2 Ways to Brace Your Budget for Rising Health Care Costs

Photo by Ricardo Reitmeyer / Shutterstock.com

While politicians and pundits battle over the GOP health care plan, one thing is clear: Medical costs are on the rise for many folks.

To be exact, 74 percent of Americans say their health care costs have increased in the past few years, according to a recent survey by health care data firm Amino. About 1,000 adults over age 18 were polled in late February for the survey.

The results also show that 64 percent of Americans want to lower their health care costs, but don’t know how. If you’re looking for tips, take a look at “16 Ways to Beat the High Cost of Medical Care.”

Additionally, a majority of people believe that receiving a medical bill they can’t afford is as bad as (53 percent) or even worse (10 percent) than being diagnosed with a serious illness. People who are unemployed, over age 55 or earn a lower income (which the survey did not define) are most likely to feel this way.

Despite such fears, few people have prepared for unexpected medical bills. Consider these survey findings:

  • 37 percent could not pay for an unexpected medical bill of more than $100 without going into debt.
  • Only 32 percent currently contribute to a health savings account, or HSA, which allows them to save money tax-free for qualifying medical expenses.
  • Only 23 percent could pay for an unexpected medical bill of more than $2,000.
  • Only 15 percent of Americans have set aside money for major surgeries or emergencies — even though those medical costs concern them most.

While medical costs might be largely beyond your control, they are something for which you can prepare.

Build a budget

If you aren’t already tracking your expenses or budgeting for future ones, this is a great starting point.

As the Amino report notes, “With health care costs rising, budgeting is more important than ever.”

Money Talks News partners with the free budgeting service PowerWallet, and you can read more about budgeting on our site:

Build an emergency fund

As we recently noted in “Beware These 12 Common Money Mistakes,” you’re walking a tightrope without a safety net when you have no emergency fund.

Ideally, you should set aside enough money to cover your net income for seven or eight months. For example, if you earn $4,000 a month after taxes, your emergency fund should be $32,000.

That might be easier said than done, though, considering that about half of Americans don’t have enough cash on hand to cover a major purchase like a refrigerator.

But as the JPMorgan Chase Institute recently reported, even a smaller amount of spare cash can still serve as a buffer when your budget suffers an unexpected expense like a medical bill.

To learn more, check out:

Could you cover an unexpected medical bill without going into debt? Tell us about your strategy below or on Facebook.

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