Author Topic: Budgeting for medical deductibles  (Read 3367 times)

Freedom2016

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Budgeting for medical deductibles
« on: May 03, 2015, 09:04:06 PM »
This may be a dumb question.

How do people handle budgeting for medical deductibles, when it's not always clear how much you'll be spending in a given year on doctor visits, medications, procedures, ER visits, etc.?

We have had weird unexpected expenses over the last several years: 2 unexpected surgeries in two different years, random urgent care visits, DH had an injury that required steroid injections (big copay), and last year we had to get bloodwork done for our son that cost $800 (!!!).

Based on the above, I've kind of assumed I should budget the max deductible every year no matter what (i.e. for us, $4000 divided by 12) but is this necessary? At what point do you treat unexpected medical expenses as something that should come out of emergency funds? If it matters we have a high deductible plan with $50 office visit copays.
« Last Edit: May 03, 2015, 09:09:46 PM by course11 »

MDM

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Re: Budgeting for medical deductibles
« Reply #1 on: May 03, 2015, 09:13:03 PM »
At what point do you treat unexpected medical expenses as something that should come out of emergency funds?
For large expenses, that seems as good an example of "emergency" as any.

For routine (severe sinusitis, sprain/break determination, etc.), one "urgent care" visit per person per year might be reasonable.  Of course individual examples will be all over the map.

Another defensible approach would be "moving average of the past X years" expenses, using whatever you think reasonable (3? 5?) for X.

rubybeth

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Re: Budgeting for medical deductibles
« Reply #2 on: May 03, 2015, 09:18:36 PM »
When we were making less, we just made sure there was enough going into the HSA to cover the deductible. Now, we max out the HSA. If you don't have an HSA, I think taking the deductible and dividing works fine, as $4,000 seems like quite a low family deductible anyway.

protostache

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Re: Budgeting for medical deductibles
« Reply #3 on: May 04, 2015, 04:40:17 AM »
I'm a cancer survivor so I am 100% certain that I will blow my deductible early each year when my CT scan checkup happens. To account for that I accumulate 1/52 of the deductible every week in a separate spreadsheet cell. My wife and I are trying to get pregnant as well so right now I'm setting aside the full family deductible.

If you know for sure you're going to blow the deductible thats what I would recommend.

Apples

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Re: Budgeting for medical deductibles
« Reply #4 on: May 04, 2015, 08:19:57 AM »
We are in the same situation as you:  a few large medical expenses in the last few years, and a deductible of $4,000.  In addition, we have almost $1,000 of dental and vision care each year which is not insured.  So we save $200/month right now into "medical savings" (no hsa) which covers the routine dental and medical and a bit of urgent care and one hospital visit or major sickness.  Next year we'll probably up that to $250/month, and evaluate from there.  When we have kids in the future, we plan to set aside the entire deductible every year because you never know what kids will do (or you know, you could get cancer or some major sickness - most people I know do at some point).  We let any extra we haven't used build up as "medical savings" in addition to our E-fund in case of a major medical event that we would need to pay for.  It adds another small layer of security before we need to tap our efund.  I decide how much we put aside each month based on how much I think we'll spend reasonably in a year, plus one or two several hundred dollar surprises.  It's the same as setting aside money for car repairs.  If we didn't set much money aside, it would seem that all we do is build our E-fund up just to spend it again.  But we're verrrry early in our financial journey, with a small E-fund.

curler

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Re: Budgeting for medical deductibles
« Reply #5 on: May 04, 2015, 09:14:19 AM »
Based on the above, I've kind of assumed I should budget the max deductible every year no matter what (i.e. for us, $4000 divided by 12) but is this necessary?

Maybe, but what's the harm.  I'm assuming that by budgeting for it, you mean setting aside $333 as near term savings ever month for health care.  If you budgeted less, would that money would just be going into investments/long term savings?  At the end of the year, if you don't spend it, you could transfer it then.  If so, that seems to be a small potential loss for the piece of mind.  (I guess I'm not sure where you are in terms of financial situation.  If you are carrying high interest credit card debt, the math could be different).

celticmyst08

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Re: Budgeting for medical deductibles
« Reply #6 on: May 04, 2015, 10:53:29 AM »
We are on high deductible plans, which means we pay out of pocket until we reach our deductible. So we budget enough each month to cover "regular" medical expenses (a couple non-preventative care visits per year, medications, etc). Then we make sure to always have enough savings on hand to cover our out of pocket maximums. It's working for us so far... knock on wood. :P
« Last Edit: May 04, 2015, 10:55:13 AM by celticmyst08 »

Numbers Man

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Re: Budgeting for medical deductibles
« Reply #7 on: May 04, 2015, 11:23:17 AM »
My family maxes out on our HSA via payroll deduction and employer contribution. The tax savings are wonderful while a certain portion is invested in an S & P Fund and we really never worry about medical expenses, whether they are of the routine variety, emergency or surgery related.

Freedom2016

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Re: Budgeting for medical deductibles
« Reply #8 on: May 05, 2015, 07:18:21 AM »
We opened an HSA last year and maxed it out; hoping to do the same this year... but we're actually trying to use it as a savings vehicle rather than to pay for today's medical expenses. Is that unwise? Practically speaking, that means we budget $6550 for HSA savings, then on top of that I'm trying to figure out how much to budget to cover deductible expenses. When we know we're going to blow through the deductible in a given year it's actually easier to figure out how much to save, than it is when it's not obvious how much we're going to spend in that year. I'm trying to figure out how to handle that latter situation.

(Someone asked - our only debt is our mortgage.)

Sibley

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Re: Budgeting for medical deductibles
« Reply #9 on: May 05, 2015, 10:01:50 AM »
Use your HSA for medical expenses, that's what it's designed for. If you don't use it all, then great. Other savings can be invested in 401ks, etc.