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Protect yourself from unexpected medical costs

Imagine this: you're admitted into the emergency room for a medical issue that requires immediate treatment. You assume that you are well-protected from medical expenses with your employer-sponsored health care. After paying your portion of the medical bills, you think that you are in the clear with treatment costs.

Americans spend an average of $5,000 a year on out-of-pocket health care costs.1

Several months pass and you receive a bill from a third-party for doctor services rendered. This bill for over $1,000 leaves your head spinning. You contact your insurance provider and are assured that this is a legitimate bill that you are responsible for paying. You raid your savings to pay for this unexpected medical cost.

This financial emergency may have been prevented if you had the right layers of protection in place. Read on to learn how.

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Anticipate future medical costs

Scenarios like the example above are all too common in today's health care environment. So how can you protect yourself from the burden of unexpected medical expenses? Being proactive and understanding that there are relief options available can help to soften the financial impact (and frustration) of unexpected medical costs.

Anticipating future medical care for you and your family should be the first step in preparing for the ensuing costs; both the known and the unexpected expenses. Is someone in your family facing a medical challenge that may require extensive or ongoing treatment in the coming year? Or is a covered family member active in sports which could lead to an injury? Consider what your health care costs might be for such services and choose the right plan for your family's health needs and your budget.

Choosing your health care plan

Generally, employer-sponsored health plans fall into one of two categories: a High Deductible Health Plan (HDHP) or a Low Deductible Health Plan (LDHP). If everyone who is included in your coverage is relatively healthy and you do not expect high medical costs in the coming year, an HDHP option may be right for you. You'll pay lower premiums, which can save you more money than you would spend on medical care. If you do expect high medical costs due to various factors, an LDHP can be a good coverage choice. You'll pay more in premium but when those pesky medical bills start to add up, a lower deductible will help you save on out-of-pocket health care costs.

Tax-deferred medical benefits

Whichever health care plan you choose, you may have the option of picking a tax-deferred savings fund to help give you some medical expense relief. Basically, you choose an amount to pay into your fund each month to set aside for qualified medical expenses. The money in your fund can be used to help cover medical treatment, equipment, medication and more. Many employers offer to match up to a fixed percentage of your own account contributions.

Flexible spending accounts (FSA)

An FSA can be handy for routine medical costs, eligible over-the-counter purchases, and other health care expenses. You'll receive a debit card to use for eligible purchases, which adds convenience to this benefit. One limitation to FSAs is that the money funding the account must be used within the same calendar year; your account balance won't rollover into the following year.

Health savings accounts (HSA)

HSAs work the same as FSAs but with distinct advantages. First, there are no annual distribution requirements with HSAs. Any funds in your account that you do not use within a calendar year are rolled over into the following year. Second, some HSAs allow you to utilize your account as an investment opportunity. When you invest with an HSA, your investment gains are not taxed, and the proceeds can be used for eligible health care costs. Most HSA investment options give you access to your funds at any time.

While the advantages of HSAs make them more attractive than FSAs, both options provide you with financial protection when unexpected medical costs arise.

Medical expenses and your taxes

According to irs.gov, some medical and dental expenses that you pay directly to health care providers may be eligible tax deductions. To deduct medical expenses, you must itemize your deductions when filing your taxes. Medical costs that you pay for yourself, your spouse and your dependent children can also be eligible for tax relief.2

Irs.gov offers a free medical and dental expense tool that calculates your eligible, deductible medical costs. You can securely access the tool here.

Supplemental insurance

To further protect yourself from unexpected medical bills, look no further than supplemental insurance options. These non-traditional coverage plans can help you pay medical costs or daily living expenses. Supplemental insurance pays eligible claims regardless of any other medical coverage that you have in place.

If coverage options like accident, critical illness, or hospital indemnity insurance are offered to you through your employer, you'll likely pay group rates. Your premiums will be affordable, and most plans offer full-family coverage. Simply file a claim following eligible treatments or diagnoses and approved claim funds are paid directly to you.

If your employer doesn't offer supplemental coverage options, you can buy an individual plan directly from an insurance agency or broker. With individual plans, your rates may be higher, but the benefits of protecting yourself from unexpected medical costs are the same as with group plans.

Allstate Benefits can help

Allstate Benefits offers a robust portfolio of supplemental coverage options that can help give you relief from unexpected medical expenses. If your employer doesn't offer such options, share information with your employer or benefits administration manager to let them know you are interested in having these valuable benefits available to you. There's no cost to the business, which should grab their attention.

Adding an extra layer of protection from unexpected medical costs is easy. Contact us today to speak with a sales representative about supplemental insurance options that can help give you financial peace of mind.

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