Your Guide to Budgeting for Healthcare Costs
Adults often feel the pressure to act financially responsible. It’s easy to think that health insurance will cover the majority of medical-related costs and therefore may be overlooked in your budget. A copay here or deductible there, isn’t much to fuss over, right?
Well, that might not be entirely accurate. Medical expenses should be one of your top budgeting priorities, with out-of-pocket expenses on the rise and the always present risk that an unexpected medical cost could put a ding in your spending plans. Even if your health insurance kicks in to cover an expense, your budget for healthcare costs should still include your premiums.
To better plan for healthcare costs, consider these 5 steps:
- Put Your Health at the Top of Your Priority List
Once you’ve estimated your annual healthcare costs, consider how you prioritize them against your other essential expenses. Healthcare should ideally fall between necessities like your mortgage or rent, food, transportation, and phone. By adjusting your mindset to give your health the significance it deserves, budgeting for medical expenses will become second nature.
- Set Up An Emergency Fund
An emergency fund is an account that is set aside to help cover unexpected financial or medical emergencies, such as a procedure or medication that is not fully covered by your insurance plan.
Experts typically recommend saving at least three to six months of living expenses in your emergency fund so you can pay for these expenses without having to take on debt or dip into savings earmarked for other financial goals. However, if you are starting an emergency fund from scratch, it’s better to start small and focus on a goal that’s attainable for you.
- Take Advantage of Health Savings Accounts
There are special health savings accounts that are funded by you or your employer that can help cover your health expenses and plan for healthcare costs.
3 Common Health Savings Tools to Consider:
- A Health Savings Account (HSA)
- Health Reimbursement Arrangement or a Health Reimbursement Account (HRA)
- Flexible Spending Account (FSA)
- Evaluate Health Insurance Choices Carefully
To budget for healthcare costs effectively, you should take time to evaluate your health insurance options to find the best plan for you and your family. For each plan, you’ll want to carefully consider the type of plan (are your preferred doctors, hospitals, and pharmacies covered?), as well as the cost of premiums, deductibles, copays, and prescriptions.
Start Budgeting for Your Healthcare Costs Today
When it comes to budgeting for medical expenses, a little planning today can go a long way toward providing for a more financially secure tomorrow. With a healthcare budget firmly in place, you’ll be able to make better decisions that are good for your health and your wallet.
