Coping with Unplanned Medical Expenses
Dave Ramsey is right. He’s always saying that you have to be prepared because of Murphy’s Law. Murphy eventually catches up to all of us. The law says that whatever can go wrong, will eventually go wrong. It applies perfectly to personal finance because we all know that cars need repairs, the AC goes out in the heat of summer, and so on.
Today I’d like to talk about how Murphy shows up in your medical expenses.
In general, I feel like my wife and I have done a pretty good job preparing for expenses. At least for the routine ones. Each year we review what we’ve spent in medical costs and either make a decision to increase or decrease contributions to my company’s Flexible Spending Account (FSA). If you know anything about these “use it or lose it” plans, you know you’ve got to be pretty good at your estimates or you stand to lose some money. Overall, we’ve done a good job. Most of the time we’re a bit short, which is far better than overestimating contributions.
You may know that contributions to your FSA are good for routine medical expenses, but you shouldn’t ever use them for an emergency savings account. So if you have to reasonably limit contributions, what do you do when medical expenses become the not so routine, when they demand more money from your budget each month than what you’re contributing to your FSA?
Not Jason’s unplanned medical expense, but you get the idea.
This situation occurred for our family this year. Some unplanned medical expenses came our way and we ended up depleting our FSA account nearly half way through the year.
I think we handled the situation well, but it’s still a bit of a challenge when the bills continue to come in the mail. I don’t know for sure, but my feeling is a lot of people encounter this issue. It can be stressful from a financial standpoint — where do you get the extra money? — but add that to what’s generating the costs and you’re dealing with a lot!
So, I thought I’d offer some thoughts and ideas around how to handle unplanned medical expenses from a financial standpoint. I haven’t used all of these ideas, but I think they’re worth considering.
Understand what you owe
Before getting out your checkbook, review your claims and understand what your insurance has paid. If this seems low, you need to contact your insurance company and understand the reasons why. Also make sure the provider hasn’t incorrectly billed you. Make sure you fully understand your situation and your responsibilities before making any payments. Don’t hesitate to pick up the phone and call the provider as well as your insurance company to get to the bottom of things (I’ve had them both on a 3-way call before).
Negotiate the amount due
I always say that it never hurts to ask. Perhaps you’ve received a few medical bills that are well beyond on your FSA account balance as well as your short-term cash savings. Perhaps there were out-of-network costs you didn’t know about (this sometimes occurs in hospitals). Ask the provider if they can negotiate the balance due. State your case, ask for some additional help and then be quiet to see what they say. On top of that, ask to speak to the office manager if you’re not getting help from the front line.
Use emergency savings
Tried all of the above? Well overall, the easiest answer is to fall back on your emergency fund to help make payments or cover the costs. Hopefully, you’ve prepared, at least with an initial $1000, like Dave Ramsey and other gurus suggest, and can cover such expenses. But what if you don’t have the savings? There are still a few options…
Negotiate the payments
In the past, I received a medical bill that was much larger than I could pay at the time. We were tight on cash, and I couldn’t even afford the monthly payments, so I told the provider what I could pay each month, and they accepted it. The point is that sometimes you can only pay what you can pay. You didn’t ask for the surprise medical situation, so don’t beat yourself up about it. Pay a little bit and try to increase it down the road. Most medical providers are helpful if you agree to start a payment plan with them.
Budget wisely
Certainly you also have to do your part to evaluate your monthly budget. Life throws us a curve ball every now and then and that just might mean you have to go to the movies once per month versus every weekend. Or perhaps it means you have to postpone a vacation which is never fun. But it’s our job as household CFOs to make wise decisions with how we’re spending money. Just keep in mind that any budget cuts you have to make will likely be temporary and you can get back to your normal course of entertainment later.
Consider a family loan
Sometimes families are closest to these medical situations, so you might have an opportunity to get a family member loan to get you over the hump for a while. I do want to state that you must use caution here and consider it only as a last resort. Family loans can impact relationships. Just remember you’re likely to sit across from the Thanksgiving table with your lender and that could impact your relationship. If you go this route, make sure you’re able to agree to the terms (in writing), make payments consistently and never, ever default!
I’m confident one of the options above will help you along your way, even if it means paying smaller payments for a while. That option doesn’t move you a long fast, but it’s about taking these situations month by month. Unplanned medical expenses are no fun, and sometimes, the best planning and smart money management can’t prepare you for them. I truly believe in the month to month planning for these situations. It helps lessen the stress and keeps your mind from wondering and stressing about things you can’t control more than a few weeks of financial planning into the future.
Have you encountered an unplanned medical expense? If so, how did you handle the situation?
Photo by Thomas Mueller.
Become A Money Boss And Join 15,000 Others
Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)
There are 91 comments to "Coping with Unplanned Medical Expenses".
Our medical emergencies have been extreme. My daughter has almost died twice due to pulmonary issues. We have paid at least $100,000 OUT OF POCKET in her life time and we have really good insurance (she is now 19 and thriving). There were times when 25% of our income was going towards medical bills.
What we did was increase our income. My husband and I worked two jobs/businesses for 15 years. Yes, that’s how long it took.
We reduced our expenses. We became experts at thrift. We learned to barter.
We borrowed money to avoid being sent to collections (yes, you can be sent to collections for medical bills).
Side note (and no one asked for this opinion): We know people who have declared bankruptcy over $15,000 in medical bills. I don’t support that route. Those doctors were worth every bit we paid, and at the time when we thought she might not make it, we would have paid any amount of money for their help. It would be unfair, now that she is healthy, to coveniently forget that and stiff those doctors.
God that just makes me want to cry. What kind of a country, what kind of a people are we? Two jobs? You should have been able to work part time so that you could spend more time with your sick child.
I’m glad she’s doing better now.
