It's bad enough when your day is derailed by an unexpected trip to the doctor, but it's even worse when you can't afford to pay the bill. Unfortunately, too many Americans find themselves in this position, according to a recent survey conducted by Ipsos for the healthcare transparency group Amino.
The survey found that 37% of Americans could not pay a medical bill of $100 or more without going into debt, and 19% of respondents could not pay anything at all towards a medical bill without incurring debt. In addition, 55% of respondents had received a medical bill that they could not pay with available funds. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.
The current insurance situation does not help anxiety levels. Almost three-quarters of survey respondents reported higher out-of-pocket healthcare costs within the last year. Anxiety is likely to increase as insurance companies increasingly pull out of the existing healthcare exchanges. Further, it is not clear what, if anything, will replace the current Obamacare guidelines. Consider that 10% of respondents reported that a significant medical bill is worse than a life-threatening illness.
What can you do to lower anxiety and increase your ability to handle an unexpected medical expense? Knowledge and prevention are the keys.
Know what your insurance covers and does not cover, especially with respect to your co-pays and coverage limits. To assess correctly how much money you need to set aside for medical expenses, try to figure out the average cost of a likely visit. Granted, medical expenses are hard to decipher even after you have received your bill – but it's important to have some concept of how much money basic procedures cost versus your risk of needing those procedures.
For example, the survey asked respondents to estimate the out-of-pocket medical costs associated with a broken arm. The median cost of $1,100 was widely underestimated. Only 7% guessed the amount correctly, while 46% of respondents underestimated the cost by at least half.
If you have a suitable high-deductible healthcare plan, you may be able to pay into a health savings account (HSA) that allows you to put aside money for medical expenses on a tax-free basis. Only 32% of survey respondents currently contribute to an HSA.
If an HSA is not an option for you, make some space in your budget for emergency medical expenses as if you were creating your own HSA. According to the survey, only 46% of Americans bother to budget $50 or more each month for healthcare purposes. Food, transportation, and debt payments all received higher priority among respondents. Without specifically dedicating funds to healthcare, you are very likely to find other uses for that cash – and even if you don't, $600 a year does not go very far in covering any medical emergency.
Take advantage of all preventative medical care measures (checkups, etc.) that are covered by your employer and your insurance policy. People sometimes have a tendency to avoid doctors – 19% of survey respondents reported that their main method of avoiding high medical bills is to shun doctors altogether – but by not taking advantage of covered preventative care, you are asking for bigger expenses down the road.
Don't be like the 54% of the survey respondents who had received an unexpected medical bill in the past and were more likely to budget for their healthcare as a result. Start by budgeting a certain amount for healthcare emergencies over and above your known expenses like insurance premiums. Stick with that budget, and resist the temptation to stretch the definition of "emergency." That way, if a medical event does occur, you can concentrate on healing your broken body instead of your broken wallet.