No one should take their health for granted. It’s essential to plan ahead in case you have a medical crisis. Without a plan in place, you and your family could be hard-pressed in multiple ways.

1. If you’re incapacitated and unable to make medical decisions, your loved ones may have trouble handling legal matters regarding your care and your estate. Confusion, uncertainty, and even court proceedings could be the result.
2. If you’re not financially prepared, it could send you spiraling into debt.
3. If you don’t have a good health insurance plan, you may not receive the best care, and you’ll end up paying out of pocket. This could further damage the quality of life for you and your family.

The good news is you can take matters into your own hands now. It starts with estate planning.

Creating an Estate Plan in Case of a Medical Emergency

For most people, estate planning involves creating directions for the distribution of your assets after your death. It also includes documents that detail who should manage your finances and health care decisions if you are unable to do so yourself.

A proper plan helps ensure:

• Your beneficiaries get the assets that you want them to have
• There are no arguments about dividing your wealth
• Someone you trust can help manage your finances
• Medical professionals follow your healthcare wishes (more on this below)

You can use a will to distribute assets, create trusts that will retain your assets for beneficiaries, or have joint accounts or accounts with specific beneficiaries who take over the assets and funds when you pass away.

You can also plan your estate to limit the tax liabilities for your beneficiaries. If you can do this, they may not have to worry about issues like estate or capital gains taxes.

Furthermore, if you create a full-blown estate plan, your assets will be taken care of before and after your passing. You could designate a financial power of attorney to handle all money matters, leaving the medical decisions to the healthcare agent. Powers of attorney do not normally extend after you pass away, so your estate plan can include a last will and testament as well as a revocable living trust to allocate your assets after you’re gone.

Making Your Medical Wishes Known

You need to decide what would happen if you are unable to provide for your family or incapable of making decisions about your healthcare.

Proper estate planning can ensure your family is cared for if you die unexpectedly or are unable to care for them for medical reasons. You can also grant someone power of attorney to make decisions on your behalf.

Medical Power of Attorney/Healthcare Directive

A medical power of attorney (also known as a durable power of attorney for healthcare or healthcare directive) gives a designated person, typically an agent, the right to make healthcare decisions on your behalf. These decisions could have to do with surgeries, treatments, medication, or end-of-life care.

This legal document lets you decide who you would like to make decisions for you if you are unable to do so yourself.

There are plenty of benefits to creating a healthcare power of attorney document:

• You can choose someone you trust to make these calls.
• It makes your wishes clear.
• It ensures that your family does not have to struggle to come to a consensus about life-and-death healthcare decisions.

Typically, the agent gets the power to make decisions about your care when you become incapacitated (but not beforehand).

The right healthcare power of attorney agent will advocate on your behalf and see to it you get the care you need. If you so deem, your agent can also act in your best wishes concerning the allocation of healthcare funds while you’re incapacitated.

Living Will

If you want to prepare for all contingencies, it’s a good idea to have both a healthcare directive and a living will.

A living will (also called an advance healthcare directive) enables you to accept or reject certain treatments, and can even specify the medical team and/or facilities you’d like to use in the event of a medical emergency.

Preparing Financially for a Medical Emergency

Medical debt is a significant problem in the U.S., as the statistics clearly show:

• 50% of Americans reported some form of medical debt in 2021.
• 57% of those with outstanding bills owed more than $1,000.
• Approximately two-thirds of people who file for bankruptcy cite healthcare costs as the primary reason.

From these statistics, it might seem like medical debt is unavoidable. However, there are ways to reduce the monetary strain of medical emergencies.

Build an Emergency Fund

An emergency fund can help with unexpected medical costs and other emergencies that could ruin your family’s finances. It can also help cover other expenses, such as car or appliance repairs.

Many people likely feel like they do not have enough income to build such a savings account. However, small weekly or monthly contributions can add up over time, leaving you with a financial cushion to handle unexpected costs without going into debt.

You could also look into a side hustle to solely contribute towards your savings. Even a few hours per week will bring extra income that you can put into a savings account. If your current job pays well enough, you can deposit a small amount from each bi-weekly or monthly paycheck into the account. Over time, these modest deposits will add up.

Alternatively, you could cut costs, by downgrading unnecessary spending habits such as online subscriptions, phone services, or reigning in your coffee shop or restaurant habits. You can then put the extra savings from these cutbacks into your emergency fund. By taking these extra efforts, you can help bring financial security to your family.

Learn About Your Employer’s Flex Spending Account Options

In addition to building a financial cushion that you can rely on when a rainy day arrives, take a look at some opportunities your employer may provide, such as a Flexible Spending Account (FSA).

You can use the money in this account for qualifying medical and dental expenses. It is meant to cover the costs that employees would otherwise have to pay out of pocket. This could include copays, deductibles, dental or optical services that aren’t covered by insurance, or medications.

In many cases, you need to spend the money in the account each year, otherwise, it is lost. However, some accounts will allow you to carry over $500 in unused funds to the next year.

