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The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I was reviewing my family’s medical expenses the other day and was happy to find that our medical expenses have been coming in lower this year than the past couple years.  Over the past few years, we have experienced some significant medical costs, both expected and unexpected.  The magnitude of the medical costs caused my wife and me to rethink some priorities and how we allocate our savings.

Expected Beginning

It started a couple of years ago when my wife became pregnant with our second child.  This wasn’t unexpected, as we were trying to have a second child.  I knew the costs were going to be a little different than when we had our daughter.  I had switched companies since my daughter was born and my health insurance was different.  When my daughter was born, we had a plan that covered virtually all of our costs with a small $500 deductible.  My health insurance now has a deductible and a co-insurance component.  So, I began planning as best I could for the extra medical expenses that normally come with a pregnancy.  I knew my wife would be having a c-section, as my daughter was born via a c-section, so that expense was anticipated.  We felt that we were in a pretty good position.

The Unexpected

The pregnancy and delivery came and went without any complications.  My son arrived the Monday before Thanksgiving in 2011.  It was later that day that the nurses began to suspect something was not quite right.  Before we knew it, he was being transported to a different children’s hospital for emergency surgery.  You can read in more detail about it here at Budgeting in the Fun Stuff.  Turns out he had a heart condition that we weren’t aware of until after he was born.  He is doing well now, just requiring periodic check-ups, but his extra medical costs were a little unexpected.  When 2011 was over, our medical costs for the year were over $7,000.

The Next Surprise

The next year, we anticipated slightly higher medical expenses because of my son’s check-ups.  His cardiologist performs a few tests to make sure his heart is still ok.  All of that was expected.  Early on, we were seeing the cardiologist every couple of months.  The next medical expense surprise came from me.  I accidently broke my ankle playing volleyball the Wednesday before Labor Day in 2012.  The costs of the treatment and rehabilitation were over $1,300.  Thankfully, I was still able to work from home while I recovered, so I did not lose any of my salary.  When 2012 was over, our medical costs were over $4,000 for the year.  So, better than 2011, but again not nearly what I was expecting.

Knocking on Wood

So far in 2013, there haven’t been any major surprises.  We’ve had just the one check-up with my son’s cardiologist and are on an annual schedule from here on out.  My daughter needed some vision therapy and some help with her fine motor skills, but nothing too bad.  Our medical costs for the year are coming in under our 2012 expenses.

Lesson Learned

With my son’s initial bills, we did not have an adequate emergency fund to pay them all off.  We had resorted to placing them on a credit card with a temporary interest rate of 0%.  We have since paid off the balance in full and have been able to handle all of the other medical bills that have come up since then.  The experience of the last few years really opened our eyes to how unprepared we were.

As a result, we have been able to beef up our emergency fund and establish a medical bills fund.  With my son, his condition could require another procedure at any point in time.  The medical fund for us is designed to cover that and any other unexpected medical bills that might pop up.  Our intention is to keep it at around $5,000 (that’s the out of pocket maximum we face for any one family member under my plan).   We will use it to pay medical bills as they arise, and then add to it as it drops below the $5,000 amount.  This way, we hope that we will be able to handle the unexpected a bit better.

Should our medical fund become depleted for any reason, we still have our normal emergency fund to fall back on.  The emergency fund sits at about 3-months of expenses, on its way to 6-months.  We could certainly handle the unexpected surprises better now, than we could 2 or 3 years ago.  At least I’m learning.  🙂