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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.

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. 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. 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. 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. 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. 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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