Currently, the limit for FSAs is $2,850 per year. Though these general rules apply in most cases, there are some types of FSA accounts that have different parameters. Here are the three most common options. In addition, the money in an FSA is not taxed, so you can contribute to the account and lower your taxable income at the same time.

1. Health FSA

A regular health FSA is ideal for individuals who have out-of-pocket expenses. If your health insurance has full dental, prescription, and optical coverage, you may not need an FSA.

However, this is a great option for limiting your healthcare costs. Copays and medication can add up, as can the price of corrective lenses. That being said, reimbursement can be a lengthy process. You may need to file a claim with a receipt and proof that the cost isn’t covered by insurance.

Health FSAs can cover over-the-counter medications, prescription medicines like insulin, and medical equipment. Unfortunately, medical insurance premiums are not covered by FSAs.

Most accounts allow you to use the funds for yourself and others who are on your health insurance plan, including your spouse and dependents.

2. Dependent Care FSA

Dependent Care FSAs (DCFSA) are not for healthcare costs. Rather, they cover the necessary costs associated with caring for children and adult dependents who need extra care.

You can use the money in this type of FSA for childcare or adult daycare costs, but only for those times when you need assistance so that you can go to work. For example, you can pay for daycare, but you cannot use the account to cover the cost of a babysitter in the evening.

As with other FSAs, you need to ensure that the expenses are covered and then submit a claim for reimbursement. You need to be careful to ensure the service is eligible for dependent care FSAs, or you will have to pay out of pocket without reimbursement.

3. Limited Purpose FSA

A Limited Purpose FSA (LPFSA) covers optical and dental expenses that are not included in your health insurance plan. Like general health FSAs, you can use an LPFSA for yourself, a spouse, and dependents.

However, unlike health FSAs, you cannot usually use them for medication and other general medical expenses. Some plans LPFSAs cover other expenses, but only if they are out-of-pocket costs that you still have to pay after you reach your insurance deductible.

Finding a Good Health Insurance Plan

Health insurance covers medical costs that you would otherwise have to pay out of pocket. There are many different types of health insurance plans. Some cover most healthcare costs, while others have high deductibles, but kick in to pay the high costs of emergency care or unexpected illnesses.

You can obtain insurance through an employer or on a marketplace. Some states offer partially or fully subsidized coverage.

When looking for good insurance plans for yourself, your family, or your employees, you should consider a few essential factors.

• The cost of the premium: This should be manageable because you will have to pay it month after month. Also, you should pay attention to the deductible and copay. The deductible shouldn’t exceed 25% of the total cost of the care.
• Coverage: Your coverage should include comprehensive healthcare services, although some cheaper policies may not cover specific things such as rehabilitation services. You should also check if dental and optical coverage is part of the package. If not, you need to make separate arrangements, such as getting an LPFSA.
• Restrictions on the policy: Some policies do not work out of state or internationally. If you travel frequently, you might need to factor the cost of annual travel medical insurance into the overall cost of your coverage.
• Dependent eligibility: Family coverage typically includes your spouse and dependents, but they may not be eligible if they have insurance from other organizations or if they are no longer living at home. For example, if your spouse can get insurance from their employer, they may not be included in your policy.

When shopping for insurance, you have two options, PPO and HMO plans. It is essential to understand how each affects your healthcare choices.

PPO Plan

Preferred Provider Organization (PPO) healthcare plans provide access to a network of healthcare providers. If you have this plan, you typically have to get all your healthcare from clinics, hospitals, and specialists within the plan’s network.

The contracted providers offer services at reduced costs, which allows the insurer to offer lower premiums for coverage.

With a PPO plan, you can see any provider within the insurer’s network. You can also get care from specialists outside of the network. This will usually cost extra, although some plans limit the additional fees if you have a referral from an in-network doctor.

One of the disadvantages of a PPO plan is that your choices are limited. You may have fewer providers in your area, and the selection of specialists could also be limited. You may need to travel a longer distance to get healthcare even if there are out-of-network providers near your home.

HMO Plan

Health Maintenance Organization (HMO) plans also have limits on who you can see for healthcare. You get all your services from one organization, and you cannot get coverage from outside of the network unless you have a referral.

With HMO plans, you choose a primary care physician, who coordinates all your coverage and refers you to other specialists.

However, HMO options are often limited. In addition, it is difficult to change to another provider, and you have few choices when it comes to selecting specialists. At the same time, HMOs typically have lower copay fees, and you do not have to worry about submitting claims or documentation to the insurer. They communicate directly with the HMO, which simplifies the process.

Achieving Peace of Mind

All told, you’ll be able to rest easy once your estate plan, financial accounts, and insurance are in order.

The earlier in life you start planning, the sooner you’ll be able to minimize stress and go about living the rest of your life to its fullest. This peace of mind will extend to your family and friends.

When you’re ready, have a reassuring conversation with your family about your estate planning intentions. Also, you could consider speaking to an attorney, especially if you’re not sure of the best course of action with your estate plan.