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Dealing With The Cost of Health Care

My daughter has treatment-resistant epilepsy. She has been suffering with seizures for more than a decade. The emotional costs have been tremendous. It is so painful to watch your child (or anyone) seize up, convulse and check out. But this column is about the medical costs associated with family illness. My daughter is covered by insurance, for which I am grateful, but that hardly covers the actual costs of her health-impaired life.

As a hardworking member of the middle class, I have been saddled with tremendous unpaid expenses to care for my daughter. You know the story. I’ve earned too much money for her to obtain government aid, yet not enough to afford her care, leaving me with the sickening choice of not providing the very best care “money can buy” or using credit and personal loans to pay for services and treatments that are otherwise out of my reach.

Insurance does not cover co-pays for the handfuls of pills my daughter takes three times a day or cover the co-pays for all the doctors she must see regularly.  Insurance does not cover the 24/7 care she requires or all the personal items that get destroyed in the wake of her seizures (like crushed eye glasses, a frequent and unavoidable occurrence).  And, there is no choice.

This past week my daughter’s doctor ordered an in-hospital 48-hour video EEG.  Can you even guess what 48 to 72 hours at a New York City hospital costs?  Beside the astronomical hospital bill (and you should always ask for an itemized bill), there are the exorbitant non-medical costs of just staying at the hospital.

For example, “hospital food” is provided but the cuisine is bland and lukewarm if you are lucky, certainly not comforting.  You will likely be running out to purchase meals three times a day for the patient and visiting family members.  While I always advise people to shop for groceries, cook and eat in, when your family member is admitted to the hospital, it is nearly impossible to eat healthy or on the cheap.

If your child is admitted to a large hospital in a major city, you can add the cost of a hotel stay, or if you are fortunate, you may be blessed to sleep in a bedside recliner.  On this particular visit I was offered a recliner chair that didn’t actually lock in position, so every time I moved, the chair closed up on me like a rubber band.

Then there are other add-on expenses including the costs to park your car (in NYC overnight parking runs approximately $60/day), a stop at the crafts store for in-room entertainment and online games and movies.

As I try to calculate all of these expenses, I am left with the sinking feeling that the costs of this medical adventure will now be known as our “lost” summer vacation. Where on the spectrum do these unexpected medical expenses fall?  Am I going to clean out my emergency funds? Yes.  Am I going to take the money I had scraped aside to go to the beach this summer? Yup.

Am I the only one? Nope.

It is well known that medical expenses are the number one cause of personal bankruptcy in America.  With the Affordable Care Act requiring mandatory health insurance, you would expect those numbers to decline.  Unfortunately, because there are so many unknown and uncovered costs, including out-of-network doctors, hidden and unexpected fees, billing mistakes, and widely differing fees for services and procedures, there is often no choice other than to go deep into medical debt to buy good health.  A new poll by the New York Times and Kaiser Family Foundation finds that about 20 percent of people under age 65 with health insurance still reported having problems paying medical bills over the past year.

I am constantly harping on the benefits of paying yourself first and having an emergency fund.

There is another key component to your financial health known as asset protection. That means having funds that are yours alone, exempt from third-party “unsecured creditors” that include the trillion dollar money making medical industry. In other words, you should have some of your money “tied up” in retirement and/or trust accounts (which differ state to state) providing a safety zone for the assets you have earned, even if you do become indebted for medical costs.

These days medical treatments can easily be deemed extravagances. While you may consider yourself a moral person, and while you may not spend indulgently or on frivolous items, can you deny your child medical attention?  At the end of a hospital stay, if you don’t have money to pay those bills, you may have no choice but to default on payment and either file for personal bankruptcy or settle with your creditors.

By putting money into your exempt retirement account every pay period, you can generate and accumulate “protected” money. This is money your creditors cannot access.  Our government has intentionally set up these mechanisms to allow people the ability to save for their futures in vehicles that cannot be pierced and taken by creditors.

Every day we have to make choices between needs and wants. Sometimes we are overwhelmed and feel that certain wants are actually needs.  Other times, what we see as needs are actually real needs and cannot be defined as splurges, yet the costs go far beyond the actual dollars that we have available.  We have to make educated, fact-based decisions regarding how to proceed and how to protect our families.

I am not leaving my daughter’s bedside because the parking expense is too high. I will have to break my budget and use both my emergency and vacation funds. I will spend more than I normally would on an average week in May, but as I see it, I have no choice.

The good news is that I will not dip into my exempt retirement account, which would cost me not only the principal, the penalties and interest, but also the continued compounding interest I am earning as the money stays safe. And no one can make me. If I can pay the medical bills as they arrive, I will. If I can’t, I will try to negotiate. Not paying may cost me a large hit on my credit score, but I am prepared to take the blow. It will take five to seven years to repair my credit. That “hit” to my credit may cost me a higher interest rate when I try to get a new car or loan, and it may cost me a job if I look for a new one, and it may also impede my ability to get housing if I choose to move. But what choice do I have?

My daughter’s health is more precious than my money. So, this is today’s bottom line: Save your money and pay yourself first on a regular basis. Be sure to keep a portion of your money in an exempt vehicle, whether it is a Roth or Traditional IRA, a 401k plan, a trust or a life insurance policy.

Don’t be afraid to use credit or to negotiate debt, if you need to.  Health first!

About Michelle Gershfeld

I’m a debt settlement and bankruptcy attorney who negotiates resolutions between clients and their creditors. I am also a real estate attorney involved in both sides of purchasing and selling distressed real property. I am passionate about teaching people about money and helping individuals of all ages achieve financial independence and success in a "no…

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