Money Matters Save Now for Your Future Health

Photo of person holding a bird's nest containing one egg People plan their vacations, their doctor visits — even their workouts. But when it comes to planning ahead for future health costs, many Americans don’t look beyond tomorrow.

Of course, it’s hard to think about future illness when you feel fine right now. Yet with age, you’ll likely see your health problems and medical costs increase. You can avoid getting caught in a future financial bind by planning ahead for your healthcare. And the best time to start is now.

Plan for Next Year

You may put money from every paycheck into your savings and retirement accounts. It’s also a good idea to think about your immediate medical expenses. Here are things you can do to make sure you’re covered all year long:

Read your health benefits booklet.

Be sure you understand what is covered and what is not covered. Then calculate the maximum you’d need to cover in one year if you or a family member ends up in the hospital and needs follow-up doctor visits. If a baby is on the way, you’ll need prenatal care and well-baby visits. If a child needs his tonsils removed, you’ll need to plan for surgery and follow-up care.

Plan ahead.

If you put one-twelfth of the most you could owe into your savings every month, within a year you’ll have a cushion of protection. If you put less in, it will just take longer. When you are budgeting, take into account any:

Copayments — usually a fixed amount you must pay for each purchase of prescription medications or for each office visit (for example, $20 a visit)
Coinsurance — the portion you must pay for most covered expenses. For example, you may have to pay 20 percent while the plan covers 80 percent.
Deductibles — the initial portion of covered expenses you’re responsible for in a given year. For example, with a $1,500 deductible, you must pay the first $1,500 of covered health costs before your insurance coverage will kick in.
Out-of-pocket maximum — the most you’ll be required to pay in a calendar year for covered medical and surgical expenses

Fund a flexible spending account.

If you have the option to open a flexible spending account, be sure to take advantage of it. This is a pretax savings account that lets you set aside funds toward paying off your health expenses for the year. However, in some cases, you must use all the money by a certain date in the year, otherwise you will lose any unused portion of the account.

Your Best Investment

While saving now for future needs, be sure to invest in the most valuable savings plan of all: prevention of future illness or disease. Your lifestyle habits translate directly into the amount of healthcare you are likely to need over time. So quit smoking (if you smoke); get regular physical activity; maintain a healthy weight; eat a balanced, low-fat, high-fiber diet; and schedule all recommended health screenings and doctor visits. You’ll not only save your health, you may also save yourself some money.

Who Has Higher Costs?

Injury or illness can happen to anyone. So everyone, young and old alike, needs to plan for future medical costs. However, those most at risk for higher healthcare costs include:

People with growing families. Prenatal care; childhood immunizations; well-child visits; and the common scrapes, bruises and illnesses of childhood all contribute to higher costs of medical care.

People with chronic illnesses, such as diabetes, asthma or high blood pressure. Chronic illnesses tend to require ongoing medications, more frequent health screenings and other regular care to help control the condition. But that’s not where the big costs lie. It’s the people with poorly managed chronic diseases who often end up with serious complications that require hospitalizations or other high-ticket treatments. They may also pay a stiff price in poor health and lower quality of life.

People with high health risks. If you have an unhealthy lifestyle because you smoke or don’t get adequate physical activity, you have a greater risk for high health costs over time. Having a family history of heart disease, cancer or other illnesses can also raise the risk and signal a need for stepped-up preventive care.

Older adults. People approaching age 50 or older should consult their physician to determine any increased health risks and how best to address them.