Two years ago, Qing’s uncle suffered a stroke that paralyzed the left side of his body. He was taken to hospital by ambulance, given anti-clot medication and spent several weeks in the intensive care unit. Then, after months of rehabilitation, he finally regained the use of his arm and leg. His family felt relieved that he recovered without any long-term disabilities; however, the process left them with a pile of medical bills that they still pay to this day.
While we can’t predict when something like a stroke is going to happen, we can plan and prepare for common and unexpected medical expenses so they don’t completely derail our finances.
Know your insurance
Previously, we talked about evaluating medical insurance and choosing among the different plans. We want to reiterate the importance of understanding your insurance, including which providers and facilities are in- and out-of-network, which services are covered fully, partially, or not at all, and how much of the cost of care you are responsible for. Insurance companies are required to provide a plain language summary of benefits and coverage, which you can access from the online member portal, through the Human Resources office (if you have sponsored plans by the employer) or by calling the number on your insurance card. . When you see a new provider or schedule a procedure, call your insurance beforehand for a cost estimate and check to see if any additional steps (eg, pre-authorization) are needed to secure coverage. Knowing your insurance will eliminate surprises and keep much of the care process under your control.
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have a budget
Routine health care expenses include insurance premiums, deductibles, co-payments and coinsurance. You can anticipate these amounts based on the number of providers you see and the number of prescriptions you take. If your overall health is stable, use the amount you spent last year as a guide.
Also, build up an emergency fund in case you are struck with a sudden illness or accident. The goal amount should correspond to one year of the maximum paid by your family. Save a little each month in a dedicated account and don’t touch the money except for healthcare needs.
Take advantage of savings vehicles
If you have a high-deductible health insurance plan, you qualify for a health savings account. Contributions are tax-deductible and the investment grows tax-free, as long as withdrawals are for future healthcare expenses; any unused balance is carried over from year to year. Some employers link contributions to HSAs, so take advantage of this if offered.
Another common vehicle is a flexible healthcare spending account (FSA), which is set up as “use it or lose it”. The fund is allocated from your pre-tax earnings, but you must spend it by the end of the year. Items eligible for health FSAs include not only the usual expenses, but also eyeglasses, hearing aids, over-the-counter medications, and a variety of drugstore purchases.
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Critical illness and hospitalization insurance
Employers may offer these plans or you can purchase them separately or as part of a life insurance package. They pay a lump sum if you are diagnosed with a serious illness, including cancer, stroke, and heart attack, or if you are hospitalized for any reason. Most employer-sponsored plans are guaranteed issue, while individual plans likely require a medical exam and underwriting. Some exclude pre-existing conditions; for example, if you have known coronary artery disease, you will not be paid for a heart attack. While these plans can provide a cushion against unforeseen disasters, their usefulness depends on your likelihood of experiencing such an event, which you can estimate with online calculators by entering your age, gender, lifestyle habits, and chronic illnesses. .
Keep track of your expenses
Save all your medical bills and health-related receipts for several reasons: (1) You must submit them for reimbursement with the HSA or FSA; (2) Medical expenses exceeding 7.5% of your adjusted gross income are exempt from tax and you must list them on itemized deductions; and (3) Having a clear idea of your expenses helps you budget better in the future, reducing the amount of stress in your life, thereby increasing your physical, mental, emotional, and financial health!
Qing Yang and Kevin Parker are married and live in Springfield. Dr. Yang received his medical degree from Yale University School of Medicine and completed his residency training at Massachusetts General Hospital. She is an anesthesiologist at HSHS Medical Group. Parker has helped formulate and administer public policy for various city and state governments across the country. He previously served as Group Information Director for Education at the Illinois Department of Innovation and Technology. This column is not intended to replace professional medical advice, diagnosis or treatment. The opinions are those of the authors and do not represent the views of their employers.