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Am I the only person who cringes when I think about the complexities of our family’s health insurance? Just like navigating the health insurance circus, budgeting for healthcare can be confusing.
That complexity can make budgeting for this category a bit more of a struggle than accounting for other expenses. Accounting for premiums and doctor’s visits is simple. Add in an HSA or FSA and things get even more garbled.
How We Budget for Healthcare
Here’s how we budget for this category at our house. If you don’t use a health savings account (HSA) like we do, you’ll want to tweak this formula for your own use.
To come up with a monthly healthcare budget we add up the following costs:
- healthcare insurance premium payments – $50
- alloted HSA amount, divided by 12 – $105 (this is our per month HSA amount)
We budget $155 per month for healthcare costs for our family of 7. If you don’t contribute to an HSA, then you can add in your expected yearly bills and divide by 12 for a monthly budget amount.
Healthcare Costs Will Vary by Year
Healthcare expenses can be awfully variable. Our family spends more during years where a baby is born. Labor and delivery isn’t cheap, so we budget more for healthcare expenses during those baby birthin’ years.
Sometimes unexpected events occur that ramp up healthcare costs. Take this year, for example. We budgeted based off a “non baby” year. Then my husband fell ill and we’ve been paying his medical bills. So of course we blew through our health savings account contributions by March and are now paying without the tax benefit of the HSA.
Want to know how we come up with our HSA contribution amount each year? You’ll find a link at the bottom of this article to my notes when we were coming up with our number for 2015.
Budget as Accurately as Possible, but Make Sure You Have Emergency Savings Too
During times of unexpected medical expenses it’s important have built an emergency savings through diligent budgeting. Being able to pay these bills out of a healthy savings account really takes a lot of stress out of the situation.
I’m thankful that my husband has been able to focus on healing instead of worrying about how to pay for medical bills. That’s added stress that no one needs; healthy or otherwise.
How do you budget for healthcare costs?
Are you interested in seeing how we determine our HSA contribution? Click on the thumbnail below for a pdf of our notes from this year.