Health Insurance and Your Savings
Health insurance is your first line of defense with regard to both your health and your budget. However, it is not only your health insurance premium that you need to consider. There will still be co-payments, deductibles, and other out-of-pocket expenses that are not covered by your policy.
How Good is Your Policy?
A thorough understanding of your health insurance policy will enable you to better handle these expenses. After all, if it isn’t that wide-reaching, you’ll need to consider a backup plan so an unexpected health cost won’t completely undermine your financial situation.
Start with the basic costs of your health care. This includes what you would normally pay out-of pocket: co-payments, deductibles, your normal medications, and so forth. Take a look at the costs you’ve dealt with the last couple of years; what’s the usual yearly amount? This will give you insight into the practical expenses you’ll be likely to encounter in future.
Take it 2 steps further.
- First, look at those elements in which you don’t have coverage. Perhaps your chiropractic and dental cover isn’t that strong, for instance.
- Then, start to consider the more serious scenarios. You never know when you could need emergency treatment or help with a serious health condition.
Building a Savings Account
Whether you choose a designated health savings account or a standard savings account – such as one that you can manage online – it is important to save some money for a “rainy day” in your health.
This is especially true for those with a tight budget. Imagine that you came down with an illness today. A trip to the doctor would perhaps give way to your co-payment, some more out-of-pocket expenses for tests, and then even more for medication(s). What would that do to your budget?
Of course, this is a rather mild scenario in the realm of possibilities of health problems. It can be much more serious and debilitating to your finances. This is why it’s important to keep money for a rainy day, for your health insurance and more – your car insurance, home insurance, and for a number of other items for that matter.
This seems to be the million dollar question – and don’t worry, you likely won’t need that much saved away.
Hence the importance of the first point we covered: knowing your insurance policy, or how public health services impact you. If you have strong coverage, you may be able to keep this cost relatively low. Taking it a bit further, there are plenty of situations that can warrant a decent reserve – such as medical problems in another country when on vacation (travel insurance is an important extra cost to consider).
Take these factors in consideration. Your budget may not allow for a lot of money to be saved in an account, but whatever you may decide is right, you can continue to re-evaluate your situation. Perhaps you’ll be able to turn such an account into an investment, and gain interest as well as peace of mind. There is no universal number that you must keep in reserve – you never know how much you’ll need.
Still have questions? Let's talk!
Confused? Not sure if this applies to your situation? Phone us on 1300 643 355 for some free, no obligation advice!