Managing higher out-of-pocket medical costs

Medical costs, like many living costs, are up. In fact, roughly half of US workers say they only have $2,500 saved for a medical emergency¹ and report having difficulty affording health care costs.²

And when costs go up, stress, worry, and pressure can easily rise, too. If you’re currently feeling worried about paying for care — your own, or a loved one’s — well, you are likely not alone.

In fact, for individuals who are on high-deductible health plans (HDHPs), covering higher out-of-pocket expenses can add to that stress. Nearly 3 in 4 (74%) workers with high medical deductibles report high financial stress,³ according to our research.

This unfortunately can have negative long-term effects as employees skip or delay health care to avoid the associated medical costs. In 2023, 2 in 5 workers with high-deductible health plans deferred health care to avoid out-of-pocket costs.⁴

Fortunately, there are steps you can take today to plan and save, which can help you more easily cover high out-of-pocket medical costs and build a stronger foundation for a brighter financial future.

Here’s what you can do

• Make a plan
  Create a savings plan to set aside funds toward any future out-of-pocket expenses, so you’ll be prepared should you need money to help cover health care costs.

• Start a Flexible Spending Account (FSA)
  If available from your employer, you can start an FSA account that allows you to set aside some of your earnings pre-tax and use that money to pay for qualifying expenses, most commonly for medical or dependent care expenses. Since the money isn't taxed, it'll cost you less than if you saved it post-tax.

• Use a Health Savings Account (HSA)
  You can also fund a Health Savings Account, which is available depending on the type of medical plan you have, such as a high-deductible plan. This account, too, allows you to set aside money to help cover any out-of-pocket expenses, which will help you save on taxes. Funds can be withdrawn tax-free to pay for or reimburse out-of-pocket medical, dental, and vision costs.

• Enroll in supplemental health insurance
  Supplemental health insurance like Accident, Critical Illness, or Hospital Indemnity insurance can help cover expenses such as deductibles or copays associated with an accident, illness, or injury.

Supplemental health insurance provides extra protection should you be faced with a serious illness, admitted to a hospital, or suffer an injury. The benefit is paid directly to you and can be used any way you choose. You may choose to use the payment of benefits toward deductibles, copays, transportation, or possibly childcare. Several plans also provide benefits that pay you for eligible health or wellness screenings you have done, even if other insurance covered the original cost.

Many of these benefits are made available by employers for as little as the price of a pizza a month, making them an affordable way to get added protection. For help deciding which types of insurance are best for your needs, read more about how supplemental health insurance works.