A Guide to Plan for Healthcare Costs in Pennsylvania
No matter how safe, sensible, and risk-averse you are, life happens. Accidents, mishaps, and unpredictable occurrences lurk around every corner, and as much as you may try to avoid them with a cautious demeanor and logical forethought, every once in a while, life is going to hand you a lemon. When that day comes, you will understand the importance of planning for healthcare costs.
Without health insurance, even a minor medical problem can soon turn into a financial emergency. According to eHealth, the average cost of a one-day stay in a hospital as a Pennsylvania resident, without insurance, is $2,307. Though nobody likes to think about the worst happening, it pays to have a plan in place to deal with both expected and unexpected healthcare costs.
Review Your Needs
No one can predict when a medical emergency will strike. However, if you or anyone in your family already suffers from a chronic illness, review the amount you spend each year on medication, care, supplies, and related expenses, so that you’ve already forecasted how much money you need for typical medical expenses. Compile all the healthcare costs you’ve had for the past few years, then think about what you suspect is coming down the line. Do you plan to start a family or have another child? Is there anyone in your family who’s had a mild health issue that isn’t improving, and who really needs to see the doctor? Don’t forget the amount of money spent on over-the-counter medications or items that don’t require a prescription. These costs can add up, and they are part of your medical needs.
Secure Health Insurance
Health insurance is a critical part of any healthcare plan and can provide great peace of mind. However, choosing an insurer isn’t a one-size-fits-all situation. According to eHealth, 5% of Pennsylvania residents do not have health insurance, so Pennsylvanians who are lacking (and interested in upgrading or updating their policy) can use a service like HealthCare.gov to compare plans, receive personal help from licensed agents, and obtain affordable insurance.
It’s crucial to understand what is and what is not covered in your policy, and the costs associated with your account. In general, there are three main costs you need to be aware of and account for in your budget:
- Your monthly insurance premium. This is the amount you pay to maintain your policy each month. Some employers will cover this cost for their employees, so make sure you ask.
- Your deductible. This is the amount that you must pay annually before your insurance kicks in. The figure can vary greatly: some deductibles are as low as $250 while some are in the vicinity of $2,000.
- Your co-pay and out-of-pocket expenses. Co-pay refers to the fixed dollar amount you pay for services or prescriptions. This needs to be factored into you budget along with any other out-of-pocket expenses related to doctor visits, prescriptions, and various procedures.
If you have questions, visit your provider’s website or contact a representative. You need these exact figures to determine how you can budget for these costs.
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Make a Savings Plan for Medical Emergencies
Accidents happen, and when they do, it pays to be prepared. We recommend that you build an emergency fund of three to six months’ worth of living expenses, but understand that a figure of this size is unobtainable for many people. If that’s the case, aim for the out-of-pocket maximum dictated by your health insurance plan. If that’s $5,000 annually, try putting away approximately $417 per month. That sort of saving requires discipline, not only in cutting other items out of your budget to accomplish your goal but resisting the temptation to raid this fund for non-medical emergencies. As such, you should also consider having another emergency fund to cover other unexpected expenses, so you aren’t forced to use your medical emergency funds to pay for car repairs, for example.
So, now that you’ve determined what you need to budget for, it’s time to consider how you’re going to meet that budget. At Citadel, we can help you save for financial emergencies, whether they are healthcare related or occur for other reasons. Whatever your financial needs, contact Citadel today.