By Britt Johnsen and Emily Hulstein
We at Trig know healthcare can be super expensive. That’s one of the reasons we created Trig in the first place; we want healthcare to be less overwhelming and more manageable for you.
With the right information, that’s possible.
So today’s blog post explores several ways you can prepare for healthcare costs. Sure, surprises come up, but you can keep those surprises tame with these tactics.
Budget like a pro. When you sit down to budget, be sure to track the last year’s medical expenses. This will give you a better idea of what you could face in the coming year. You can use the number as a starting point to for how much you should budget in medical expenses for this year.
Don’t know what your past expenses look like but need a place to start? Think realistically about what your annual healthcare costs may look like. You will want to be sure to include recurring costs like your insurance premiums, co pays and prescriptions, and then budget those into your expenses accordingly. You will also want to think carefully about any planned, or potential, procedures you or a family member could need in the coming year. This will help to make sure you don’t get backed into a corner, surrounded by medical expenses that you can’t afford.
Look around for a budgeting tool that works best for you. You can find various tools online to help you with this process. Some are even free. You can also sit down with an accountant to receive expert advice.
Expect the unexpected. One way to do this is to create an emergency fund. You can’t predict the future, so help yourself prepare by putting money aside. This is especially important if you’re on a high-deductible health plan. You don’t want to find yourself unable to pay for your medical expenses and piling up debt, so use your deductible and out-of-pocket maximum as a starting point of how much you should save. This emergency fund will also be beneficial should you lose your job; it will help you from immediately dipping into savings.
Save like a pro. Both health savings accounts (HSAs) and flexible spending accounts (FSAs) are great for setting aside money for healthcare expenses.
HSA: These are pre-tax accounts that can be used towards qualified medical expenses. They are intended to help you prepare for and pay out-of-pocket healthcare costs. Typically, these plans are paired with a high deductible insurance plan. One advantage of an HSA is that the money in the account rolls over each year, so it accumulates over time.
So how much should you save? As much as you can! Any excess not used for medical expenses can be used as an extra retirement fund that you can use for any purpose — not just medical expenses.
FSA: These operate like HSAs – but the difference is that the money in these accounts must be used within the year or it goes away. When it comes to an FSA, it is better to over-estimate than under-estimate your costs, since they disappear at the end of the year. Therefore, there is no reason to wait on pulling money from your FSA. If an expense occurs, don’t hesitate to pay out of this account.
Get great coverage. Get a health insurance policy that fits your needs. Find a policy that covers the areas where you will need coverage. Insurance plans are typically not one-size-fits-all, so take the time to look around and find a plan that has coverage where you need it most.
For example, if you’re pregnant or plan to get pregnant, you’ll want a policy that has good pre-natal, maternity and newborn care coverage. Or if you know you need or may need multiple medications, get a policy with good prescription drug coverage.
Also, be sure to pay attention to a plan’s annual out-of-pocket maximum. This is the most you can be required to pay for healthcare in a year. When looking at plans, you will want to make sure that this is a number you are comfortable with.
Get even more coverage. Supplemental insurance plans are policies that help you pay for things that your regular health insurance plan doesn’t cover. The benefits are paid directly to you, not the medical provider. That means you can use the benefits to pay for out-of-pocket costs, supplement lost wages, or pay for some of the other unexpected expenses due to illness or injury.
Depending on your situation, buying supplemental insurance may be a good choice to ensure additional coverage at the cost of a monthly premium.
Be proactive with preventive medicine. Although some things are out of our control, there are certain preventive measures we can take to help protect ourselves. The great news is that many of these things are fully covered by your insurance! Don’t skip your annual check-up, for example. These are completely covered and can help detect problems before they become bigger issues. It’s important for you to remember that most of these preventive services are only covered once a year.
Trig offers tools to show you what preventive care is covered under the Affordable Care Act. We also have a great tool for you to track your doctor’s visits, and any notes from those appointments. Check them out here.
Now it’s your turn. How do you prepare for healthcare costs? Do you have veteran advice, or questions?
Let us know in the comments.
If you found this article helpful, please share with friends and family. The smarter we can all be with our money, the better off we will all be.