How to Save for Emergency Medical Expenses

We’ve had seven doctor appointments and two emergency room visits over the past two months. Not to mention, I’m going to start earning frequent flier miles at our local pharmacy.

At the time, it’s necessary, right? No one wants to deal with influenza or pneumonia (several bouts of it) without medication to help ease the symptoms and get on the road to recovery.

And the nice (or not so nice, depending on your opinion) thing is that, except for the occasional copay, the bills don’t start pouring in until you are healthy enough to deal with them.

But then, pour in they do.

Lab visits.

Doctors’ fees.

Medications administered.

…and everything else they might have done while you were too miserable to question the cost.

How To Save For Emergency Medical Expenses

So, how do you deal with those medical bills and prepare yourself for the future? Hopefully, the methods we’ve used (and succeeded with) will be helpful to you as well!

Step 1: Set Up a Payment Plan

You can’t start saving money for future medical expenses until you’ve put together a payment plan for your current ones. If you aren’t able to afford the bill outright, my suggestion (and what’s worked for us) is to call the provider and put the bills on a payment plan.

It might be frustrating to add another monthly bill to the mix, but the nice thing about hospitals and other large medical providers is that they are normally willing to work with you and your budget to find a monthly payment plan that works. Additionally, most medical providers won’t charge you interest on those bills, so you won’t be racking up extra fees as you work to pay it down.

Whatever you do, don’t put medical debt on credit cards if you don’t have to. Exhaust all other options before you choose to pay a significant amount of money in interest payments.

Want more information on setting up a payment plan? Check out my post on that very subject HERE.

Step 2: Begin Preparing Your Finances

As I sat in the emergency room with my husband just over two weeks ago, I contemplated how much different this situation was from previous years. I mean, when Justin and I got married over a decade ago, we were immediately in medical debt up to our ears. At the time, I just thought it was part of being a grown up.

It turns out that medical debt doesn’t have to be a constant thing and, this time, rather than sitting in that hard, plastic chair worried about the increased amount of money we’d have to pay out each month, I was instead thankful for the protocols we’ve put into place with our budget that allowed me to pay all of the expenses up front.

Trust me, even if it looks bleak now, you can have that same feeling of peace when it comes to your own medical expenses, and spend your time focused on your sick family member instead.

We did that, in part, by setting up a medical emergency savings fund.

Create a Savings Fund

Once you have that payment plan set up, I highly suggest saving for future unexpected medical expenses first, before working to pay more than the minimum payment on that 0% interest medical debt you already have. In much the same way as an emergency fund, having a medical fund will keep you from being tempted to put prescriptions, medical supplies, copays, and more on credit.

Ultimately, having a sinking fund (or savings fund) for medical expenses is the best way to prepare yourself for the onslaught of bills (and expensive copays).

Note: a sinking fund for medical expenses should not include those prescription expenses you know you will have each and every month. Include those, instead, as a line item in your monthly budget.

The amount you put into that savings fund is entirely up to you, but I’d love you to consider the following options.

Option 1: Save For Your Deductible

Typically, no matter what kind of medical emergency you might find yourself facing, the deductible you have with your health insurance is a pretty good starting point. If your deductible is $2,500, then I suggest you save enough in your sinking fund to cover that amount. Sure, your out-of-pocket expenses might be slightly higher, but it’s a great place to start.

Looking for ways to come up with that amount quickly? You can use some of my emergency fund tips to help you do so! Find them HERE.

Option 2: Add Money Monthly

If you don’t have the extra leeway in your budget to set up a large fund right away, take the time to look over your monthly expenses and determine a consistent amount that you can put toward your medical emergency fund each month. In our case, I pay our medical emergency fund each month just as if it was an important bill. It’s not money we touch for any other reason, either, so it’s always there when we need it.

Keep track of those monthly deposits and make sure to deduct any and all expenses you pay out of that fund over time. When an emergency does come up, you don’t want to be worried about where that money is or how much you have at your disposal.

Step 3: Evaluate Your Insurance Plan

The final way to prepare for medical emergencies is to take a close look at your health insurance policy every chance you get.

I’m going to be honest with you: everything I learned about health insurance, I learned the hard way. We had little to nothing as far as income in our early married years and, therefore, we’d always sign up for the insurance with the cheaper monthly premium. And, like clockwork, each and every year we’d hit our deductible and maximum out-of-pocket amounts.

Now, we take into consideration a lot more before picking a plan, and you should, too. Do you need regular doctor visits? Are you more likely to end up in an ambulance on the way to the hospital? Do you tend to be accident-prone? Whatever your specific situation, you can pick the plan (and deductible) that’s right for you and your family.

Want my exact system for evaluating health insurance options? You can find it HERE.

No Perfect Plan

In the end, there’s no perfect plan when it comes to preparing for emergencies, but if you don’t prepare at all then you’ll find yourself like Justin and I were many years ago: struggling to get out from under all of the medical payments.

Today, I’m happy to report that my family is on the mend AND we were able to pay each and every medical expense as it came through the door. Sure, we’ll spend the next couple of months getting that medical fund up to par, but then, the next time a medical emergency arises, we’ll be prepared (financially) for it again.

Do you have a medical emergency fund? If so, I’d love to hear how it’s worked for you!

Tip: Unexpected medical bills are no joke so it’s better to be prepared. Grab my FREE Family Budget Worksheet and start planning your budget accordingly.