When you are sick, the last thing you want to worry about is how to manage unexpected medical expenses. But that’s the reality for millions of Americans every year, and at some point it’s something everyone will likely deal with.
Here are three things you can do to help budget for the unexpected.
1. When possible, plan ahead.
Unexpected costs will always come up. Whether it’s vehicle expenses, home repairs, travel or medical expenses, saving ahead of time can be set up with simple savings accounts. Establish individual savings accounts for each of these variable areas of life that you want to be prepared for. Some online banks, like Capital One or Ally, will allow you to open up to 25 different savings accounts, all with no fees. You can change the nicknames to reflect the category you are saving for, and contribute consistently to these accounts each month, so the money is there when you need it. Look for accounts that don’t charge you unnecessary fees and that offer interest so that your money can grow while sitting there.
2. Find Your Pre-tax options.
When it comes to medical expenses, find out if your employer offers an FSA or HSA. If either of these is an option, consider maxing out your contributions, especially if you will likely meet your out of pocket deductible (or have a high deductible health plan). By taking advantage of these accounts, you get to pay for medical expenses with pre-taxed dollars, which essentially means you are getting a 15-25% discount on your medical expenses. FSA and HSA accounts have different rules about how much you can carry over year to year, so be sure to do your research and talk with your HR department or a financial professional if you need help. If you do have a high deductible plan, your employer likely will direct you to their preferred HSA, but you can also check online or with your local bank to find the best HSA option for you.
3. Call & Ask.
Often times hospitals, outpatient clinics, and home care facilities will have special programs for those who stop and ask. Patient assistant programs are set up for those who express financial hardship. You may be asked to fill out paperwork and provide additional financial documentation, but it’s well worth doing so, as it could greatly reduce (or in some cases even waive) your entire out of pocket expense. The same goes for prescriptions. Ask your pharmacy if they offer programs for co-pay assistance. Many medical offices and facilities will also reduce pricing for cash pay patients or those who are able to pay in full up front. Asking for a cash pay price could potentially result in a 20% discount off of your bill. This is often due to the high volume of bills they have to send out to collection agencies. Collecting payment in full is a win-win, as it saves both them and you money in the long run. Patient assistance programs are there to help those with financial hardship, but compliance dictates that the patient must first express a medical hardship before the patient assistance can be offered. Moral of the story is to always stop and ask.
Special thanks to Jill Emanuel, lead financial coach with Fiscal Fitness Phoenix, for being a community partner to The Singletons and providing us with these tips. For more tips, check out the Fiscal Fitness Podcast (on iTunes, Stitcher or anywhere you listen to podcasts), the Fiscal Fitness Facebook Group, or if you are looking to be more intentional with your money, learn more about how Fiscal Fitness can help by clicking here.