Most health insurance plans don’t cover all your medical costs, and when you have accident-prone kids, unexpected costs can add up. That’s why it’s so important for parents to save up an emergency fund to cover unplanned expenses. We sat down with Jeannie Jackson, financial representative with Guardian and Strategies for Wealth, on the set of a Scary Mommy video shoot to talk about unexpected medical costs and what you can do to prepare for them.

Kids can be rambunctious, and you can’t predict when they’ll get hurt. How can you plan to cover the unexpected costs if your child is injured? 

If you work for an employer, the first thing you should do is look at your supplemental insurance plans, like hospitalization and accident policies. These policies will pay cash benefits to you if your child needs medical care. They cover a wide range of services that help you with out of pocket expenses you don't even think about (taking cabs, eating out, etc.). With some policies, you could receive benefits for an ER or urgent care visit because your child sprained their ankle playing soccer. Some carriers may even pay increased benefits if your child is hurt while participating in an organized sport. If you’re planning on expanding your family in the future, hospitalization benefits could be important to help you with the costs of hospital admission or complications during your own delivery.

What’s considered a high deductible?

A High Deductible Health Plan (HDHP) is a plan with a higher deductible than a traditional insurance plan.  For 2020, the IRS defines an HDHP as at least $1400 for an individual or $2800 for a family. The out of pocket max is $6900 for individuals and $13,800 for a family.

What are the benefits of an HSA? When should you open one?

An HSA is a Health Savings Account. It’s a tax-advantaged medical savings account available to taxpayers who are enrolled in a high deductible heath plan. Any money you contribute to your HSA is not subject to Federal income tax. For 2020, an individual can contribute up to $3,550 a year, and a family can contribute up to $7,100 a year. HSAs allow the money you contribute to be used for medical expenses like copays, deductibles, dental work, the chiropractor, therapy, etc. The money in your account can be invested, and depending on your cash flow, when you need to pay a medical expense you can choose to use that HSA account or pay out of pocket. This strategy allows you to build up a medical emergency account for a day you really need it or to ear mark the money for a health account in retirement.

What are the benefits of an FSA? When should you open one?

FSAs are Flexible Spending Accounts. They allow you to set aside money from your paycheck on a pretax basis to use for eligible out-of-pocket expenses. This can include things like medical, dental, hearing, vision and dependent care expenses. You choose the amount you want to contribute at the beginning of the year. One of the biggest differences between an FSA and an HSA is that if you don't spend what you've set aside for your FSA by the end of the year, you lose what’s left.

Can you explain the different supplemental insurance policies out there?

Supplemental insurance policies may be voluntary benefits that you opt into, offered through your employer via payroll deductions at affordable rates, They generally include things like short term and long term disability, life insurance, and accident coverage, critical illness, legal services, pet insurance, and other benefits. Purchasing these supplemental⁠ (sometimes called “voluntary”⁠) benefits through your workplace may come at a discount.

What advice would you give to the parent who’s looking to plan long term? 

It’s tough to plan alone. I would recommend consulting with a trusted financial professional to discuss your goals and prioritize what to save for. Don’t think that you don’t make enough money to meet with a financial professional. Everyone can benefit from good, sound financial guidance. Getting financially fit takes time, but once you begin and start handling things on your to do list­, you'll feel more at peace. 

Disclaimer

Jeannie Jackson is a Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. Strategies for Wealth is not an affiliate or subsidiary of Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.  Scary Mommy is not an affiliate or subsidiary of Guardian. This material contains the current opinions of Jeannie Jackson but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

 

 

Excerpts have been taken from a longer interview conducted by Scary Mommy.

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