Insurance should be part of everyone’s financial planning
Every day, thousands of Americans find themselves in a difficult financial situation after receiving a dire medical diagnosis. Even those with health insurance are at risk of disaster in the aftermath of a medical emergency. It is imperative that you proactively shield yourself from this risk.
While health challenges like strokes, cancer and broken bones are bad enough on their own, paying for your care can be just as difficult. Medical problems cause, at least in part, more than 60% of bankruptcies in the United States, according to a Harvard study. In a life or death emergency situation, you can’t shop around to find the best care at the best price.
If you have health insurance, you may think that you are safe, but this may not be the case. The odds are high that you may have significantly less of a financial safety net than you think.
The Costs Add Up
Health conditions come with a variety of costs, many of which traditional major medical health insurance was never designed to cover.
- First, there can be deductibles and co-pays, the portion, under your health insurance contract, that you must pay out of your own pocket.
- Second, related expenses such as ambulance fees and transportation to follow-up medical appointments can also build up. A recent report by the Government Accountability Office found that an ambulance ride could cost the providers over $2,000 in some cases.
- Third, on top of this after receiving care, you might be ill and unable to work, but your rent, mortgage, car payments and other household expenses continue to pile up.
Together these three items make up the true cost of a medical condition. The real cost can be staggering.
For example, if you have a heart attack as a 50-year-old man with an average level of major medical health insurance, you could see a potential total price tag of over $50,000 for deductibles, co-pays and other charges. And yes, this is after adjusting for what your health insurance covers.
Even something as simple as a broken leg could carry an out-of-pocket price tag of $10,000. Worse, if you have an ongoing condition such as diabetes, that cost you owe can shift from a one-time payment to an annual expense. Care for diabetes in some cases can top $15,000 per year.
What to Consider
How can you protect yourself? Supplemental, guaranteed-renewable disability insurance might help out. A guaranteed renewable policy obligates the insurer to continue coverage as long as premiums are paid on the policy. You should know, however, that while the re-insurability is guaranteed, premiums can rise based on a number of different factors, so you need to read the fine print.
Such policies are designed to pick up where your major-medical insurance leaves off so these out-of-pocket expenses don’t deplete your savings or put you deep into debt. Disability insurance can also make up for income that you miss out on while you are out sick. Depending upon your insurance carrier, it could take a few weeks for a payment to arrive, so keep your emergency savings funded.
Contact your financial advisor who can help you get information about various health insurance options. Everyone hopes that we never need to use it, but the time to research this insurance is before a costly medical condition occurs.