While health care spending isn’t the biggest component of most household budgets, it’s still a significant monthly expenditure.
In September 2013, The Atlantic published information from the Bureau of Labor statistics, indicating that Americans spend 7% of their monthly income on health care. Their latest press release (September 2014) on the subject of consumer expenditures in 2013, indicates that household spending on health care increased by 2.1% from 2012 to 2013.
Health care spending continues to rise, and Americans are paying more out of pocket as many employers shift some of the costs to workers through co-payments, co-insurance, and deductibles. Many companies are pushing high-deductible plans for employees, since it means lower premiums all the way around.
With health care costs likely to keep rising, what can you do to keep these costs from overwhelming your budget?
Protect Yourself from Medical Debt
Stephen Lesavich is an attorney and credit card expert, and the co-author of The Plastic Effect: How Urban Legends Influence the Use and Misuse of Credit Cards.
He offers some suggestions for reducing the chances that medical costs will overwhelm your budget:
- “Make sure to have medical insurance,” says Lesavich. This is your first line of defense, especially in cases where you have a long hospital stay, large accident, or expensive illness.
- When choosing insurance, Lesavich suggests choosing a plan with a premium and deductible you can afford.
- “Create an emergency fund that you can use in case of a medical emergency, and in case your insurance plan does not cover the expenses you incur,” he continues. This is a good plan, since you might have a high deductible. Your emergency fund should be able to cover your deductible. Additionally, in some cases, your portion of responsibility might be high. When you are responsible for 20% of $50,000, that’s still $10,000, and can be difficult to handle. Your emergency fund can help.
- Lesavich suggests reviewing your plan before agreeing to medical services. You want to make sure your plan covers the service — and that the provider is in your approved network of doctors and physicians for best results.
- “If your medical insurer denies coverage something, and many do, be persistent,” says Lesavich. “Make them pay for what is covered in your policy.”
- Review your hospital or other health care bill. Ask for an itemized bill. In many cases, there are errors on bills and you don’t want to may more than you have to.
- “If you get in a situation in which you cannot pay your medical bills, contact the doctor or hospital right away and negotiate a payment plan you can afford,” Lesavich says. “Virtually all doctors and hospitals will accept a payment plan.”
Reduce Medical Costs
Protecting yourself ahead of time can be a big help when it comes to health care costs. However, there are cases in which a large medical emergency — even when you have health insurance — can result in financial devastation. Lesavich says sometimes bankruptcy is the only option.
In fact, medical bills are often the final straw that results in personal bankruptcies according to recent data, and many of those who file actually have health insurance.
However, you can protect yourself to some degree. Do your best to buffer your finances against medical costs, and follow these expert tips, so you stand a better chance of avoiding financial catastrophe.
How do you deal with medical costs and piling debt from medical needs?
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I am shocked that the US don’t have free health care, seems a bit trivial and I am just lucky I live in the UK. The NHS are amazing.
We buy a generic drug from Canada. It saves us about $2000 after insurance.
We use Northwest Pharmacy website.
I recently found out, to my dismay, that if you use a lab that is affiliated with a hospital the bill may be twice as high as an independent lab. My ultrasound was
literally twice as expensive as the lab across the street. So I have to pay $650 out of my pocket.
I am now going to check on a website to see where is the cheapest lab to get work done. Your insurance company can point you in that direction.
You have to be your best advocate. There’s no one looking out for a patient it seems these days.
Great tips here. It’s definitely true that it’s best to try and keep one’s health solid and detect problems early so that expensive emergency hospital visits aren’t needed. Thanks for sharing.