by Maurie Backman | April 18, 2020
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Hint: It's a risk that's just not worth taking.
Sometimes we're forced to put off expenses. Maybe you have to hold off on renovating your home, or even fixing your car if the issue doesn't impact safety -- say, a broken air conditioner. There's one expense you generally can't afford to delay: medical care. Yet a survey released in late 2019 revealed that 49% of millennials postponed medical treatment because of financial constraints. That's a mistake that could haunt them.
Delaying medical care is just plain dangerous. If you let a minor health issue escalate, it can quickly become major, and you'll risk compromising your overall well-being.
Imagine you have a persistent cough, but you don't see a doctor because you don't want to pay for the visit. If the cough turns into pneumonia, you might end up in the hospital.
Delaying medical care can clearly harm your health, but it can also hurt you financially. Consider the cost of a run-of-the-mill doctor's appointment compared to the cost of an emergency room visit or a hospital stay. The latter two are, of course, substantially more expensive. The sad part? They're also, in many cases, completely avoidable.
If you're putting off medical care because of money, it's time to break that habit -- before you harm yourself physically and rack up needless bills. The best way to help ensure that you won't have to delay health matters is to build a solid emergency fund.
You have a couple of options. First, you can build a regular emergency fund where you sock away enough money in a savings account to cover three to six months of essential living expenses. That sum could, in theory, tide you over during a period of unemployment, but it could also be money you dip into for medical care that your regular paycheck can't cover.
Another option is to build a medical emergency fund. How much should you put into that account? It depends what your costs look like under your health insurance plan, but a good bet is to sock away enough money to cover your annual deductible, plus a few hundred dollars more for additional copays or out-of-pocket expenses. A deductible, if you're not familiar with the term, is the amount you have to fork over before your health insurance company picks up the tab for your care.
If you save money for healthcare expenses, be sure to capitalize on tax-advantaged medical spending accounts. One option is a flexible spending account, or FSA, which lets you set aside pre-tax income for medical expenses on a yearly basis. Usually, you need to sign up for an FSA during your employer's benefits enrollment period, generally the October or November before the calendar year that the FSA applies to (the enrollment period for 2021 is late 2020, etc.). But if you experience a "qualifying event," like marriage, divorce, or birth of a child, you can sign up for an FSA mid-year.
The main thing to note regarding FSAs is that funds don't carry over from year to year -- in some cases, you can carry a limited balance, but generally speaking, you need to deplete your FSA every year. Any funds you don't use get forfeited, so you'll need to estimate your healthcare costs carefully before putting money into an FSA.
A second option is a health savings account, or HSA. You can contribute funds to an HSA at any point during the year, as long as you're enrolled in a high-deductible health insurance plan. Like FSAs, HSAs are funded with pre-tax dollars, so there are instant savings. Unlike FSA funds, the money in an HSA never gets forfeited, so you don't have to worry about depleting your plan balance every year.
Medical care is often an unavoidable expense. Rather than risk harming your health by putting it off when money is tight, cut back on spending where you can, or get a second job temporarily to build up your savings so you can tackle medical costs as they occur. At the same time, use an FSA or HSA to your advantage, so you have funds set aside for medical purposes, and snag a tax break in the process.
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