This also makes me really upset. Luckily in the UK the NHS pays for everything and we are lucky. Having private health care is of some benefit, but not like other countries. I am glad she is doing well now
Your case is one of many that shows our healthcare system is broken. I may make some assumptions that are incorrect. You stated you have really good insurance, obviously that is subjective but typically means really expensive insurance when you factor in total premiums paid by all parties. I could easily see any major ongoing medical issues surpassing 100k, our cost, over a period of time, particuarly now with the high deductible policies or higher out-of-pocket maxes that are prevalent. Ok so you were happy with the outcome even though it was a struggle, it was well worth it from your point of view. That doesn’t excuse the underlying system and the issues that need to be addressed. This country has become so obsessed with quantity of care vs. quality of care that we rank low globally on many of the quality of care ratings. Fee-for-service is a joke and so many of these drs. make their livings on unnecessary procedures, imaging, etc., not to even mention the RX industry. The # of people who go bankrupt due to medical bills is off the chart, not everyone can ramp up their income especially if they are the ones that are sick. Yes I understand the U.S. is based on capitalism and free market ideas, but the concept that health care is a for profit industry bothers me on many levels. While I don’t want to squelch innovation, the ability for people not to receive treatment or to be squeezed to the max financially just doesn’t make any sense. Its why I do believe in universal health care that uses a hybrid system that will allow people to receive coverage and still encourage creativity in the field. Of course there are other issues that tie into cost as lawsuits, fraud, overall waste in the system, not to mention human laziness in taking personal accountability for their health, etc. and they need to be addressed as well. I think about how much the cost of healthcare, premiums, have risen in the last 30 years and it just boggles the mind. The biggest issue we have with healthcare is that it is a complex isssue with many intertwined pieces and parties involved in the process. We particularly need leaders who can delve into it and balance the complexities with the interest of the american people, while simultaneously keeping the innovative part of the industry intact. I personally don’t feel we have enough of these people in leadership postions, because they have shown an inability time and time again to compromise and come to reasonable solutions for complex problems.
Thank you for sharing your experience AMW, and I am so glad your daughter is thriving! 😀
Your comment: Side note (and no one asked for this opinion): We know people who have declared bankruptcy over $15,000 in medical bills. I don’t support that route.
The people I know that declared bankruptcy over $15K in medical debt didn’t have other people that was able to work multiple jobs to pay to it off. When its just you and you’re the one who’s sick, there may not be other options. Every if there are, its difficult to make sound decisions when there so much on your plate. Not everyone has parents, not everyone has a spouse that could do what you did for your debt.
I don’t disagree with you, I just feel split on the matter based on personal experience and the experience of others.
AMW, thank you for sharing your story. I applaud your efforts to work extra and pay the expenses, but wish the extra jobs weren’t required for your family. I think that’s a tip I should have listed. No doubt it’s difficult when trying to support a sick loved one.
JD, would it be possible to host the accompanying images on GRS instead of Flickr? I held my tongue when you did it for the “How Much to Tip” article, but I noticed you did it again for this one, and I’m afraid of this becoming a pattern.
In addition to making the site seem a bit “bush league” by linking to Flickr images instead of hosting them locally (one step above grs.tripod.com), Flickr is actually blocked for some of us. All I see is a big empty square with the “broken image” icon in it.
Sorry to hear about your situation, Jason. And wow, AMW, I admire your love and commitment and the honorable way with which you approached your situation! My hat is off to you.
Our company didn’t have an FSA, but we went another route. We elected to take a high deductible medical insurance plan and coupled that with a Health Savings Account (HSA). The benefit of the HSA is that you never lose any remaining balance.
Granted, to work it requires that you be healthy for a few years in order to build up the account, but the benefit is you do it with pretax dollars. What we did was take the difference in premium between a normal health insurance payment and the high deductible one, and saved all of that in the HSA.
As I said, we we were blessed in that we weren’t faced with an early, expensive medical situation, so that allowed us to build up two healthy HSA balances. We’re both retired now and I still have some left in my HSA.
Stepping back from the micro picture, this is an issue that will only grow in importance for all of us. Health care costs in America are growing faster than any other category of cost, and faster than income. If unchecked, that means in not so many years we will be paying more in health care cost than housing…
Totally agree, this is one of the main benefits of HSAs, you can contribute various amounts throughout the year, and if you overcontribute any given year, the money doesn’t disappear.
It does tie you to a High Deductible Health Plan (possibly for a long time if you don’t want to pay fees for have an HSA without the HDHP), and that’s not for everyone.
You can only contribute to an HSA while you have a HDHP, but you can use the funds at any time, without penalty, even if you change types of insurance – as long as you are paying for qualified expenses. I am maxing out my HSA Account each year ($6250 for a family plan) with the goal of using the funds I build up to help cover my costs when I retire early. (My husband will be eligible for medicare when we retire, but I will be several years away.) I handle our company’s health insurance, so I do know what I’m talking about. 🙂
I was just about to say don’t forget about HSAs 🙂 My employer also contributes $1,000 to our HSA every year if we opt for the High Deductible Health Plan (HDHP).
Additional benefits to HSAs include: The money can grow and you aren’t taxed on the gains, you can distribute the balance (with a penalty, but at least it’s not gone forever) if your plan changes and you don’t need it or if you have a non-medical emergency (again, not a GOOD plan since there’s a penalty, but still better than an FSA where the money just disappears), it’s “portable” and can move with you if you change employers or leave the work force.
Oh! Another benefit (that occured to me as I was reading the other responses): In order to qualify for an HSA the HDHP must have an out of pocket max of (I think) $7,500 for a family plan. That is a lot, but it’s not devastatingly so, even though we don’t yet have that much in our HSA, we’re savers so we’d be able to cover that max even if something horrible happened today.
We also use a High Deductible Plan coupled with an HSA. When we switched to that sort of plan, the difference in premiums were funneled to the HSA and we’re able to save the deductible.
We’ve had a few years where we’ve come close to hitting our deductible (but haven’t) so our HSA balance has taken the hit, but we’re not any further out of pocket than if we’d had our old plan.
It’s very nice to know that our balance is rolling over each year (my employer also contributes to it each January).
It’s hard to follow the situation above because it sounds like the primary insurance plan was not adequate? If an unexpected expense arose and put them in this situation, what more permanent solution makes sense to prevent in the future? Bigger contributions to the FSA? Better coverage? Obviously you can’t predict what health care needs are going to arise — so what’s the long term approach to better prepare?
Healthcare and weathering the storms has been a constant for my family. We’ve been able to do so with many of the suggestions you’ve listed. If you have an HSA you should try to save and invest through that vehicle for longer term options.
