As the one-year anniversary of my first-ever hospital stay approaches, I’ve been ruminating on the lessons I took away from the experience — some learned the proverbial hard way. This health crisis was unexpected — as many crises are — and it was preceded by a trip to both urgent care and the emergency room. I wanted to avoid the ER visit very much, not only because of the hassle, but also because — as a newly self-employed person — the deductible on my health insurance policy was $5,000.
Several years earlier, I had a very different kind of health crisis. This one was not an emergency, but long-term, subtly debilitating, and one that eventually took me out of my job for a month. Unlike my more recent health crisis, I had insurance benefits from my employer at the time.
Both situations — along with my insurance and employment status during each — were very different. Experiencing both gave me a unique perspective on managing personal health care and health insurance, along with lessons I’ve applied to my current health care choices. Here are the nine most important takeaways from these events.
1. Have a primary care physician, along with an OB-GYN if you are female. Even if you are healthy, you never know when you will need them. If something unexpected happens, it’s great to have an office to call for guidance,and your own doctor to take charge of your care in the event of a hospital visit.
2. Know where the nearest hospital is, and give some thought to which hospital you would prefer to visit, if you have the choice. This may be the hospital where your doctor practices. In case of emergency, you can almost always go to your nearest hospital, even if out-of-network.
3. When it comes to your health insurance, make sure you understand how it works, and seek expert help if possible. It doesn’t cost anything to get help from a licensed broker, as brokers are paid by the insurance carrier.
4. Choose your deductible and maximum out-of-pocket amounts wisely. Pretend that you will have a hospital stay this year. Will you be able to cover your deductible (the piece you’re responsible for before your plan kicks in) and max out-of-pocket (usually, the most you’ll have to pay in a calendar year) from income or savings? If not, will help appear from other sources like your family? If the answers are no, then you need to consider a deductible that is more manageable. Know that there is a trade-off between your health insurance premium and risk of incurring out-of-pocket costs.
5. Find out if you qualify for premium assistance. With the passing of the Affordable Care Act, there are now strict income limits in place to make health insurance more affordable for those who qualify. As a single person, if your modified adjusted gross income (MAGI) is less than about $30,000 to $45,000 per year (these limits vary by age and zip code), you may qualify for a tax subsidy to lower the cost of your insurance. Even business owners may fall into this category due to business expenses. Your adjusted gross income from the previous year is the last line on the first page of your Form 1040 (to determine MAGI, add in tax-exempt Social Security, interest, or foreign income). If you have children, they may qualify for your state’s free coverage program. Find expert assistance or check out HealthCare.gov.
6. Start an emergency fund, NOW. It’s the most touted and trite advice doled out by us financial planners, but only because it’s true! When it comes to your health, emergency savings help you cover not only your out-of-pocket medical costs, but also your day-to-day expenses should you have to miss work and pay. If you are out on disability, the “deductible” comes in the form of a waiting period, which is the time you have to wait until your insurance starts paying benefits to you.
7. Speaking of disability insurance: Do you have it? According to the National Safety Council, there is a disabling injury every nine seconds. To put that in perspective, there is a death caused by a motor vehicle crash every 15 minutes — and you have auto insurance, right? Most likely, if you work for a large company, you have short-term and long-term disability coverage. Short-term pays when you’re out of work for a short time, like I was for a month. Long-term disability comes into play when it is unlikely that you will work again, period. Make sure you understand both your long-term and short-term coverage. Ask your HR department or an independent licensed expert for a detailed explanation. Remember: Disability only covers a portion of your earnings, but you can choose to supplement with private disability insurance.
If you are self-employed, you will need to purchase private insurance. Create a spending plan based on how much you would need to replace your income, and use this monthly figure to price the insurance.
8. Don’t forget to account for recovery time. My hospital stay was two nights, but my recovery was two months. During the first month, I could barely work at all, and during the second month, I worked from my couch. This out-of-commission time may or may not be covered by disability insurance. If recovery time is not covered, then you will want to ensure that you are financially prepared.
9. Find ways to reduce your stress. I’ve always known that stress negatively impacts health, but it wasn’t until I was recovering and had lots of time for reading that I truly understood why. Lissa Rankin’s book Mind Over Medicine helped me understand that when you are in a chronic state of stress, your body does not have the ability to fight off invaders, keep up with its day-to-day maintenance, or even digest food properly. Overall health suffers greatly for it. Be sure to incorporate time for rest, meditation, yoga, prayer, reading, or any kind of downtime that helps you relax. Such time is critical for retaining health. As a recovering Type A person, I wish it hadn’t taken a health crisis to get me to slow down and address unresolved issues from my past.
Much like your retirement or long-term savings goals, planning for potential health costs is crucial for both a healthy body and healthy finances. Prepare now to avoid compounding a health crisis with a financial one.
Addie McHale is a member of the DailyWorth Connect program. Read more about the program here.