Personal Finance

Medical Expenses: How To Prepare For And Afford Them

medical expenses

Medical expenses is the top reason for U.S. bankruptcy filings, even though many in those filings had health insurance. So affording medical expenses is not only a concern for the uninsured. Now that most Millennials must take care of their own medical needs, as they have aged off their parents’ health insurance, how can they prepare for and afford their medical expenses?

How To Prepare For Your Medical Expenses: Understand How Health Insurance Works

It’s a given you need health insurance so I’m not going to tell you to get it. However, I will tell you in order to prepare for your medical expenses you must understand how your particular plan works.

You may have one of the following health insurance plans:

  • Preferred Provider Organization (PPO)
  • Health Maintenance Organization (HMO)
  • High Deductible Health Plan (HDHP) with a Health Savings Account (HSA)

I won’t go into the differences of each as you can check out this website or this one for detailed explanations. Whatever plan you have, you need to review its summary to learn about the following:

  • Your co-pay
  • The amount of your deductible
  • Your out-of-pocket maximum

Many people go to the doctor and don’t understand what they are responsible for regarding payment. This, in turn, puts you in a bad spot because you’re uninformed. You allow the doctor’s staff to check your benefits and tell you the costs. The staff verifies your health coverage is valid and how much they can charge, not how much money they can save you.

Finally, you don’t have to go through this alone. You can call your health insurer and have your insurance details explained to you. Their customer service agents are trained to explain how your plan works and what costs you have to cover.

How To Afford Your Medical Expenses: Save Up Money

Upon learning about your share of your medical expenses, you can now save those amounts.

Co-pays can be easy to save up for, as these aren’t large amounts, unless you need to see a specialist or need to go to the emergency room. A co-pay can range from $10 to $50, depending on the type of appointment or type of doctor.

What may take longer to save up for is your deductible. Depending on your plan, your deductible could be as low as $500 or several thousands dollars. This is where many people take on debt because they need a procedure and have to pay their deductible.

Finally, the hardest portion to save to pay for your medical expenses is the out-of-pocket maximum. This kicks in after you meet your deductible. Basically, this is the most you will pay for your medical expenses for the calendar year. However, your out-of-pocket maximum is usually several thousands dollars. Some plans may have a $10,000 maximum. Thus, you can see why many people get into debt. Especially if they have a chronic illness or need extensive emergency care.

How To Afford Your Medical Expenses: Consider CareCredit

Another avenue to afford medical expenses is to use CareCredit. While I don’t always advise people to take on debt, CareCredit can be a valid option instead of draining your savings for a medical procedure.

My biggest problem with using CareCredit is if you need a longer financing option. As a result of that option, you would have to pay a high interest rate. However, if you can pay off the balance before the end of the promotional period, you won’t have to pay any interest.

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