Without proper planning, a medical emergency could be financially catastrophic. According to a survey Amino conducted, 37% of Americans said they could not afford an unexpected medical bill greater than $100 without going into debt—but emergency medical care could cost thousands of dollars, even with health insurance. If you don’t currently have money set aside, you’re not alone. We found that only 15% of Americans set aside funds for major surgeries and emergencies.
Since it’s impossible to predict when you’ll need emergency care, it’s best to prepare proactively. Having a plan in place that includes an emergency savings budget, an idea of where you should seek treatment nearby, and steps you can take to avoid high medical bills can give you peace of mind and prevent you from going into medical debt to cover unexpected healthcare costs.
Have a plan for where to go
When a medical emergency arises, you’re left with an important decision: should you go to the emergency room (ER) or an urgent care center? It can be confusing to know where to go—and you don’t want to be frantically searching while dealing with a health crisis. Having a plan set in place ahead of time can save you time, money, and unnecessary stress.
There are a few key differences between ERs and urgent care centers, including how quickly you’ll be seen, the level of care available, and how much a visit will cost. Check our our post on the different between the ER and urgent care here.
Know what your costs could be, and factor them into your budget
Even if you have health insurance, emergency medical care can cost a lot. Here are some potential costs you should consider ahead of time:
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Your ER co-pay. Most health insurance plans have a co-pay for going to the ER, which can be anywhere from $50 or less to $200 or more. Check what your ER co-pay is on your Summary of Benefits and Coverage (SBC), then set aside that amount, if you can.
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Your deductible. This is the amount you have to pay in a given year for covered healthcare services before your insurance kicks in (although even then, you’ll likely still have to pay a portion of the cost of emergency visits—more on that below). Your deductible could be as low as $150 or as high as $2,000 or more. Make sure you know what it is ahead of time, and try to set aside the full amount.
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Your out-of-pocket max. Your out-of-pocket max is the most you’ll have to pay in a given year for healthcare expenses before your insurance covers 100% of your costs. Your out-of-pocket max will be significantly higher than your deductible (usually thousands of dollars). If you can afford it, set aside the full amount of your out-of-pocket max each year. That way, you know that you can cover any medical costs that arise.
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Your co-insurance rate. Co-insurance is a fixed percentage (usually around 20%) you have to pay for medical services, like a hospital visit, even after your deductible has been met. It can be tricky to budget for this because your total cost depends on the type of care you receive, where you receive it, and whether you’re seen by an in-network or out-of-network doctor. Even if you’ve hit your deductible, keep in mind that you may have to pay co-insurance for an ER visit.
Open a savings account for healthcare expenses
Opening a savings account that is only used for healthcare costs is a good way to ensure you have money set aside if a medical emergency strikes. You’ll want to do some research to see which option makes the most sense for you—but here are the most common types:
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Flexible Spending Account (FSA). This is only available to people who have health coverage through their employer. If that’s you, then ask your HR/benefits manager if an FSA is available. An FSA account will allow you to save pre-tax income to put towards healthcare expenses, and some employers match contributions.
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Health Savings Account (HSA). HSAs are only available to people who have high-deductible health plans, either through their employer or a financial institution (so anyone can open an HSA account, as long as they have a high-deductible plan). You can contribute pre-tax income to an HSA, and your contributions rollover each year.
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Health Reimbursement Arrangement (HRA). An HRA is an employer-funded account that allows your employer to reimburse you for eligible out-of-pocket medical expenses and your health insurance premium. Check with your employer to see if they offer this benefit.
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Regular savings account. If none of the options above are available to you, consider opening a regular savings account that you only use for medical expenses. According to Laura Adams, host of The Money Girl podcast, you should look for accounts that are “high-yield” so that you get better rates. “You might want to consider opening up a healthcare savings account in a different institution than where your regular checking or savings account is saved,” Adams said. “That way, there’s more of a barrier to taking out the money for non-healthcare expenses.”
Keep track of your medical bills—and know how to catch errors
Even if you plan ahead, a medical emergency could leave you with unexpected medical bills. This can happen for a variety of reasons, like your doctor using the wrong billing code, going to an out-of-network facility, or seeing an out-of-network provider.
Before you shell out the last bit of your savings or open a credit card to cover medical costs, it’s important to understand that you don’t have to take an emergency medical bill at face value. You may be able to get your bill lowered or corrected. It can be a tedious process, but many medical bills do have mistakes that can be corrected. Here are some tips for catching errors:
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Ask for an itemized bill. You can get an itemized bill from your doctor that lists the exact charges and what they are for. You can review this bill and verify that the care you were charged for is the care you actually received.
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Find your Explanation of Benefits (EOB). Your EOB comes from your insurance company and covers the amount charged by the doctor, the amount paid to your doctor, the amount you’re responsible for, and which charges are covered and which are not.
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Cross-check your itemized bill with your EOB. Once you’ve read both your itemized bill and your EOB, compare the two. Look for things like out-of-network care, incorrect service dates, duplicate charges, incorrect quantities of medication, and charges for services you didn’t receive. Make a note of these things; they’ll be helpful when you call your insurance company.
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Call your insurance company. If you noticed any discrepancies on your bill, call your insurance company and ask them to correct the errors.
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Negotiate with the hospital or urgent care center. You can also negotiate your bill directly with the place you received care. There’s no guarantee but some facilities may lower your bill or offer a discount, interest-free payment plan, or settlement.
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Be persistent if they deny coverage. It may take more than one call to your insurance company to get your emergency care covered. Don’t give up!