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Four Ways to Plan for Unexpected Medical Expenses

No one expects to face a medical emergency, but it’s important to plan for one. If you or a family member has a health scare, whether the issue is major or minor, the related expenses could wreak havoc on your personal finances. 

Don’t let an unplanned medical bill erase the progress you’ve made in eliminating debt and building your savings. Here are four steps to take to help plan for unanticipated medical expenses and minimize their impact on your budget. 

1. Shop around for affordable insurance

Getting health insurance is one of the best ways to protect you and your family from surprise medical bills. Should an emergency occur, you would be able to rely on your insurance to help cover expenses. A visit to the emergency room can cost several thousand dollars—even for a minor medical issue. This could be financially devastating if you don’t have any insurance at all.

If you aren’t able to buy an inexpensive group plan from your employer, call around and ask different providers for insurance quotes on individual or family coverage. Many websites, such as eHealthInsurance.com, offer quotes from a number of different providers, so you can conduct one-stop shopping. You could also call an insurance broker for help. 

If you’re in relatively good health and don’t have recurring medical expenses, like frequent doctor visits, consider buying an affordable high deductible health plan (HDHP). These insurance policies have very low premiums when compared to traditional policies, so it’s usually easier to make payments. 

However, these plans also have high deductibles—as the name implies. An Atlanta Journal Constitution article on HDHPs reports that deductions regularly range from $1,000 to $5,000. They also require you to pay a larger share of minor healthcare costs, such as ongoing office visits and prescription drugs. To help save money to pay for the deductible and any out of pocket medical costs, you can open a tax-advantaged Health Savings Account (HSA).

2. Investigate Health Savings Accounts (HSA) 

An HSA can be thought of as an emergency fund for healthcare costs. These accounts are held at financial institutions, and they allow you to save a portion of your pretax paycheck in a special account that’s used to pay medical bills. When you incur an unexpected healthcare expense, you can use the funds in the account to pay your costs—a much better option than going into debt. 

In order to open an HSA, you have to be enrolled in a qualified health insurance plan that has a deductible of at least $1,200 ($2,400 for a family). Money in these accounts can be rolled over from year to year, so if you don’t use all the cash in your account, it will continue to grow tax-free. Once you reach retirement (when your medical needs are likely to be at their highest) you could have a comfortable fund to tap for medical costs. 

To find a financial institution that offers these accounts, contact local banks and insurance companies in your area. Be sure to ask about any fees they charge to open and maintain an account. Then shop around for the best deal. Employers that offer high deductible health plans may also have relationships with banks that provide HSAs, and they may even waive some of their fees if you open the health savings account with their institution. 

3. Research assistance programs

Even if you don’t have a pressing healthcare problem now, make sure you’re familiar with the types of programs that could help you should you have a medical emergency. 

There are many local and state government plans that are designed to assist eligible participants with hospital payments, office visits, and prescriptions. You can find information about them at healthcare.gov

Several states also offer programs that provide health insurance to eligible children who are under age 18. To find more information on plans in your area, visit insurekidsnow.gov or call 1-877-Kids-Now (1-877-543-7669). 

In addition to learning about public programs, become familiar with local charities and religious organizations in your area that could lend a helping hand if you faced a healthcare emergency. Take time now to understand their requirements, so you know whether or not you’d be eligible for them if you need medical help in the future. 

4. Know who to call for help with debt

Sometimes even the most advanced planning won’t prevent a medical catastrophe, and if it happens in your family, you could be faced with a financial catastrophe, too. 

If your medical bills are too high, and you find yourself in debt, don’t face the challenges alone. A reputable debt relief provider, like CareOne Debt Relief Services, can help you explore options for getting out of medical debt, including negotiating a settlement or setting up a manageable monthly payment plan. 

Budgeting and planning is all about being ready for the unexpected, especially when it comes to medical expenses. By shopping around for affordable medical coverage, estimating your potential medical needs, and knowing who to call for assistance, you can help keep surprise healthcare concerns from ruining your finances.

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