This Is How Much You Need to Budget for Health Expenses

Although Im lucky to be employed and (mostly) healthy, budgeting for healthcare is still a nightmare.

Unexpected health expenses can take a devastating bite out of your budget if you dont plan for them.

Having adequate savings set aside for medical costs can provide peace of mind and prevent debt.

Deductible.Your deductible is the amount you pay for your health services before your health insurance starts paying its share.

Premium.The premium is what you pay to the insurance company to have your plan.

You could pay this monthlyas most people door quarterly or annually.

The costs of your deductible, co-pay, and co-insurance are included here, but not your premium.

you might expect a higher deductible and out-of-pocket limit at out-of-internet providers.

Your coinsurance and copayment may also be higher for out-of-data pipe providers.

Here are steps to budget for healthcare expenses:

Estimate your annual out-of-pocket healthcare costs.

This includes things like co-pays, deductibles, prescriptions, dental work, vision care, etc.

Review what you spent last year as a starting point.

Divide that annual amount by the number of pay periods in a year to get a per-pay-period amount.

Add a buffer for unexpected expenses.

Thats the monthly savings you should budget for healthcare.

Be sure to review and adjust as needed.

Its tough out here.

Add an emergency fund cushion.

Its impossible to predict a sudden injury or illness, so add a buffer to your estimate.

Aim to save at least an additional 20% of your expected health care expenses.

This will help cover unexpected emergencies.

Consider contributing to a dedicatedhealthcare savings account.

An HSA allows you to contribute pre-tax dollars that can be used tax-free for qualified medical expenses.

Making regular contributions instead of a lump sum will help build savings faster.

Review and adjust annually.

Re-evaluate your estimated health expenses each year during open enrollment season and adjust your contributions accordingly.

Life circumstances and health needs change over time.