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.
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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Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
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