Managing unexpected medical bills
With medical costs growing across America, there is little doubt an unforeseen trip to the emergency room or a hospital admission can severely stress family finances. For most, tending to matters of healthcare is not optional, because failing to address an issue can result in consequences far worse than a strained budget.
Whether you have a child with a broken arm, or someone in your immediate family requires hospitalization for treatment of a life-threatening illness, getting well — not cost — is the primary concern.
When the bills start showing up…
As bills roll in, patients and their families realize how quickly total obligations can escalate. The good news is, insurance plans have a set limit on the amount of money you pay out-of-pocket for medical expenses in a given year. That’s not to say that paying your bills will be easy, but insurance helps make it much more tolerable and there is a ceiling on your obligations.
Planning ahead can be a tremendous help
If you are eligible – and not everyone is – health savings accounts (HSAs) and flexible spending accounts (FSAs) offer viable ways to save for the proverbial “rainy day.” Such accounts are financial instruments through which one may contribute pretax dollars for the purpose of covering future medical expenses.
In 2017 an individual can contribute up to $3,400 to an HSA and $2,600 to an FSA. Some employers will provide varied amounts of matching funds to encourage their workers’ participation. An HSA account can be maintained and used indefinitely, even if a person becomes ineligible to contribute further, while money in an FSA must be used for qualified medical expenses by the end of the year in which the funds were set aside.
If money held in an HSA or FSA is used to pay for medical expenses it can be withdrawn tax-free, and the incentive is strong to make sure it is applied correctly. If HSA or FSA funds are used for non-medical purposes, withdrawals are subject to taxes and penalties.
If you are not eligible for either of these accounts you should consider establishing a savings vehicle that you dedicate to paying medical expenses.
You may also have to pay for elective surgeries and procedures that are not covered by your insurance. Whether it is a separate account or simply money you hold in an existing account and make off-limits for all but medical costs, saving today to pay for the unexpected tomorrow is a wise use of your funds.
When you’re short of funds
What if you incur medical expenses and don’t immediately have funds to pay after insurance has settled? A good credit record can make it much easier to set up payment arrangements for out-of-pocket medical expenses. Lenders like LightStream look not just at your credit score, but at your total financial picture. Many patients who have a track record that demonstrates they repay loans in a timely manner can borrow funds necessary to pay the portion not covered by insurance. Such loans can be obtained at competitive rates and terms that won’t leave borrowers feeling cash-strapped.
In addition, some healthcare providers will consider working out repayment plans if you are proactive and inform them of your financial situation. In other instances, healthcare practices may even allow short-term repayment plans without interest or penalty if certain stringent requirements are met throughout a specified timeframe.