The Emergency You Really Need to Plan For

You know I wish all of you great health. And a life free of injury.

And you also know that one of my most important pieces of advice is to “hope for the best and plan for the worst.”

Which brings me to the subject of your health insurance. Do you have enough cash in your emergency fund to be able to cover your maximum annual out of pocket (OOP) if you –or a family member on your plan—happened to have a serious illness or injury?

According to the non-partisan Urban Institute, in 2018, the average maximum OOP charge for an individual with insurance through work was more than $4,400. The average for family coverage through work was nearly $8,400. If your insurance is through the ACA marketplace, typical maximum out of pockets are even more.

That is a lot of money. And I want to be clear, this is in addition to your monthly premium. The OOP maximum is the most you will have to cover for your deductible, co-pays and coinsurance charges. If you have an illness or injury that requires a lot of tests, surgery or ongoing treatment, you will likely hit the OOP max quickly. And I am sorry to point out that if you are diagnosed late in the calendar year, you could very well hit the OOP in that year and then have to pay it again if treatment continues into the following year.

If you decide to seek care outside of your plan’s network of care providers, there is typically no limit on what you can be charged in coinsurance/copayments.

Sadly, researchers report that two-thirds of people who file for bankruptcy cite medical debt as a primary reason.

Again, we can all hope for the best. But at the same time, I sure hope you have a renewed appreciation for how important it is to build up a hefty emergency savings fund. It’s not just for car repairs or needing to replace the HVAC earlier than you expected. Your emergency fund is vital to reducing the stress if you, or a family member faces a serious illness or injury.