So far as budgeting, it’s getting more challenging to do that because businesses are getting more aggressive about passing on costs to the employees through high deductible, high out of pocket costs. Our Deductible was up $600, Max Out of Pocket up $2k and premiums up $280 over LY. So as this trend continues, it’s something that I think will demand that we move to a more progressive healthcare system.
My employers plan is a regressive plan that has some impacts. I work for a larger retailer (@ corporate), most retail staff probably can’t realistically afford the healthcare and thus the pay and benefits dictates most people will be under the age of 26… It’s a form of big business governments subsidies via the ACA.
Also, it acts as a deterrent for those to stay with the company if you have a healthcare need above normal, the costs shifting more towards a pay per use, that you would want to look for a job elsewhere that doesn’t promote regressive policies on their employees. It has the added incentive of encouraging the high cost people to leave the pool so that the overall pool of people stay younger/healthier so that they can contain costs. This is a disturbing trend that I think will push the nation towards a more progressive system which should help us all better weather these storms.
So the debate about what needs to happen hasn’t been entirely settled on the national stage but the simple fact that the country has spent about 17% of GDP when that’s nearly double for most of our economic and social peers suggest we have a long way to go as a country to reign in theses costs. The biggest opportunity is to take the profiteering out the insurance program, because healthcare isn’t a normal market mechanism and it’s been widely proved that a public health institution can deliver comparable and better outcomes and with much less cost for the entire society, so we can all weather these storms by meeting the challenges of managing our health, not just an unbearable burden of digging out of debt or declaring bankruptcy.
A more progressive plan would free up a large % of our income to grow the economy and the pie for everyone. I’m of the mindset that the ACA isn’t progressive enough to make us more inline with our national peers.
See the Olympics and how one of the reigning stories was how proud Britain was of their healthcare system and how it helps all and under much less cost. We should hope that we can all come together to find such benefits for all of our balance sheets and healthier outcomes for all.
I agree with everything in this article *up to* getting a family loan. These are always bad ideas when they are paying for something that has already happened. If they want to give it as a gift, fine. But make sure that they know that is what it is.
Look, if you can not negotiate a reasonable payment and/or payment plan with the insurance, and you simply cannot afford the bill, it may be time to consider seeing a lawyer about the big B. Is it going to have a major impact on your life? Yes. Is it the right thing to do? Yes. Remember, this is why we have bankruptcy laws in the first place: so those who are drowned in unexpected debt have some way to eventually get out.
All that said, seeing a lawyer may have another positive effect: the medical professionals may, all of a sudden, be willing to settle for what is actually available (they are experts at this, trust me).
There is no reason to spread the burden of your medical bills to your family. All it will lead to is a lifetime of emotional pain and suffering.
Now, let me go and put on my flame retardant suit….
It depends where you are in life and where your family members are.
As a newly married in-college couple, an unexpected $1000 bill would have been really rough for us*, but is practically pocket change for either of our parents.
Now days, we could probably handle anything under $10,000 relatively easily between our emergency accounts and savings.
When $1000 would break our bank, we would’ve gone to our parents for sure. Now that it’s $10,000 we wouldn’t.
* We had insurance, so this wouldn’t have happened, just using it as an example.
Hmm… If it truely is “pocket change” and they are only willing to lend it to you, not make it a gift, then I think what JakeIL7 says it probably wise
I think you are over-generalizing. Why does it necessarily lead to a lifetime of pain and suffering? Why file for bankruptcy when your family can easily afford lending you 15K, and can afford to lose it? They may not be willing to give it as a gift, because they may prefer at some point to go on vacation. Or they’d rather not gift it because they want to teach you some financial responsibility. Or they know you wouldn’t accept such a gift because you are financially responsible.
In my family, we are all constantly borrowing from each other. Whether it be a $100 because a youngster’s check was short one week, or 10K to help with a down payment on a house while waiting for a CD to mature… The key has always been excellent communication and trust.
As a teenager, I had a job lined up, but had, a tad irresponsibly, run out of gas for my scooter to get there. I had done nothing to deserve a gift, so my grandma loaned me a few bucks she knew I would have as soon as I got my paycheck. What is wrong with that?
My aunt once loaned my mother about 10K for various unexpected expenses, mostly medical/dental. She knew my mother would get about 50K about a year later from a pension lump sum she was expecting. Why let my mother pay big bucks in interest to a bank (and break her budget with the monthly payments), when she had this money, and then some, sitting in her savings? Of course, this happened after 50 years of regularly loaning each other money, cars, clothes, homes, and never having issues. They didn’t start with 10K… But I don’t see how my mother declaring bankruptcy, or paying lots of interest is less of a “lifetime of pain and suffering”.
I think it really depends on the people. Some families (and friends–I regularly loan and borrow from friends, too) are less reliable than others.
I think, in my experience with my own family and others that I have known, that your family may be the exception to the rule. I don’t know how we could determine which case is more likely.
Also, don’t think my family does not pass money around. We do. But it is always done with the expectation that it is a gift. Come to think of it, the biggest problems we have is when we try to repay such things 🙂
My family does this.
35 yrs ago, my dad had the good fortune to be able to work a lot of overtime.
That tiny nest egg has grown to a pool of 25000 or so that we pass around the immedite family as needed.
When we need it, when we pay it back plus a little extra and it grows that way.
I assumed everyone did this in their family.
No, they don’t. At least my family doesn’t – no way, no how.
Heck to the no with my family (both my side and my ILs).
In both families, there are workers and there are moochers. Some would only take a family loan under absolutely dire circumstances, while others ask for money for any reason (vacations, non-critical home improvements, etc.).
My husband and I decided a long time ago that we wouldn’t borrow money from family unless it was absolutely necessary, for many, many reasons. Besides, having a family loan opens up the door for the lender to take a closer look at your finances and make comments on your spending. The last thing I’d want is someone to criticize me every time I buy brand name toilet paper!
A friend of ours had to have major heart surgery in his retired years with a big bill resulting. He decided it was time for the kids to help him….he has several adult kids and each was asked to give $1000 to help pay off his bill…..which they did. A lot easier for them to help out with this amount than him a huge unpayable amount. The rewards of a closeknit family.
