Budgeting for healthcare often feels like an impossible task. Even the most basic doctor’s visits may lead to costly and unexpected bills. And you may not receive the invoices until months later—making them difficult to plan for. Between all the co-pays and out-of-pocket expenses, it’s tough to know exactly how much you will have to pay.
Predicting your healthcare expenses is never easy. But luckily, there are a few ways to keep them from derailing the rest of your finances. Even if you have never had a budget for healthcare before, here are a few tactics to try.
Start with last year’s medical expenses
One of the hardest parts of budgeting for healthcare is figuring out where to begin. If you’ve had the same health insurance policy for a while, start by reviewing last year’s expenses. Print copies of your checking, credit card, or health savings account (HSA) statements. From there, you can highlight and tally everything you spent.
It may be helpful to separate these expenses into two categories—ongoing and one-time. Ongoing expenses maybe things like monthly prescriptions or routine blood work. One-time expenses may be seeing the orthopedic doctor for a hip flexor injury. Or, visit your dermatologist for an unexpected rash.
This exercise should give you a baseline of expenses to expect. Add up your ongoing expenses and divide the number by twelve. To ease the sting of this year’s bills, set money aside every month. As expenses arise, you can tap your medical expense fund.
How to budget for unexpected medical expenses
There’s a reason for health insurance. Unexpected problems or emergencies happen. Whether you are dealing with a sprained ankle or trip to the emergency room, it’s important to have a plan. Even smaller, one-time expenses can throw off your regular budget if you don’t plan for them. Here are a few ways to cover these expenses:
- Add a buffer to your medical expense fund for small expenses.
- Withdraw money from your health savings account (HSA).
- Ask the medical provider for a payment plan.
- Finance your medical bills through a third-party company.
- Borrow money from friends or family.
Be proactive with healthcare expenses
With the high cost of medical bills, it may be tempting to ignore small aches and pains. But these issues rarely resolve on their own. Before you know it, minor toothaches or back pain can balloon into a bigger problem. These issues often become a lot riskier and more expensive, too.
You may avoid some problems by having a relationship with a primary care physician. Be sure to schedule annual checkups. Don’t skip these screenings—your doctor may catch an early-stage illness.
Women should pencil in annual visits with their gynecologist. Seeing the dentist twice a year is also a good move. A few minutes of discomfort is better than a lifetime of costly—and painful!—dental work.
Your healthcare budget should evolve
Budgeting for healthcare isn’t something you do once. As your family’s needs change, your healthcare expenses may grow. You should always be ready to adjust your budget as needed. By monitoring and making updates, it’s less likely a major bill will cause financial ruin.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.