How to Deal with Unexpected Medical Expenses

Healthcare costs can be unpredictable, but being prepared can make all the difference. Discover how you can effectively manage unexpected medical expenses.

Medical costs can sometimes hit you when you least expect it. Even in countries with universal healthcare, unexpected medical expenses can cause significant financial distress. As per a recent study, approximately 25% of Canadians confessed their inability to handle an unexpected medical bill of $500. Here’s a comprehensive guide on how to deal with unexpected medical expenses.

Emergency Fund: Your Financial Safety Net

An emergency fund is a crucial tool in your financial arsenal to tackle unexpected medical costs. This fund is essentially a stash of money set aside to cover the financial surprises life throws your way.

Building Your Emergency Fund

Start by setting aside a small portion of your income into this fund every time you get paid. Aim to accumulate enough money to cover three to six months of living expenses and minimum debt payments.

Insurance: A Protective Shield

Insurance can offer a protective shield against the high cost of unexpected healthcare. However, it’s crucial to understand exactly what the policy covers, the cost of coverage, and how much you could potentially receive.

Health Insurance

Health insurance can cover part or all of the health costs not covered by government healthcare. Many organizations offer group benefit plans where they cover a portion of the premium, making it an economical way to get extra coverage.

Travel Medical Insurance

If you fall ill outside of your home country, you’d be responsible for any medical treatment received. Travel medical insurance can protect you against potentially catastrophic expenses or denial of treatment due to the inability to pay.

Income Replacement

Disability insurance provides income replacement if you’re unable to work due to injury or illness. The amount you can receive typically ranges between 60 and 85% of your regular income.

Tax Credits: Get Some Money Back

If you’ve paid for medical expenses out-of-pocket, you might be eligible for tax credits when you file your annual tax return. You may qualify for the disability tax credit if you have long-term or permanent disabilities.

When Debt Takes Over

When unexpected medical expenses become too overwhelming, some people turn to credit to pay for medical and other living expenses. However, this can quickly spiral out of control, making repayment very difficult.

Seeking Professional Help

If you’re struggling to manage your debt, consider reaching out to a Licensed Insolvency Trustee for a free initial consultation. They can provide all your options for dealing with debt and guide you towards a solution that suits your situation.

Remember, preventative measures are always better than reactive ones. It’s never too early to start planning for unexpected medical expenses.

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