JakeIl7,
No need for a flame retardent suit as far as I’m concerned. Your points are well taken. If I had to declare bankruptcy due to unavoidable medical bills, you can bet your a$$ I’d do it AND I’d do it smartly – i.e. with a lawyer who knows the ins and outs of it. No shame in trying to keep your family together and well anyway you have to – given the circumstances you may be facing.
“I agree with everything in this article *up to* getting a family loan. These are always bad ideas when they are paying for something that has already happened. If they want to give it as a gift, fine. But make sure that they know that is what it is.”
Yes times a thousand. I think setting up a loan between family members can be a great way to start fights and have long-term resentment. If the lendee doesn’t pay back the loan, or the lender feels the lendee is spending their money on stupid stuff, etc. – it can all end terribly.
In addition to our FSA contributions, I also contribute to a ‘medical cost’ fund that is there in case we go over. Which is actually sort of planned, since I think leaving money on the table with unused FSA dollars is worse than paying some costs out of pocket. We are just about done with our FSA for the year, so anything remaining will be self-funded. If that were to get depleted, we would then rely on our emergency fund which has enough to cover our annual out of pocket maximum in the event that we got a really big bill somehow.
I don’t think we ever left money in our FSA. It’s easy if your family wears glasses or contacts to use up “extra” money. New glasses or more packs of contacts can eat up pretty much as much money as you might have in there!
Also, planning ahead for a major expense is helpful if possible. I put off some gum surgery until a January date, so that I could put that much extra in over a whole year.
The first bullet is CRITICAL. Last year my daughter was in the NICU and we ended up battling incorrect bills for the next 9 months. The hospital tried to send us to collections at one point fairly early in the process. We had a medical transport company attempt to charge us directly when they messed up the insurance filing. Getting those charges corrected (and staying out of collections!) ate up probably 50 hours of our time over those 9 months.
In the end, we were able to pay approximately the right amount (we gave up on complete accuracy when it got pretty close) – which was still a lot, but only about 1/4 of what we would have paid had we simply paid the bills that came to our mailbox.
We were fortunate in that our insurance plan had a maximum out-of-pocket and everything done for our daughter was covered under the insurance. If that had not been the case, we would have had to declare bankruptcy – the total cost was in the hundreds of thousands of dollars. If you don’t have good insurance there’s simply no way to prepare for that.
Yes! We have a constant problem with my husband’s primary care provider. Every year when he goes in for his preventative checkup, the secondary providers (i.e. the lab for the bloodwork and the guy to read the bloodwork) ALWAYS submit the insurance claim incorrectly and we gets bills for it. And every year we go through a battle where we call nonstop to the insurance company and the providers asking them to correct it because it’s wrong. I’m at the point where I wish he’d go to a different doctor since their labs and pathologists can’t seem to get their s$!t together. It’s frustrating!
Have you said anything to the business manager at the doctor’s office? If they know that they will lose business over this, they might be more inclined to clean up their act.
The (major company) insurance we had when my older kids were little did this sort of thing themselves.
I’d get charged every single time for the planned baby visits that were supposed to be covered 100%. I’d get charged for vaccines that were fully covered.
Every single doctor’s visit required that I call, get put on hold, have them tell me the plan didn’t cover it, then I’d ask them to look up my plan. After minutes of holding, they’d come back to announce that, surprise!, I was right it was covered. Then they’d redo the claim and pay.
I asked if they could flag our account somehow so I could skip the calling and asking them to do it correctly every single time. They said that would hold up the claim processing…I pointed out that it already WAS holding it up!
I always wondered how much money they made off of people who just assumed that they did owe what they were told the first time. Or who didn’t have a parent at home with enough time to call and get it corrected.
I’m really glad this was posted because it is so important to be ready for the unexpected if at all possible. My socks were knocked off last fall from a diagnosis I received and let me tell you, I thank God I had paid off debt and had something in savings to help me through this year with relatively little upset. The emotional aspect of serious illness is difficult enough to grasp, but if the monetary depletion devastates you too, it just magnifies everything. Save everybody, Save! It may Save your sanity!!! 🙂
There’s a lot that goes into “Understand,” “Negotiate,” and “Budget.” The real problem is that healthcare it is difficult to understand, negotiate, and budget for.
I wouldn’t necessarily agree with the statement “Most of the time we’re a bit short, which is far better than overestimating contributions.” Back when I used an FSA, I’d always go for slightly over. I don’t mind going $50 or $100 over when it’s pretax money. It’s peace of mind.
Well, try losing $15-20K in unspent FSA contributions. A real story. A few years ago we had an IVF procedure planned early in the year – we had run out of infertility coverage and the cost is north of $15K. We had decided that we are doing one more and it made sense to save taxes on that amount, right? Our FSA has no contribution limit. Well, first the cycle got push back due to some circumstances, and then lo and behold, I got pregnant naturally just when I was about to start my meds (and no, we really didn’t expect this after years of infertility).
Now try spending 15K when our co-pays are low, we had no other medical issues, and being pregnant there are few “elective” procedures I could have undertaken. At least this was before they took OTC drugs off the reimbursement list, so that helped a bit (and family and friend stocked their medicine cabinets:-).
At the end we managed to get the loss down to under $1,000 I think, but since then we’ve been more than conservative with using FSA.
I said “I don’t mind going $50 or $100 over” — not 15K over. Also, my friends that have gone the IVF route unsuccesfully would gladly take the natural pregnancy, even if it meant losing significant amounts of FSA money. In fact, they would consider that amazing luck.
FSA rules are ridiculous. Who can predict the future that specifically? I don’t understand why the money doesn’t roll over like an HSA.
I totally agree about trying to negotiate the final cost.
When I had my youngest daughter, my deductible was $4000 and insurarance paid everything above that. My total hospital stay was around $11,000 but my out of pocket cost was still $4000. I asked for a discount if I paid immediately and they gave me 30% off. Paying up front was definitely worth saving $1200!
Healthcare costs are one of the many reasons I don’t think I will ever have children. Creating and supporting another human life sounds expensive!
