Being in good health is priceless, but there can often be a personal financial cost to looking at your healthcare. Each year, more than half a million Americans file for bankruptcy due to medical bills, which is the number one cause of bankruptcy in the country.
Even in cases where bankruptcy is avoided, dealing with expensive medical expenses can have a broadly negative impact on an individual’s quality of life. People who carry medical debt often say that they have to cut down on other essentials, such as clothes, food, and household items, to pay their bills. That’s why it’s important to learn how to protect your finances from medical expenses through smart planning, insurance coverage, and proactive savings strategies.
The issue with medical-related debt is that it’s often taken on unexpectedly. You might choose to take on debt to buy a property, but when it comes to healthcare, it’s usually a “needs must” situation.
There are some effective strategies that can help to protect your finances, both ahead of time and when you’re in the middle of treatment. We’ll run through some of the most effective strategies below; take them on board, and you’ll be in a much stronger position to keep your finances intact during both healthy periods and when you have an issue.
Check Your Insurance
Even people with insurance can find themselves in financial hardship due to medical issues. In fact, the majority of people who carry medical debt are those with insurance. This usually happens because the insurance isn’t extensive enough to cover the level of healthcare that the individual requires.
Taking a close look at your insurance to identify what it does and does not include is key to avoiding unexpected, nasty surprises. It also allows you to bridge the gap by obtaining more insurance if necessary. Also, keep in mind that working with in-network healthcare providers is the easiest way to keep costs under control, and that some insurance policies offer preventative services that can help to reduce how much healthcare you require.
Build Your Emergency Fund
As we said above, even people with health insurance can find themselves with medical expenses to pay. Unless you have iron-clad insurance, it’s likely that you’ll need to pay something at some stage.
You can’t always avoid paying, but you can avoid how much it impacts your personal finances by setting up an emergency fund. This fund, which should be separate from your other savings accounts, can be used to pay for any surprise expenses. In doing so, you can avoid using your credit cards or other savings to pay for treatment. It’s recommended to have the equivalent of three months of living expenses in your emergency fund, but it’ll be even better if you can have six or more months’ worth set aside, especially if you’re at-risk for health conditions.
Take Action Early
It’s much easier — and cheaper — to treat a medical condition when it’s still at its earliest stage, rather than waiting until the condition becomes more pronounced. Many people delay visiting their healthcare professional when they have an initial symptom because they hope that it will go away on its own. When it doesn’t, they’re often required to pay more to receive healthcare that may have been easily treated had they visited at the first sign of symptoms.
You can also reduce your healthcare costs by reducing the risk of experiencing issues in the first place. People who follow a healthy lifestyle have fewer healthcare requirements. Plus, looking after yourself by exercising, eating well, and getting enough sleep each night can also just more broadly lead to an increase in happiness and a reduction in stress. It’s a win-win situation, essentially.
Consult With an Expert
In some cases, working with experts can be an effective way to reduce your healthcare-related expenses. For instance, if you have incurred healthcare costs for conditions and injuries that were not your fault, then you may have a claim for compensation. People who have work-related health issues, such as asbestos-related mesothelioma or lead poisoning that can cause lead encephalopathy, can work with a mesothelioma attorney specialized in asbestos cases or a lead poisoning attorney specialized in lead exposure cases to get the compensation they deserve.
You may also be able to claim compensation if you’ve been injured in public spaces, too, such as if you slipped in a store and suffered a fracture. Even if you’ve already paid some healthcare-related costs for conditions and incidents caused by others, it’s still worth getting in touch with an expert, since you may be able to retrospectively make a claim before the statutes of limitations take effect.
Negotiating Bills
It can be disconcerting to receive a higher-than-expected bill following treatment. However, it’s important to remember that the bill you receive doesn’t necessarily have to equal the amount of money that you’ll pay. In many cases, you’ll be able to negotiate your bill down to a lower value. Most healthcare providers are happy to reduce medical bills if you have valid grounds for asking for a reduction, such as comparing the amount they’re charging with the standard rate or explaining your financial situation.
Shop Around
There can be a significant difference between the cost of medical services and treatment. Shopping around to find the best price, rather than automatically accepting the first quote, can lead to significant savings. If you have recurring medication costs, ask your provider if there’s a generic version available — they’re much cheaper than brand-name drugs.
Long-Term Care Planning
Finally, remember that even if you’re currently fit and healthy, there can be a lot of value in thinking about the future. There’ll come a time when you’re more likely to experience health issues, and in many cases, it can be what you do now that determines how equipped you are to take them in your stride. Many Americans underestimate how much they’ll need when they’re in their retirement years, which is a period when living and healthcare costs can increase significantly. While it’s important to enjoy what today brings, spending some time thinking about and planning for your long-term future can ensure you can navigate it well when that moment finally arrives.
Final Thoughts
Medical expenses are unpredictable, but they don’t have to derail your financial well-being. By reviewing your insurance, building an emergency fund, adopting preventive health habits, and planning ahead, you can protect your finances from medical expenses while maintaining peace of mind.
Taking proactive steps today ensures you’re better prepared for whatever health challenges tomorrow may bring.
FAQs: How to Protect Your Finances From Medical Expenses
What is the best way to protect your finances from medical expenses?
The most effective strategy is combining strong health insurance coverage with an emergency fund. These two safeguards help cover unexpected costs without pushing you into debt.
Can you negotiate medical bills?
Yes, many medical providers are willing to negotiate bills. Asking for itemized charges, comparing rates, and explaining financial hardship often results in reduced costs or payment plans.
Should I shop around for healthcare services?
Absolutely. Prices for procedures, tests, and medications vary significantly. Comparing providers and asking about generic prescriptions can help you save money.
How much should I save in my emergency fund for medical costs?
Experts recommend saving at least three months of living expenses, but six months or more is ideal for added security against unexpected medical bills.
Why is long-term healthcare planning important?
Healthcare costs typically rise in retirement. Planning ahead with savings, insurance, or long-term care coverage ensures you’re financially prepared for future medical needs.
