😬unexpected medical bills - how to handle

[mamabear18]

Hi Everyone, so, I  am very responsible with finances and follow mostly  mustachian lifestyle, but I was a bit unprepared when I was hit with a hefty dental bill, then a few months later - my husband got a hefty dental bill and now my 7 year old has 5 cavities which will require her to be sedated.

This all started last year - at the time, I did and still do have an emergency fund, but I didn’t want all of my cash used to pay for the dumb dental bills.  so I decided to open a credit card with zero APR for almost 2 years. The thought of having $0 in my emergency count pained me to no end.

I anticipate all the dental bills will be paid off (under $20K for everyone) before the apr expires. I don’t like debt and normally pay it off every month for points - but carrying around this much debt on a credit card (no interest being paid) is stressing me out even though I know it will all be paid before the promo expires. It should be paid off by the end of this year.

I feel dumb for. Neglecting my teeth and even dummer the dental insurance barely covers anything. What can I do differently next time around to help pay for unexpected bills like this? Now I’m terrified that I’m not as prepared as I thought.

I do have a HDHP with HSA - again - I don’t want to deplete this account so I only used some of the money to help offset the costs.

For 2024 - my company offered a limited purpose FSA which is only used for dental and vision. That will help too.

Was I wrong in putting most of it on a credit card? Why do I feel anxious? Is it wrong that I didn’t want to use my available cash and hsa?

What can I do differently or how do I prepare differently next time?

Any advice would be great.

Thank you!

[Exflyboy]

Well in not using your HSA you paid the bills with after tax money. The HSA allows you to pay for medical stuff with pre-tax money, thats why we have them.

Now for a big bill like that I would have used a cash back (or points) credit card then claim the money back from your HSA account, That way you can pocket the cash back from the card as well as use your HSA funds.

As for dental insurance, we have never found it to be worthwhile.. We always end up paying out of pocket.

I'm always a little nervous about FSA's don't you have to use the funds in the same year or lose the money?

[reeshau]

Our dentist has a "payment plan," with a fixed amount for 2x annual visits, and a percent off their normal fees for any other work.  We found that to be comparable to dental insurance, until we switched ACA plans, and lost DS's dental coverage.  That juuust tipped the balance to a dental plan.

It will never be on par with medical costs (as a percentage).  I think It's telling that they are comparable to the dentist's discount plan.

Do you have your HSA money in stocks investments?  There are two ways to think about it, but unless you are saving the money for a specific reason, then @Exflyboy is right: you just volunteered to pay with after-tax money, instead of pre-tax.

But, congratulations on having a choice, and not paying interest on that emergency!  Some people are comfortable having an available line of credit; some aren't.  I would reflect on this experience ce, and adjust your reasoned emergency fund (e.g. x-number of months' expenses) to what your gut has told you. (Ack!  Not enough!)  The whole point of an emergency fund is to let you sleep at night.  If you have tried this way and don't like it, then beef it up to include this scenario.

FIL used to work as an executive in an oil services company.  Our maximum scenario was something happening to him while traveling, and we would need to drop everything for a next-available flight to Australia or Malaysia, with an indefinite stay.  Probably overkill for most, but it was a very real, very specific scenario that also outpaced any more mundane, household-generated emergencies.  We slept well.

[Dave1442397]

If you can pay it off without using your HSA funds, that's exactly what I did. I have all but $1,000 of my HSA invested in VTSAX, and I'd rather not use it.

You can always keep the receipts for your medical/dental bills and claim the money from your HSA account if you ever need it. I have over $10k in unclaimed receipts at the moment.

[reeshau]

Although I talked about it the other way, I actually have quite a bit saved in my HSA, too.  While I am on an ACA plan, I am using it specifically as a medical emergency fund while FIRE'd, so that a major medical expense (which we could cover a number of ways) does not blow our tax and subsidy planning for the year.

[use2betrix]

I know this isn’t what you asked, but have you checked for second opinions? Do you have a long relationship with this dentist? I’ve lived in a 8+ states the last dozen years and tons of dentists. I’ve had maybe 3 cavities in my life. There’s been a couple times I’ve seen dentists and they say I have 3-4 cavities. Then I go see another dentist and they find none. I’ve been going twice a year most my life.

I know many other people with identical situations. I’ve seen my current dentist for 3 years and no cavities, yet the in the past I’ve been told I’ve had some (and I didn’t fix them). Doubt they disappeared or the other dentists

You may indeed have an honest dentist and have these issues, I unfortunately have dealt with more sketchy dentists than any other medical profession. Issues both firsthand and from many others.

[Catbert]

I think a 0% credit card was a good solution this time.  Since the balance stresses you, do the math on how much you need to pay each month so that it will be paid off one month before the 2 years is up.  Set it on auto pay and forget it.

I would also suggest that you spend sometimes thinking about your emergency fund.  If 20K would deplete it and give you significant stress maybe you need a larger E fund?  Also ponder what your philosophy is regarding your HSA.  When would you want to tap it?  Or maybe it's a long term extra investment vehicle?

As someone else noted FSAs can be a problem since you have limited time to spend what's in there.  (Unless things have changed since I retired 15 years ago.)