I hate to hear you say that =( If you don’t want kids then don’t have them…but don’t do it only for financial reasons. Children are a priceless gift. They will bring you more joy and teach you more about life than anything you can imagine.
Of course, that is just my opinion =)
O don’t worry my choice isn’t based solely on the finances. Children just aren’t my thing.
I hear ya- it certainly isn’t for everyone!
Its one of the reasons families are alot smaller today and people have more pets. Of course,animals can cost a small fortune as well
supporting a
notherhuman life sounds expensive!By this logic, you might as well kill yourself to save money.
Yeah. If it was morally ok, some of us WOULD kill ourselves, simply because we can’t afford to keep existing. But, it’s not morally ok, so…we’re still here. :/
Tyler your reasoning is flawed. If someone wants not to take on the incredible responsibility of supporting another a human life due to financial reasons then they shouldn’t. The point is they should want to do it and do it well. We should be supporting someone who actually gives THOUGHT to the reproductive process and the consequences for the children and themselvs. Far too many people give it no thought untill after the fact, lets face it there are a lot of poor parents as role models for their children. I don’t see the point of killing oneself to save money even in jest. I support people who are able to make reasonable decisons based on their current financial circumstances which may change in the future.
I feel the same way. I actually love children to death, but financially, they’re not for me. After dealing with my own healthcare expenses, its not a decision I can take lightly.
I know what you mean. I love children to death, but I know after dealing with my own medical expenses, it would be irresponsible for me to bring children into the world unless I was wealthy.
(Server ate my last response)
I was actually just thinking about this. I love my kids, and they are definitely worth the money we spend. But I was adding up what we spend on them — daycare, food, diapers, etc. and thinking of what we could do if we didn’t have that responsibility. But hey, when I am 70 years old and Social Security has gone completely bankrupt, they can pay me back then 🙂
Assuming they could. Not to be a Debbie Downer, but I hope to god that my mom can care for herself financially in 9 years when she’s 70. If I was faced what that responsibility now, we’d both be SOL.
Just got a bill for over 1K for a childbirth that we had thought was covered. Turns out the doctor was covered 100% but the hospital was not. We called the insurance company and sorted it all out… and paid the thing. I wish I’d known because we could have gotten a 25% (tax) discount using the FSA, but the bill didn’t come until after the last deadline for adding to the FSA for the year.
What that meant was we finished the unpaid summer with a $500 dent in our emergency fund rather than having money leftover like we usually do. But hey, 1% cash back from the cc company.
So, note to self: call the insurance company before planned large expenses, and don’t just rely on what the doctors office says. There’s a doctor bill and a hospital bill and they may cost different amounts.
There can be more than just that. So maybe your doctor is covered, your hospital is “in network”, but then the anethesiologist isn’t. Hmmm – never thought I’d have to get preapproval for the anethesiologist. Didn’t even know I could find out who it was supposed to be and request someone else that was “in network”.
You have to assume that every item you touch will be billed to you, every person that you see will have some way to bill you for their time and every single one of them could be “in network” or “out of network”. Crazy.
I agree it is crazy. I go to a primary care clinic, but to increase their income (there is really no other explanation) I get billed for that clinic, and by the (affiliated) hospital. I could change clinics, but as its the clinic my primary care provider is at (I’ve been seeing this provider since before they started this new fee), I suck it up.
this is very minor, given the overall cost of my pregnancy and birth was completely covered, no deductible, but every part of my birth was 100% covered by our HMO because I went with an OB from their clinic…
EXCEPT the neonatologist who examined our son just after birth. For that, an out of network copay.
And that’s the simplest, best, least complicated health insurance situation I’ve ever been in.
I’ve heard that it is so common for anesthesiologists to not be in network that most insurance companies have a system for paying them (if the insurance covers the birth) under certain circumstances– like you weren’t allowed to choose an anesthesiologist. However, I know a lot of people who had to call the insurance company to wrangle approval for the anesthesiologist after the fact. The approval wasn’t automatic.
Me, I’m terrified of anesthesiologists and didn’t let one in the room, so not something I had to worry about. (Also saved 30% copay on that!)
One nice thing about having crappy insurance (by which I mean, large out of pocket expenses each time we use it) is they never screw up. When we had amazingly awesome insurance we had to call them to fix mistakes every time they billed us. Once I even had to set the nice ladies from the hospital’s credit agency on them to get the “good” insurance to pay a bill they were supposed to pay.
Before I retired I had a Flexible Spending Account through my employer. It was nice to use those pre-tax dollars.
Each year I sat down and made a likely estimate of medical expenses. Throughout the year I saved all receipts and kept a good record of expenses incurred.
I tried to claim as little as possible during the year. Then, at year’s end, I claimed the rest–and used the saved money to pay my personal property taxes, rural fire dues, and fund my Christmas. (Or I could have claimed the money much earlier in the year, earned interest, and then withdraw it at the end of the year. However, I know me— and felt it was just too tempting to have it easily available in savings!)
We did the same thing when we had an FSA. We typically withdrew it infrequently and with bigger lump sums to put towards specific goals. It also cut down on the paper shuffling to just do it once or twice a year.
We have switched to a High Deductible/HSA and it’s so nice to just use a Debit Card tied directly to that — no paper work to file at all.
I am fairly ignorant when it comes to health insurance so I am a bit confused. Isn’t there a max out of pocket (like a couple thousand dollars)? How can someone have $20 grand in medical bills- or is this specific to people without coverage? I know that it could accrue over several years but that’s not really a sudden, unexpected medical cost. Can someone please explain this to me? I have to get my own insurance next year and just looking at the different plans gives me a headache.
There may be some things that are not covered by the insurance policy that you have. Also, some treatments and procedures are not covered even if the illness is. Both these items may be affected by pre-existing conditions (i.e., you didn’t tell us you knew you hand cancer); these are often not covered unless explicitly stated. Also, insurance companies will typically only pay what they feel is “reasonable” (I forget the exact wording). Finally, while there is a maximum out-of-pocket expense there is also a maximum benefit that you could exceed with a specific treatment.
I’m not sure how it works. My father is on medicare and even has supplemental insurance. However after being in the hospital for a week, end up having 30K in hospital bills that he was responsible for.
