Healthcare Budgeting: Planning for Essential Medical Expenses

Coming up with a health care budget is an important part of your financial life. Health care expenses are one of those things that you can not do without. It makes sense to budget it into your finances before you need it. Here are a few things to consider about budgeting health care into your life. 

Health Insurance

The first thing that you need to consider is health insurance. While no one likes paying those premiums, it is a necessary part of the process of staying on top of your finances. The purpose of health insurance is to protect you from catastrophic bills. Although having a low copay and a great drug plan is nice, this is not the main purpose of what health insurance is designed for. 

Health insurance makes it possible to budget for your medical expenses. You pay your monthly premiums and then you have a yearly deductible as well. On top of the deductible, you will have a coinsurance amount that you may have to pay. The coinsurance maximum and your deductible is the most that you would ever have to pay for medical expenses. Therefore, if you are in a car wreck and have to have a life saving operation, the amount of money that you have to pay will stop at a certain point. Your objective should be to save enough money in advance so that you can afford the deductible and coinsurance maximum. 

With the high cost of health care, not having insurance could easily bankrupt you if something bad were to happen. You could rack up bills of well over $100,000 on a life saving surgery and rehab. Purchasing health insurance can protect you from these catastrophic events and keep you on your feet financially.

While you might save a few hundred dollars per month by not paying for health insurance, you could lose a lot more than that if something were to happen unexpectedly.

Health Savings Account

One of the best ways to budget for health care expenses is to utilize a health savings account. A health savings account can be set up at any financial institution for the purpose of saving for qualified health expenses. Health savings accounts allow you to make tax deductible contributions to the account and then use that money for health expenses. You can put aside a maximum of $5000 each year towards your health savings account. This type of account is only available to those that have high-deductible health insurance plans. 

You could potentially save up enough in your health savings account to pay for your deductible each year. This would make it possible to never have to come up with any money out of pocket for medical expenses. You can just use the money out of your health savings account until you get to the deductible and from there, the health insurance company will pay for everything.