[dandarc]

Yeah 0% card was a good move. If it is too stressful to get it paid off before the promotional APR is over, look into a 0% balance transfer (start at least 1 month before). Even if you pay a 3-5% fee for another year's worth of time, that's still fairly cheap money.

For big unpredictable stuff, just having money gives you options. I tend to just evaluate each one on an if and when basis, and adjust where I keep money if I decide this time is different enough to warrant doing that. And using credit cards like this are definitely in the bucket of tools we have for scratching together 5 figure sums of money when we need to.

[Trying2bFrugal]

If you can pay it off without using your HSA funds, that's exactly what I did. I have all but $1,000 of my HSA invested in VTSAX, and I'd rather not use it.

You can always keep the receipts for your medical/dental bills and claim the money from your HSA account if you ever need it. I have over $10k in unclaimed receipts at the moment.

Is there a time limit to claim hsa? Do I just keep one of those last bills sent to me?

[Trying2bFrugal]

I am still on middle of big expenses (unexpected surgery, medical treatment, big plumbing expenses not covered by insurance) at about 10k+9k. And there will be possibly Medical oop of 9k this year.
This is what I am doing or plan to do (still dont know how much final costs)
- got monthly installments on provider who allowed
- got 2 new cc with big signup Bonus
- may use existing or apply a new card with 15 month 0%apr and use it for all monthly expenses until build emer fund back
- may pay 10k and carry remaining on the balance transfer
- keep atleast 15k emer until build back

I am a novice on finance. just learning stuff but been this tough situation last decade and one thing that I learnt hard is, liquid cash is king on all times.

In 2022 november/december, wife and I both had cavity bad tooth, etc. Dental coverage I had only covers 1500/y/person. I talked to the doc and get her to fix one this year and next on start of next plan year. Still end up paying 3k oop but otherwise would have spend 6k. For future, unless it is emer, you can weigh and wait.

[reeshau]

If you can pay it off without using your HSA funds, that's exactly what I did. I have all but $1,000 of my HSA invested in VTSAX, and I'd rather not use it.

You can always keep the receipts for your medical/dental bills and claim the money from your HSA account if you ever need it. I have over $10k in unclaimed receipts at the moment.

Is there a time limit to claim hsa? Do I just keep one of those last bills sent to me?

No time limit, as long as you have documentation.  You don't even need to necessarily produce it before getting the money.  However, the IRS could ask for it, come tax time.

[Dave1442397]

If you can pay it off without using your HSA funds, that's exactly what I did. I have all but $1,000 of my HSA invested in VTSAX, and I'd rather not use it.

You can always keep the receipts for your medical/dental bills and claim the money from your HSA account if you ever need it. I have over $10k in unclaimed receipts at the moment.

Is there a time limit to claim hsa? Do I just keep one of those last bills sent to me?

No time limit, as long as you have documentation.  You don't even need to necessarily produce it before getting the money.  However, the IRS could ask for it, come tax time.

Right, no time limit. I scan all my bills (or save the emails) and upload them to my HSA account. My HSA provider is Benefit Wallet, and they have a 'file cabinet' section where you can enter your claims and upload documentation. I'm not sure what happens when I eventually leave my job, but for now everything is there, and I still have my scans as backup.

[AnotherEngineer]

I understand your uncertainty, but as others have said, the current 0% interest cards are powerful for flexibility, especially with 5% HYSA interest. You could view it as two alternatives: 1) paying it off now, so no credit card debt, but no access to that cash if you have another unexpected event this year or 2) the 0% card lets you decide how to pay it in 18 months and you get to use that money or have it earn interest in the meantime.

In my book, it is silly to not use the HSA for its intended purpose, which is giving you a discount of your marginal tax bracket on medical expenses, then reimbursing you so you can put that money to work elsewhere. I can see three exceptions: 1) have really low taxes now so it is all "pretax", 2) have high enough medical bills that you can meet the %AGI for making them deductible so using the HSA would be double counting, or 3) it is essential to your RE money access strategy). Feel free to put them on a points/SUB card first before reimbursement.

I've used a limited purpose FSAs on top of maxing out HSAs when I've had known expenses coming up. You can also carry over something like $560 over to the next year so that amount is no risk of use it or lose it.

As for dental insurance, it is simply people who don't get dental checkups/cleanings subsidizing those that do. Vision insurance is even worse.

[mamabear18]

Thank you everyone! Great tips and advice! Especially reconsidering increasing my emergency fund.  I don’t want to use hsa bc half of it is invested for retirement and the other half bc I just want to have that money there for BIGGER  emergencies.

Like I mentioned- I’m not concerned about actually paying the cc off - I think just having a balance for so long stresses me out bc I don’t like debt.

But you all make great points that I need to evaluate in case this happens again!

[Exflyboy]

I did find out just yesterday that you can use your HSA to pay for part B deductibles when you get to Medicare age. This is interesting as you cannot pay for ACA premiums so I assumed Medicare would be the same.

So $174 EACH per month can be loaded on the HSA.. Pretty nice, assuming one has a lot in the HSA of course.

Curiously you cannot pay for Medigap premiums but you could pay for Medicare Advantage premiums (if any).. OK that makes no sense but whatever.

All of this is of interest when one gets close to "a certain age"..:)