Advice for Handling Healthcare Bills

The expense of health care is still high and erratic, and many people cannot afford it.

According to a Federal Reserve Board of Governors poll, 28% of adults in 2022 did not receive any medical care because they could not pay it. Additionally, 23% of people reported experiencing an unanticipated medical episode in the previous year, with a median expense of $1,000 to $2,000.

There are things you can do to lessen the impact that medical expenses have on your life and your budget if the idea of such an expense worries you about your financial situation.

To better control your present and future medical costs, adhere to these five steps:

1. Establish an Emergency Reserve

Being able to pay for an unforeseen medical bill or other unforeseen expense is made possible by having an emergency reserve that is three to six months’ worth of expenses in a liquid account. If that sounds like a lot, consider putting aside a smaller sum every month, perhaps as little as $25 a week. You won’t believe how rapidly your savings stack up after you establish that habit.

2. Pick the Appropriate Insurance Package

Selecting your health insurance plan is one of the most crucial choices you can make when it comes to controlling medical costs. During open enrollment, make sure you weigh all of your options to choose which plan best suits your family’s needs.

The entire possible out-of-pocket expenses, including premiums and deductibles, your family’s medical demands, and whether your preferred physicians are in-network are all factors to take into account.

3. Look for Yourself

While leading a healthy lifestyle can lower the risk, it won’t guarantee an expensive medical incident won’t happen.

Receiving the proper preventive treatment is another aspect of taking care of oneself. Annual physicals and cancer screenings are examples of preventative care that most insurance plans are required to cover in full.

In the long run, receiving this kind of care can save you money since your physician can identify and manage risk factors that, if unchecked, could result in expensive surgery or medicine.

4. Benefit from Tax Breaks

Your employer may also provide you with access to a health savings account or flexible spending account in addition to health insurance. Both allow you to save money (before taxes) for qualified medical costs.

The annual rollover feature of HSAs—which are only accessible if you have a high-deductible health plan—allows you to use the account to save for future medical costs and avoid paying taxes on the growth of your investments.

But remember, at the end of the year, you forfeit any money that was not spent in an FSA account.

Additionally, you might be eligible to write off medical expenses if they exceed 7.5% of your income and you itemize your taxes. However, this does not apply to medical costs that you have paid for your FSA or HSA funds.

5. Make Future Plans

As crucial as it is to take care of your health and medical bills today, you also need to have a plan in place for potential future health care costs.

By maximizing your HSA and setting aside as much money as you can for your retirement, you can get ready for them. The cost of treatment in a nursing home or rehabilitation center may be lessened if you get long-term care insurance.