You should look at getting him a Medicare Advantage plan – some have out-of-pocket maximums in the $3,000-$4,000/year range. Medicare’s thing where you pay 20% of everything forever is outrageous.
Some insurance out there isn’t really insurance and stops paying after a certain limit. So you’re responsible for anything over 100K. (These plans won’t count as insurance under the ACA and should disappear.)
Some insurance just has very high out of pocket maximums. If you have a, say, 30% coinsurance (so you pay all of your deductible, then 30% of all costs after that until you hit your out of pocket max) after your deductible is met and there’s a high out of pocket maximum or no out of pocket maximum, then you can get to 20K (or whatever you end up being charged) in bills. (My plan has a 10K out of pocket maximum, for example.)
And some folks don’t have insurance.
In my experience, insurance is very hard to shop for, and it is even more complex to understand what is covered and what isn’t.
And then there is always the “reasonable and customary” thing mentioned above. I have had my insurance company pre-approve me for an MRI, send me to a specific office they contracted with (about 10 miles from my house), and then send me a bill for $600 because they felt that the MRI company they sent me to went $600 over the “reasonable and customary” costs for that kind of MRI. (I fought this with the insurance, and won, by the way, hence the whole negotiating advice)
There are some excellent articles out there, including on GRS, with tips on how to purchase insurance. However, keep in mind insurance will always try not to pay a lot of your bills, and that many have lifetime limits (which should disappear with the ACA, but the ACA may also be scrapped after these elections, depending on who wins). I recently was offered “insurance” that paid 80% of my medical expenses, UP TO $5000 for the lifetime of the policy, all for the friendly price of about $200 a month. They did have to carry a disclaimer according to the ACA that they had to get a special waiver to offer this kind of insurance. However, how this qualifies as insurance at all is beyond me.
One of the GOOD things to come out of the PPACA is that insurance companies will be required to provide a detail of information regarding plans offered, and they all have to be in the same format. It’s going to make it much easier for folks to compare plans in the near future. (The requirement for distributing them varies based on the plans renewal date for employer sponsored plans.)
Always, always negotiate. Last year my wife simply called up the hospital and said “If we paid cash today, would we be eligible for a discount?” They gave us 30% (a few hundred bucks) off on the spot.
Also, look into a high deductible/HSA compatible plan. It can give you the tax break without the “use it or lose it” ridiculous-ness of a FSA. We are saving a bundle by having it over a traditional PPO plan and love it.
I think it is all about being prepared as best you can, but medical costs being what they are, it’s almost impossible for the average person to be able to handle an unforeseen (serious) emergency completely with readily available reserves. So when push comes to shove, you have to go over everything with a fine tooth comb, regardless of how difficult getting information can be. My medical group has “press 4 if you’re calling about a payment plan” option in their phone system, so I’m thinking that it’s a pretty routine thing for most doctors and hospitals. Given how long they wait to get paid from insurers, this is probably a better bet for them. And do ask for a self-insured discount on whatever you have to pay out of pocket. I went a whole year without insurance (no job, COBRA ran out) and no, did not avoid the doctor, but I just asked for discounts and payment plans and everyone was very accommodating. So, as a short term solution until I was eligible for Medicare, it worked out fine. Good health to everyone! It’s the most important thing, isn’t it?
For us, good health insurance has always been a priority. Just as much as buying new cars every years seems to be a more important priority to the average American. I just feel that we are alien in our perception. Instead of taking the absolute crap offered by my employers over the years, we have opted for private insurance. About 15% of our income goes to health insurance. Most people think we are insane. One reason I have been happy to keep this route is that my spouse had a brain tumor in 2009 and had brain surgery in 2010. All that insurance was worth it and we obviously came out miles ahead. He had the most excellent care imaginable – it didn’t cost us a lot out of pocket – and he is doing GREAT. (The deductibles have been costly since MRIs alone will max us out annually for eternity – but is hundreds of thousands dollars cheaper than having worse insurance – $20k out-of-pocket I believe is what my employer plan is. Annually. High deductibles like that are not terribly uncommon).
My current employer offers “crap” to me and does not cover my family. So the private insurance has served us well. If I had a dollar for every person who told me they choose their jobs for the health insurance – I think that is just ludicrous. I do get paid more than I was offered at other jobs – so that goes into my thinking. More freedom to choose better jobs when not so caught up in the health insurance.
My spouse has not worked for a decade, so we always have the option to work more to deal with skyrocketing health costs. For me it really only comes down to one thing – it is our top financial priority. Secondarily, I have always been concerned about “good health insurance” over just “cost.” Which obviously I feel has paid off, and motivates us to stay the course.
Please share about your wonderful private insurance. Who are they?
I *wish* I could find insurance that only cost 15% of my income, AND also actually covered something.
One thing I learned as a Canadian with an unexpected visit to an American emergency room while on vacation: wait.
Not being accustomed to the various US systems in place for health care, I thought that there would be one big bill in the mail, and that would be the end of it.
In reality, there were five different bills, all of which arrived at a different times over a three month period (different billing cycles, etc.)
One for the doctor
One for the med tech who took blood samples
One for the unit that provides the equipment for the blood samples
One for the medication I was given in the hospital
One for the general hospital services (check in at the ER, paperwork, cleaning, etc.)
Rather than dealing with each as it came in, as I did (not knowing that there would this many in the end!), if I were to do it again, I would wait until they all came in, assessed just how much I was going to be trying to cover in total (since no one could/would provide me with a price at the time) and then tried to submit one consolidated form to my own insurance company back home, rather than bits and pieces here and there.
There were a lot of bits ad pieces flying arond at once, and I think it would have been much easier on myself to understand what was going in and going out, paid to whom and by whom, if I had just waited a little bit to see and understand what was going on.
Yes its pretty much the only thing in the u.s. where you are going to pay thousands of dollars without having too much of a clue of the acutal costs, much less the # of bills from various providers, better of rolling dice at the table, it really is a messed up system.
I agree with your approach, but don’t forget thta the first bill would start sending collection notices before you even received the last bill. And the fact that when it all starts you really don’t have any idea how many bills to expect, so how do you know when you’ve gotten “all” the bills and should now submit to insurance???!!!
