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Medical care is expensive. And affordable health insurance can be difficult to find. But finding fund for the monthly premium in your budget can protect your finances in the long run.

Alternative solutions like urgent care and prescription discount finder tools have popped up to help people find more affordable prices. But these cheaper services don’t help reduce every medical bill or replace the need for health insurance.

The high costs of emergency care, medical procedures, hospital stays and prescriptions make health insurance an important investment in your health and in your financial stability. Health isn’t as predictable as we’d like it to be, so health insurance is a wise purchase even if you’re healthy. A single accident can result in thousands of dollars of medical costs.

Those costs can eliminate any emergency fund you’ve built up, drain your savings and may even lead to bankruptcy. And if medical costs end up in collections, it can hurt your credit score.

The savings offered by urgent care and discount finders are only enhanced when combined with health insurance. And if you maintain insurance, even though the monthly premium seems high, it can more than offset the dramatic medical costs from an accident or unexpected emergency.

Health insurance protects individual and family personal finances by:

1.  Financial Planning

Planning your monthly spending is a smart financial move because it helps you effectively track and direct where your money’s going. Unknown costs and unexpected expenses make planning your budget harder.

Health insurance helps with financial planning because it eliminates surprise costs and reduces recurring costs for prescriptions and preventive care. With health insurance, you have a known maximum out-of-pocket cost each year.


The cost of prescription medications is rising and can add up quickly if you take medications every day. The out-of-pocket maximum, discounted rates and cost-sharing offered by health insurance can significantly reduce your monthly medication bill.

The discounts and cost-sharing help make medication more affordable and fit better in your budget. It also frees up money you can use for savings and other expenses.

As drug prices change, health insurance helps reduce the impact of rising drug costs on your wallet.

Preventive Care

Regular visits to a primary care provider are important for maintaining good health. These visits are also especially important for children as they grow and need vaccinations.

Because these visits typically occur annually, they’re an expense that you can plan for. Many health insurance plans cover preventive care, like immunizations and check-ups, fully or at a lower rate than other services.

This means that you don’t have to worry about finding money in your regular budget for these expenses. All you need to do is pay your monthly healthcare premium, which simplifies your financial planning.

2.  Emergency Costs

Emergency room visits, surgeries and other medical procedures can break any budget. Sometimes surgeries and procedures can be planned for, but emergency room visits can’t. And without health insurance, the costs of these services are exceptionally high.

Surgeries and Medical Procedures

When you have surgery or a medical procedure, you pay the doctor and the team of professionals, you pay for the use of the equipment, anesthesia and time in the recovery room.

Each item is expensive on its own. Combined, it’s a large sum.

Emergency Services

The cost of an emergency room bill depends on the services you receive. It’s estimated that an emergency room visit costs between $150 and $3,000 without insurance.

Urgent care centers are an alternative to visiting the emergency room, and the costs are much lower. However, in the more severe cases, urgent care centers can’t help and may send you to an emergency room anyway.

Health insurance offers discounted rates for medical treatment and cost-sharing. Both of these features significantly reduce the cost of medical procedures and unanticipated hospital trips. This, in turn, eases the financial burden.

While you may still run into medical debt while having health insurance, the debt will be much smaller and easier to pay off. And it won’t exceed your annual out-of-pocket maximum.

3.  Future Savings

Some health insurance plans are high-deductible health plans (HDHPs), which are HSA-compatible. You can put money into an HSA tax-free to be used for medical expenses. Unlike flexible spending accounts (FSAs), the funds in an HSA don’t expire at the end of the year.

Because HSA funds roll over year to year, some people approach them as part of their retirement savings plan in addition to a Roth IRA or 401k.

Like retirement plans, HSAs can be invested. HSAs are actually savings accounts just as the name implies. Most earn interest—although not a lot—so there is potential to grow the funds in the account. This is especially true over time. And at 65, your HSA starts working like a traditional IRA when the balance can be used even for non-health expenses provided you pay taxes on the withdrawal.

Regardless of when unanticipated medical issues and expenses arise, you can use your HSA to pay for them. When you use the money in your HSA for medical expenses, you don’t pay taxes—ever.

And the HDHPs that come with HSAs usually have lower premiums. However, the higher deductible does put more responsibility on the insured to pay for medical costs before the full deductible is met.

An HSA-compatible plan can be a great choice for people in good health that don’t need a lot of coverage and will never reach the deductible but will grow the money in their HSAs for later use. Nonetheless, consider the overall cost-effectiveness of a plan for your health needs when choosing one.

Finding Health Insurance

Although health insurance shopping can be a frustrating process, it’s worth doing because of the financial protection health insurance offers.

If your employer doesn’t offer a plan or you’re self-employed, websites, like HealthCare.com, lets you see and compare individual health insurance plans from multiple carriers at once. These websites simplify the health insurance shopping process and help shoppers find a good deal on the coverage they need.

Consider your health needs as you evaluate the savings and financial protection offered by a health insurance plan. And remember, health insurance can help you save on medication, emergency services, and save for future health costs while protecting your financial present too.

About the Author

Alice Stevens, Content Manager, Best Company

Alice Stevens loves learning languages and traveling. She currently manages debt and tax relief, life and health insurance and car warranty content for BestCompany.com.



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