Unexpected Medical Expenses: How You Can Prepare Today

• By Bethany Johnson, Guest Contributor
• September 8, 2015
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If you’re like most people, you’d say that credit card debt or mortgages are to blame for most of the country’s bankruptcies. But unfortunately, the reality hits a little closer to home. According to a study published by CNBC, the number one cause of bankruptcy filings in America is unpaid health care bills, and almost 75% of those hapless (and now-bankrupt) individuals had health insurance when they needed care.

That’s the bad news. The good news is you’re not powerless. Medical expenses are in everyone’s future, and while you can hope your need for health care is a long time away, it’s wise to take steps today to prepare.

Insult to Injury

The reason medical bills cripple so many unsuspecting people is because of the temptation to borrow funds to pay them. In an ugly cycle, those who can’t pay tend to cave under the pressure of unpleasant late notices (and even debt collectors), paying at least part of their medical bills with a high-interest credit card that only postpones their problems, offering no long-lasting solution.

Thankfully, you can take steps today to ensure you’re never in that position.

Here are the best ways you can prepare financially for unexpected medical bills.

Taste of Your Own Medicine

First, do a little research.

• Start with a list of your in-network preferred providers if you have health insurance. When an emergency arises you won’t have time to think about the smartest place to go, so do your homework today. Then, when you’re given care, you won’t be hit with a bill you didn’t see coming.

• Be sure to know whether Urgent Care is a better out-of-pocket financial option than the Emergency Room on your policy. Keep in mind that many doctors (and imaging specialists, and pain management specialists, etc.) at the hospital are subcontractors, which means they’ll be sending you a separate bill weeks after you’re on your way to physical recovery.

• Call your county’s health department to see what income requirements need to be met before benefiting from the services they provide. Then, get a list of what benefits they supply and post them in a prominent place at home.

• If you’re employed, consider enrolling in your company’s short-term disability plan today. To be extra prepared, ask about their long-term disability coverage as well. These two benefits reimburse you for wages lost while out of work.

A Spoonful of Savings Helps the Medicine Go Down

Knowledge is great, but the best way to prepare now for future medical expenses is to save. Phone your employer’s human resources department to ask about their flexible spending account, or “FSA.” This gem of a benefit takes pre-tax dollars from your paycheck and sets it aside for you in a safe place, just right for the proverbial “rainy day”. If your company has an FSA-matching benefit, max it out.

If you’re not employed, save as much as you can set aside for future medical expenses, but at the very least, keep your deductible amount in a savings account.

Prevention is the Best Medicine

The best step you can take to position yourself financially for unexpected medical expenses is to acknowledge that emergency care is most likely in your future, no matter how healthy you are today. Some people have more time to prepare than others, but everyone can take these steps to be ready.

The team at CESI is committed to helping you make wise financial decisions and to helping you understand how to get out, and stay out of debt. For a free debt analysis, contact us and find out how we can help.

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