(I hate US insurance)
The problem with “coping with unplanned medical expenses” is that it’s impossible. For a real medical emergency, there are only two options — have good insurance, or default on the payment (possibly by way of bankruptcy).
This is because it’s so easy to rack up bills for hundreds of thousands of dollars in just a few days. A few years back, a friend of mine was involved in a motorcycle accident. His Kaiser insurance covered 80% of the cost, and even that left him with tens of thousands of dollars in bills to pay. Recently, my wife was hospitalized for a few days and I have no idea how much it would have cost (I can only imagine $50,000 or more) if we were expected to pay for it. Fortunately, our insurance has an annual cap of $3,000/person.
If it weren’t for decent medical insurance, probably neither of these bills would have been payable. Who knows if either my friend or my wife would even be alive without decent insurance, since the first thing that anyone checks when you get to the hospital is your insurance card. If you show up without one, are you more likely to be sent home early?
The US healthcare system is completely screwed up. This is also why I can’t really do anything like “extreme early retirement” that some others are doing — my wife is too likely to end up back in the hospital eventually, and I need to have good insurance.
It is very hard to plan for unexpected medical expenses.
As a FSA plan administrator, I try to point out every eligible item to those who have balances they need to use up. I also encourage participants to add in their deductibles, rx, glasses, denfees, etc and use those expenses to figure out how much to put in the acccount. With a little planning, you can make this work. The drawback now is that due to the PAACA(Affordable Care Act-aka Obamacare) FSA participants will only be allowed to contribute $2,500 towards their flex plans next year. With deductibles going higher, is a big blow to everyone’s tax savings. If you are used to putting more into your fsa account than next years max allows, put the difference in a savings account for when you need it. If you don’t need it for medical, at the end of the year you can use for other expenses. If both adults in the household are elig for FSA, they both can elect $2,500.
Another tip when working with the medical billing dept, if you have the means to pay for the amount you owe right now, ask them if you pay the full amount you owe today, can you get a discount. Usually they can knock off 5% of the bill which anything is better.
Medical bills going to collections are worse than a credit card going to collections. The dr can fire you as a client which makes finding a provider difficult at times. Not to mention they will not settle at all when you get to collections like they will if you negotiate at the beginning. And charges that normally don’t show up in your credit now show up. so be very careful about letting medical bills go to collections. Set up payment plan.
I am a long time reader of this site and like any good GRS reader I save like crazy and invest. As a result my home is paid off and I own a small business outside of work that is profitable and I have no debt. Overall my net worth places me well in the top 5%. Given my resources one would imagine that I could retire early. I can’t. My wife and daughter both have pre existing conditions, which are relatively minor but enough to make them un insurable. The only way for me to get insurance is to keep working and get insurance via HIPAA. ACA is our only hope. The joke we have in our family is that if Obama wins in November we can retire in 5 years. If Romney wins I can retire immediately – because under the Republican plan we would never be able to see a doctor again.
Pre existing conditions have been eliminated for since 2011 so you shouldn’t have issues getting your family insured. I am not going to say that it won’t cost more, but it can be done. As for the ACA plan, be aware because you will still have a higher premium with less say to what kind of care or where you can go for it. There is also no plans in the ACA that specify how they are going to pay for this plan so we have no idea how successful this plan will be. Just be aware that this plan is not all as it seems.
Actually, I have read the ACA bill and the funding requirements are spelled out pretty clearly. CBO has also reviewed the bill in detail and says that not only is the bill funded, it will reduce the deficit over the next decade – compared to not having the bill. As for funding individuals purchasing insurance, ACA is also quite specific on subsidy levels relative to income. But you need to read the actual bill, not partisan commentary (death panels, not being able to choose your doctor etc).
As for purchasing insurance when you have a pre existing condition, that will not come fully into effect until 2014, if the bill is repealed then we go back to the way things were. At this point the issue is being addressed state by state. Insurance companies are now required to insure children with pre existing conditions. But all of this will depend on the outcome of the fall elections.
It is also notable that 8 million people on medicare are not seniors but individuals with chronic health conditions such as cancer. In a free market voucher system, these folks would be locked out of health care entirely.
We actually wrote about this a couple months ago. I like to say – if it’s more than a Copay, call before you pay. We are regularly over charged by labs and related health care companies that our doctors may contract out to.
In the most extreme case I know, a friend’s son spent the first month of his life in NICU/PICU and had major surgery. The nurses actually gave them the beat advice on how to proceed with bills, which for them was to have minimum payments and wait until a “pay-in-full discount” period was activated by the hospital. They ended up paying small payment for a few months and when the discount program went into effect they paid half of the remaining balance and had the other half forgiven. They would have never known about it otherwise and it saved close to $100K for them.
When we were graduate students and quite poor (although no debt and some savings), my second pregnancy was considered high risk because we had lost our first child. We were living in a very wealthy area because that was where our school was. Our doctor found out that we didn’t have a car and was so appalled that without asking he waived all his fees above what was paid by insurance, even though they were higher than normal because of the high risk designation. I have never forgotten his kindness. And we had a very healthy baby, too.
Makes one look on with envy at universal health care. Family financial devastation as described above just does not happen in Canada, UK, France, and indeed most of the western world. It is hard to understand the objection to universal healthcare in the US. And you can’t say that the US, States, Municipalities are doing better financially than any of these countries.
Well…the objection of many of those actually working in health care is that we have this radical notion that doctors, after going to school for 10+ years, working 80+ hour weeks during residency, and sacrificing much time with their family, should actually be able to OWN their profession. Most don’t want to be millionaires…but some basic respect for their autonomy and need to make a living would be nice. I never understand…i mean people would never dream of taking their car, that they never even performed basic maintenance on, to the mechanic and demand that the car be fixed “now and for free”…yet people never think twice about doing it to healthcare providers…showing up overweight, out of shape, smoking a pack a day….and demanding free, fast, and 100% mistake free care:-O
NOTHING can be a right that depends on the actions/education/expertise of someone else….that’s pretty much enslavement, IMO.
