Helping to avoid having medical expenses bankrupt you.
The news media informs us that many bankruptcies are a direct result of unexpected medical bills. Interestingly, those most often experiencing this tragedy are people that many consider financially ”well off” or in good occupations (and working!).
Three groups less likely to be affected by unexpected medical expense tragedy:
- The very rich.
- The very poor.
- The employed where the company provides good group medical insurance.*
What though, if a person is self-employed, or they work for a company who does not provide good medical benefits?
They are vulnerable.
Why is this?
Because most of us are ill-equipped financially to avoid ruin if we had even a moderate medical emergency. A serious one could ruin even those considered “well off” financially.
So how can this be avoided?
Short of becoming very wealthy (and most of these have insurance), or choosing to become very poor (who would do that on purpose?), this situation can be avoided by having a good insurance plan.
“But medical insurance is expensive!” you might say. This is true, but there are ways of avoiding financial ruin without buying expensive “traditional” major medical insurance.
A couple of suggestions …
- Decide what is the most you are comfortable with (or at least capable of) paying out in a medical emergency, then purchase a plan with that amount as it’s total out of pocket (including deductible).
- Even better, buy an “HSA” (Health Savings Account)-qualified plan and then pass any medical expenses (while “meeting” your deductible) through a special HSA bank account. This makes medical expenses tax deductible.
- Disablity insurance.
Just as important as medical insurance is providing for “living expenses” during a medical emergency. Many medical emergencies also lead to a loss of income because a person cannot work. Medical insurance does not protect against loss of cash flow, but a disability income insurance policy does.
So, what about the rest of us? What if this best alternative scenario (above) is not financially obtainable, or perhaps, based on health, unobtainable - what then?
For the first time in 25 years I am able to recommend a “limited benefit plan” that has enough benefits to make it, for many people, a reasonable option.
The term “limited benefit” is meant to imply that it is not major medical insurance. For instance, one of its drawbacks is there are not provisions for the so-called “miscellaneous” charges in a hospital. However, this can be somewhat compensated for by how one designs the other benefits.
On the other hand, not to be overlooked, it is also limited in other ways that are good for the consumer. Two ways that come to mind are …
- The surgical schedule allowed may be a very limited surgical schedule (yet the likelihood it will be accepted by health care providers is quite good) and,
- The provider list of hospitals and doctors have agreed to pre-arranged rates. This too will save you money, and in some cases — a lot of money.
If you would like more information, on the limited benefit plan (the only plan I consider good enough to feature on my site), check out the AIM Health Plans featured here.
If you would like more information on an HSA-qualified plan, or information on how to protect your income in a time of need, email me or call me. I will be happy to discuss these plans with you, and send you more information on them.
*The news article linked above highlights how some companies are handling this crisis, and choosing plans that leave their employees vulnerable. If you own a small company, look for my upcoming blog on how to avoid sending your company to the “poorhouse” over costs associated with your employee benefit plans, while at the same time not leaving your employees vulnerable.
Michael Myers - CA License 0561502
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