Budgeting for Out-of-Pocket Medical Expenses - Tundraco's Daily Living Guide to Money

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Budgeting for Out-of-Pocket Medical Expenses

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Budgeting for Out-of-Pocket Medical Expenses
By Rochelle Caviness

Having medical insurance does not relieve you of having to pay for a portion of your medical costs. Very few people have polices which provided 100% coverage.

You may be responsible for a portion of the covered expense incurred in the form of deductibles and co-payments.

What's not covered?

Many insurance policies do not cover dental care, eyeglasses, hearing aids, prescription medicines, or organ transplants. Therefore, you will need to cover the cost of these 'extras' on your own.

Pregnancy

Medical insurance policies no longer cover pregnancy, as a matter of course. To be covered for pregnancy, you will need add a pregnancy rider, or switch to a family-plan policy. Otherwise, you will find yourself paying for the entire cost of a pregnancy.
Experimental Treatments

Most insurance plans do not cover the cost of experimental treatments.
Elective Procedures

Elective procedures, such as plastic surgery or breast augmentation are usually not covered by medical insurance.

How to Budget for Out-of-Pocket Medical Expenses

To a degree, you can anticipate what your normal out-of-pocket medical expenses will be in a normal year. For example, if you bought two pair of glasses last year, chances are you'll do the same this year.

There will also be years when your medical bills far exceed your expectations, due to accident or illness – so start saving now!

If you will be paying for your medical expenses out-of-pocket, let your health care provider know. Many will offer you discounts or will allow you to pay for their services over time.

Options for Limiting Your Costs

Enroll in an HMO or other managed care plan. These plans will help keep your out-of-pocket expenses to a minimum. Most do not have a deductible and only charge a modest fee for each office visit.

Join a medical discount program. Members receive discounts on such items as eyeglass, prescriptions and medical equipment. In some areas, discount programs exist that offer reductions on office visits, home health care, and hospital services.

Don't Overlook your Local Medical and Dental Schools Medical and dental schools often offer inexpensive or free preventive and basic care, basic tests, and some even perform advance procedures.

Visit your local health fair. In many communities, health fairs are held at least once a year, and they usually offer blood pressure and blood sugar tests. Many also offer you the opportunity of having a complete blood work up done for about a quarter of what it would cost you at the doctor's office.

County Health Department

Check out your county health department. Most offer free or below cost vaccines as well as medical testing for communicable diseases, such as tuberculosis. If your income is low, most county health departments can also arrange free or below cost prostate, pap, and mammogram tests, as well as for birth control pills.

Medical Savings Accounts

These are tax-free savings accounts into which you deposit a predetermined, fixed amount, each month – normally via a direct bank withdrawal or directly from your paycheck. Whenever you incur an out-of-pocket medical expense, you can reimburse yourself from this fund, without having to pay income tax on the money. The only draw back is that you cannot use these funds for anything other than medical expenses. Before enrolling in a medical savings plan, be sure to read all the fine print. With some plans, you have only a single calendar year to use the money and if you don't, you lose it.

Start Your Own Savings Plan

Although a self-administered medical savings plan is not tax deductible, it is an efficient and valid means of ensuring that you will have the funds available to cover your out-of-pocket expenses. When you set up your yearly budget, include these expenses as a necessary item, not a discretionary one.

Bill yourself a fixed amount, based upon your expected out-of-pocket medical expenses. Every time you get paid, deposit that amount into an interest bearing checking account or money market account that is used solely for your medical expenses.

The best way to curb your out-of-pocket medical expenses is to stay healthy!

You've heard the mantra before, but here it is again:

Eat a balance diet.

Get plenty of exercise.

Don't drink, smoke, or do drugs.

Go in for an annual physical – the sooner most illnesses are caught, the easier and the cheaper they are to cure.

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The information provided on this site is for informational purposes only.

Always consult your doctor for medical advice.

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