When it comes to unexpected expenses, medical bills are among the most common. Whether it’s a broken arm at the playground or a long-term illness, just one visit to the ER or a specialist can cost you thousands of dollars – even if you’re insured.
Arbor has been publishing a series on the importance of building your financial first aid kit to deal with emergency expenses. In 2020, 36% of Americans reported that they would have difficulty covering a $400 surprise expense – and unfortunately, many medical bills far exceed that. When it comes to your mental, physical, and financial health, being prepared with a financial first aid kit is just as important as a medical one.
Below, we’ll outline the gravity of medical bills and a few of the important tools in your financial first aid kit that can help you cope with these surprise expenses.
The Expense: Medical Bills
Unfortunately, it’s very likely that you or a loved one will one day deal with a short- or long-term health condition. 1 in 2 men and 1 in 3 women will be diagnosed with cancer during their lifetime, and each year, 130 million Americans visit an ER – that’s 40% of the U.S. population. Though nobody is ever quite prepared to deal with unexpected health problems, knowing you can financially afford to fight these illnesses is an important first step.
Getting sick isn’t cheap. A single ER visit costs over $1,000 on average – that includes people who are privately insured. And in 2018, cancer patients in the U.S. paid a total of $5.6 billion out of pocket in total for treatments, ranging from surgery to chemotherapy. Then there are surprise bills: Even if you’re insured, you might be treated by an out-of-network doctor during an emergency. 20% of insured adults in the U.S. have experienced a surprise medical bill.
The last thing you want to deal with during an unexpected medical situation is financial stress. That’s why it’s so important to have these tools in your financial first aid kit.
The Tools: HSA and FSA Accounts
Opening an HSA or FSA account is one smart way to start saving for potential unexpected medical bills without wasting your money. HSA accounts function similarly to personal savings accounts, but the money is used to pay for healthcare only – and it’s tax-free. Opening and contributing to an HSA gives you a failsafe in case of expensive emergency bills – and you can use the money you’ve saved for more basic expenses as well, like new glasses or a prescription.
The Tools: Financial Advisor
Choosing the right Financial Advisor is an important step in protecting your financial and mental health. It’s hard to know exactly how much to save for emergency health expenses – a trusted Advisor can help you figure out how much to put away in your HSA or FSA accounts, so you can reach your long-term savings goals and make sure you’re prepared for the unexpected. Dealing with surprise health problems can be debilitating physically and mentally, especially with the high cost of healthcare. Knowing you’ve already made plans with a trusted Financial Advisor can alleviate some of the stress that medical bills provoke.
The Tools: Short- and Long-Term Disability Insurance
Disability insurance is a great way to assure you’re covered in case of an accident or illness that takes you out of work. Although many Americans think that a disabling event won’t happen to them, 1 in 4 of today’s 20-year-olds can expect to be out of work for at least a year due to a disability before they reach retirement. Your disability insurance is a failsafe in the event that an illness risks you losing your paycheck – it covers anything from cancer treatment, to car accidents, to even pregnancy.
Andy joined Arbor Financial Services, LLC, in 2013 as the General Manager of Operations. After 4 years of tremendous success he transitioned to develop the professional athlete division of Arbor Financial. Andy is dedicated to working with professional athletes to achieve the same success in their investments as they do in their sports career.
<a href="https://arborfinancialservices.com/about/team/andy-krajewski/">Learn more about Andy Krajewski</a>.