Even more radical..many (I would hope most) in healthcare regard their profession as a noble calling…that their relationship with their patient is sacred and best served without the meddling of government bureaucrats and insurance agents telling them to see more patients, spend less time with patients, and treat every ailment in every patient the same way…..as if patients were nothing more than cogs in some machine. Oh yes…and to do all this in a system where errors caused by honest mistakes are NEVER an acceptable outcome.
I’m a big advocate of fee for service/cash/barter system. Many primary care docs are going to back to this and falling in love with their jobs all over again. They keep prices reasonable and are able to donate lots of free care by completely opting out of Medicare/Medicare/private insurance. They don’t have the overhead of having to hire several staff members just to keep compliant. (Many don’t know this..but simple coding errors can end a doctor’s career and incur tens of thousands of dollars in fines). They don’t have to have fancy computer and software to keep compliant. They don’t have to waste time (that could be spent with patients) arguing on the phone regarding ordered tests and reimbursements.
So yeh…that’s why a lot of us object to universal healthcare….because many of us in the profession are actually quite passionate about providing compassionate and competent patient care…..just sayin:-)
http://www.idealmedicalcare.org/
Couldn’t agree more about negotiating a medical bill. Insurance companies often have a fee schedule, or a set price at which they will reimburse a doctor for certain procedures/tests/etc. By accepting the patient’s insurance, the doctor is essentially agreeing to accept the patient’s insurance plan rate. So why should a cash patient pay more? Most doctors are willing to take what they would receive from an insurance company. I would suggest you conduct a Google search on the Medicare rate for whatever service your doctor billed for, and then offer that amount to the doctor.
I got sick once while studying abroad and had to put the charge on my credit card. It sucked but I was able to pay it off in a couple of months. Definitely one of the reasons to have a credit card when in college.
I’m British. Problem solved. Care based on clinical need not ability to pay.
What helped us was knowing some of the “fine print” involved in our health insurance (employer-based and apparently very good) BEFORE needing it. We are extremely fortunate to have had only one real medical emergency (DH collapsed with kidney stones), and I knew that our insurance required notifying our doctor before going to an out-of-network hospital. So while the first call went to 911 for an ambulance, an immediate second call went to his doctor to explain that I’d just called 911 and they needed to know it for insurance reasons (among others). Our insurance agreed we’d followed procedures and paid the bills accordingly.
Unfortunately, average Joe has little bargaining power – I have tried and asked – well, why can you charge x if it is covered by insurance, but since it is out of my pocket you won’t lower it, even though if you lower it I can pay the whole thing now. Very frustrating.
We have had to pay a lot of money for IVF costs. My insurance only covered the first $30K (which is better than many women have), but it is taking mulitple attempts to have a child, so we have spent an additional $40,000 so far and still no baby so we will have to try again. There are many women in the same boat as us. So, we sold our condo since it was the only way to pay (family doesn’t have money to give us a loan) and I borrowed against my 403B. To us, having a family is more important than material things, but this is very difficult.
When I was in grad school, and dirt poor, I wound up in the ER due to exaustion, dehydration, and food poisoning. I was out soon after many tests and several IV bags of saline. The bill from the hospital, when it finally came weeks later, made my jaw drop. I didn’t have any insurance at the time (I was stupid and thought I couldn’t afford it). I had already paid the attending Doctor’ bill and thought that was bad enough.
So, I called the hospital billing department and asked to be put on a payment plan. I promised to pay the whole thing but I just couldn’t afford it at the time. I got a letter back from them stating that, even though I couldn’t afford their bill at tat time, my potential income was too high for a payment plan and therefore I had to pay the whole thing right away or they’d send me to collections. I was furious. It was the most ridiculous logic I’d ever heard.
At that point, I called a friend who was a lowly associate at a nice liberal law firm and asked for help. She wrote a letter offering that I’d pay 10% of the amount due immediately and then they’d never hear from me again. She didn’t even threaten them with anything! She got one of the name partners to sign it as a favor and sent it off. A few days later, I had an agreement from the hospital and a bill for just 10% of the original amount. I paid it that day (and ate ramen for a month – even the 10% was hard on my wallet then).
If that hospital had been willing to work with me, they would’ve gotten 10 times more. Idiots. I also learned that people are afraid of lawyers.
This is exactly the reason why we make sure that we have an emergency savings account. Accidents and sickness can happen anytime. The cost of hospitalization and other medical expenses consistently increases and we do not want to have a payment plan with any hospital for that matter.
Cherleen, I agree. My experience is a good reason to put some serious focus on your emergency savings account. We have one, but not as much as I would like and that’s a goal for us right now. If not medical, we’ll be faced with some other unplanned expenses in the future that we need to be prepared to handle.
“You didn’t ask for the surprise medical situation, so don’t beat yourself up about it.” You also presumably didn’t ask the state to drive up the price of doctors and medicines through such measures as professional licensing, intellectual property laws, and the characterization of medical insurance payments as a tax-deductible business expense. I’d go further than saying don’t beat yourself up about it. I’d say don’t pay.
I have health insurance through my employer. They only have one plan – not a High Deductible Plan. Therefore, we dont qualify for an HSA. The company has an FSA which is anything but flexible. Recently the items that could be purchased with the FSA plan were also greatly reduced. Nothing I typically purchase is on those lists. So, Ive opted out of the company FSA plan, and instead have a separate checking account of my own that I put money into every month (separate from my emergency fund.) I realize Im not getting any tax benefit, but for me, ALL medical expenses are unexpected, especially as the insurance never covers what you think it does and NO ONE can ever tell you upfront what you will owe. (Im a victim of the guy doing the xray was covered by insurance, but the radiologist who gave his opinion wasnt.) One of the benefits of budgeting for healthcare this way is I can use this account for vet bills as well. The other benefit is that Ive become very assertive with all medical professionals about the costs and the necessity of their treatment plans and am very upfront about how much is in my account/how much I am willing to spend. A third benefit is I eat better and exercise more because I HATE paying for doctors.
This may seem like a commercial, but can I recommend those of you wil similar situations check out a service called Kare360? A service offered by The Karis Group. Karis has saved people in very similar situations over $85 million in just the past 5 years.
You can visit the Kare360 site at http://www.kare360.com