Harry Reid…and that Obama says the debate on this over.

  • RJP

    One other thought is to understand how your pharmacy shows up from a category standpoint. Walmart, target, and costco pharmacies often don’t show up as “pharmacy” but often just as “Walmart.” Also true for many grocery-based pharmacy locations, which sometimes DO show up as a “pharmacy” and not the grocery store in which they are located. My pharmacy is in a grocery store, but shows up as a pharmacy. When picking up prescriptions I ask how much they are, and the. Buy a Stop &Shop GiftCard in the grocery section… And then use that to pay for the prescription at the pharmacy. This provides 5pts/$ instead of just 3pts dollar on my HHonors AmEx. I can similarly buy a visa gift card at Staples or such with Ink card and use that at a pharmacy (as mentioned above.)

  • RJP

    Insurance and healthcare are two different thinks. Obamacare is a complete misnomer, as it provides no CARE but just insurance, which may or may NOT increase a person’s actual access to care. (Seems that it just as often does NOT.)

  • tehe

    umm… Lonetree… you are the one that made this “off topic”

  • Lonetree

    Ah yes, polls. No way they can be pushed or misconstrued.

    Rammed down our throats… By an elected majority of our representatives… Over more than a year of deliberation.

  • Lonetree

    Nah, I was it was specific to the opening sentence of the post. Not trying to debate anything. But you’re right, I should have resisted.

  • deb

    Obamacare does not provide healthcare… it just takes money…by government confiscation… to insurance companies. There has never been a majority of Americans that wanted that.

  • Lonetree

    A majority of voters wanted healthcare reform, elected said representatives, who then voted and passed reform. I’m not saying it’s exactly what I wanted, but I don’t make the perfect the enemy of the good.

    Confiscation? Are soldiers appearing at your house and removing your furniture?

  • Lonetree

    On second thought I agree with you. This is my fault. If only I could delete this thread.

  • op

    you did much like most supporters of Obamacare do… chiming in before they think. It’s not a popular.topic among any intelligent person — despite their political affiliations. However, most do agree the USA healthcare system should be reformed — outside of it being mandated by government through insurance companies. There was not, however, a full debate on this in the Senate in 2009 — and there still is not in the Senate now. It’s forbidden, but we are told there are no options proposed. The well-informed non-politico American citizens know this, and will be voting in 2014.

  • deb

    the IRS is asking me to comply or pay a fine — that’s confiscation. No soldiers are needed with the IRS — they will just take your home and other assets through the banking and legal system. Any other questions?

  • Lonetree

    When you open a comment like that you just sound ridiculous. I can change a few words and say something equally silly about you or Obamacare opponents. But I won’t since I don’t go for character attacks.

    Anyway, over a year of hearings in both houses of Congress is certainly debate. Debated and passed our democratic governing institutions.

    Glad you’re voting though, everyone should regardless of affiliation or outcome.

  • tru

    There is nothing more ridiculous than an Obamacare supporter not realizing this is a piece of crap law, and wanting to “defend and mend it.”

    It’s an abhorrent piece of legislative garbage, that had no bipartisan support — much less the majority of support from the American citizenry.

    That’s what is ridiculous.

    Check Harry Reid’s trash can — there are dozens of reform proposals and fixes in it from 2009-to now.

    And the fallacies of the law are now affirmed by a president who changes its attributes at will through executive orders.

    It’s a disaster for all to see — who are willing to to see truth.

  • ohmy

    Lonetree — did anyone ask you about what you think about the healthcare law?

    I think the author was trying to make the topic “non-political” — but you made it about something else.

    You will, then, feel the fire.

    You should, because you look like a fool. This isn’t a political blog, it’s a blog about travel and airline mileage.

  • dmbas

    voeters “wanting healthcare reform” is far different than what we got with Obamacare!!

    Few wanted this piece of sh#t, and our lousy, corrupt and bankrupt government running it either.

    Please grab a f*kcing clue, Lonetree.

  • flyf

    wow – Lonetree — please give your politics a rest.

    Frankly, I don’t give a flying f*ck what you think about Obamacare.

  • gee

    So here we have it… another Obamacare supporter…feeling the need to infest everything with political opinion.

    While I know it’s due to desperation. ..Please spare me. I’m here for travel info… not your uninformed opinions on health care policy.

  • Jason

    Anthem will allow you to make any size payment you want. For example I paid them 3 months just to save the frustration of calling every 30 days.

  • tiffany

    I am new to this and am hoping for some tips on which card(s) to use when paying for some upcoming medical procedures charges (about $25k).

    I am already a member of AMEX Premier Reward Gold (long time cardholder; have only charged $7197 YTD so still a ways to go from $30k spend to get 15k bonus points), Chase Sapphire Preferred (long time cardholder so only have the 7% annual bonus every Feb), Amex Everday (just joined last week and have already used $1000 to get the 10k points), and Barclaycard Arrival (just joined last week and waiting for the card to arrive; plan to put at minimum $3,000 on it so as to get the 40k bonus miles).

    Should I put the rest of balance on AMEX Premier Reward Gold so as to get the 15k bonus points? Or should I be using Barclaycard Arrival to get 2 miles per dollar spend? Or is there another credit card (Starwood AMEX, Citi Thankyou Premier, etc.) I should be signing up to take advantage of signup bonuses?

    As a side note, we don’t travel much but do spend on groceries regularly and dine out on the weekends. Majority of our spending are in the other than gas/groceries/travel/dining/entertainment categories.

    Thanks in advance.

  • thepointsguy

    I’d personally hit the spend threshold on the Premier Rewards Gold

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