According to a 2013 survey, almost 90 percent of middle-income Americans do not feel prepared to handle the financial cost of a critical illness. Most respondents said they would have to use their savings, but 75 percent had less than $20,000 in savings and 25 percent had no savings at all.
A critical illness can be especially challenging, but even healthy people with medical insurance can face substantial out-of-pocket expenses. The total health-care cost for a typical family of four covered by an employer-sponsored PPO insurance plan is $22,030 in 2013. More than 40 percent of this total – $9,144 – is paid by employees through payroll deductions and out-of-pocket expenditures.
One strategy that may help reduce health-care costs while saving for future expenses is to combine a high-deductible health plan (HDHP) with a health savings account (HSA).
- Written by Charles Sims Jr.