How to budget for medical expenses

The cost of healthcare is a big deal. I should know. And it's not just the cost of your premiums that can impact your budget, it's also preventative care, doctor's visits, prescriptions, and basically anything else remotely related to your health. As much as all this is overwhelming, you need to take control of your medical expenses. Many people have been run aground by medical bills. Prevent financial ruin by following these four tips:

1) Get to know your medical budget

Your medical budget, while seemingly simple in nature, is actually a big old beast which includes a lot of expenses. Premiums, deductibles, prescriptions, disability insurance premium, gym membership, vitamins, and vaccinations are just a few of the expenses you need to fit into this category. Oh, and did I mention all of this should fit into 5% of your take-home pay? Seems cruel, but it's not intended to be. For some this will be no problem. If your employer provides insurance then your premium is taken out of your paycheck, meaning you are budgeting from what's left after your premium is paid. In essence, your premium doesn't count against your 5%. If you are self-employed or paying for insurance on your own, you will definitely struggle to keep expenses under 5%, but the next few tips will help you.

2) Cut expenses

Your health is important so don't cut back on preventative care, but there are a few ways you can save money in the medical arena. First, call your insurance company. You may not be able to do anything until open enrollment, but begin researching plans now. Would switching to a higher deductible plan make sense for you? Are there generics available for your prescriptions? What about your gym membership, can you downgrade to a more basic package?

3) Shift your budget

There are many people who struggle to fund high medical costs. If you can't manage to fit all your expenses under 5% of your budget you aren't alone. But it also isn't an excuse to go into debt. If you have high medical costs something else in your budget will have to be sacrificed. Determine how much you are over budget and then look for a place in your budget where you can cut costs. Have low housing costs? Perfect, use the surplus in housing to cover medical. Still wearing your intramural badminton shirt from college? Good for you, "steal" money from your clothing budget. Your budget should operate on the "give and take" method.

4) Save an emergency fund

The best way to prevent future medical bill drama is to save an emergency fund. An emergency fund is for emergencies and what's more urgent than a medical emergency? An emergency fund, which is three months worth of expenses, is there to cover any expenses beyond routine expenses. In an accident? Need surgery? Your emergency fund can help cover these costs.

It is easy to be overwhelmed by medical expenses, but a little clear thinking and forward thinking can prevent a lot of issues.