Medical Expenses – How to Avoid an Unexpected Debt Burden
These days medical expenses arising from severe injury or disease can result in hundreds of thousands of Rands in medical costs. Such an event can quickly wipe out personal savings, retirement funds and university investments.
The reason for high medical expenses is two-fold. First, of all medical premiums have been increasing tremendously. Medical inflation has amounted to approximately 13% (year on year) in the last five years. Secondly, premiums have increased because more people survive serious illnesses for longer periods than in the past.
Life After Cancer and Medical Expenses
Jaco Visagie, director and financial advisor at FinSafe, revealed some alarming statistics. With the right treatment and care, the more than 50% of men and 65% of women diagnosed with cancer can expect to live five years longer. Per more research from the British Heart Foundation indicates that 50% of heart attack victims live ten years longer. Longer survival periods therefore mean more extended treatment periods, resulting in higher premiums overall.
According to Wikus Olivier, debt management expert at DebtSafe, medical expenses as the primary reason for consumers’ debt trouble. Debt resulting from medical expenses is incidental credit. Accidental debt is dangerous because it’s not credit that you plan and want. This debt is as unexpected as the illness itself, which is why medical bills could quite easily lead to a financial demise in the case of grave and life-threatening disease.
Medical Expenses Can Lead to a Debt Burden
Visagie points out that although medical expenses can result in a significant debt burden, there are pro-active ways to avoid it or at least, lighten the load. “Each family should have a financial plan that includes at least basic medical risk cover, and this must be one of their non-negotiable expenses. Consumers cut back on this expense too quickly in tough times, but that’s when you can least afford the cost of an unexpected illness” says Visagie.
Take These Points Into Account
- Do your homework. Know what you need to save beforehand so you can pay for co-payments required for certain procedures;
- How do the tariffs that are paid by your chosen medical aid compare to the fixed rates as well as other charges by some doctors and specialists?;
- Some funds offer an annual hospital limit per dependent. Be aware of this and if you can afford it, look for a plan that offers unlimited hospital cover;
- Pay particular attention to the Oncology programme that the medical aid offers as well as the annual limits, out-of-pocket deductibles, co-pay, or coinsurance costs; and
- Take a look at ambulance service benefits and possible surcharges that you may be liable to pay.
Oliver says you should talk to a debt counsellor if your medical bills are excessively high and you are over-indebted. When entering the debt review programme, a debt counsellor will negotiate on your behalf with your creditors. By so doing you reduce your expenses to fit your income.
No one can predict illness or injury, but you can plan for it – so don’t delay talking to a registered financial planner. And if your existing medical bills are threatening your financial well-being, get a debt management expert to assist you now. In both cases, it is always wiser to take action sooner rather than later.