How Much Should I Save for Health Emergencies?
Health emergencies happen to the best of us and can be some of the most unpredictable and life-changing circumstances. Health emergencies also cause financial worry as they often lead to unexpected and crippling costs. Experts suggest your health savings should equal your out-of-pocket maximum. Nevertheless, the sooner you start saving, the better prepared you’ll be in emergency situations.
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What is Health Emergency
In general, health emergencies can be any sudden abnormal changes in your current health as well as the development of a new condition or symptom that leads to seeking out medical care. For rapidly developing and time-sensitive health conditions, your nearest emergency room or urgent care facility is usually the first and best point of care.
Some of the most common health emergencies are:
- Bleeding (deep cuts and severe bruising)
- Seizures
- Heart Attacks
- Strokes
- Difficulty Breathing
- Allergic Reactions
- Stomach Pain
Cost of Care
When it comes to cost, not all health emergencies are created equal. Depending on your diagnosis, severity, specialized care, and time spent in the emergency room. Your overall charge is determined by a few key measurement factors:
Acuities (severity) Level
The scale ranges from 1 to 5, with 1 being the most severe classification and requiring immediate medical attention. Patients who are classified as a level 3 or higher will have much higher wait times than level 1 or 2. Level 3 is the most common classification, which leads to you getting charged a lot more than someone who is a level 4 or 5.
Total Charge = triage fees + facility fees + professional fees + supplies
When you arrive at the ER for an emergency, you will be charged a triage fee that can range from $200-$1,000. Next, you are assigned a room and will be charged a facility fee that typically averages at $1,120. The facility fee covers your time in the room and nurses’ time. Attending physician, other medical specialists, medications, and supplies used during your visit are not included in the facility fee and are billed separately.
Eligibility for Care Program
Some hospital facilities have charity care programs that are income-based and can reduce the cost of your ER visit. You can learn more about these programs following your visit by contacting the hospital’s patient advocacy department.
The price of your care will be dependent on the types of treatments and medications you receive. The cost of your emergency visit also depends on if you have health insurance. For patients without insurance prices can range from $1,000-$2,500. However, If your health emergencies require more extensive treatment, such as surgery or specialized cardiology care for a heart attack, the cost could reach over $25,000.
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Cost of Common Health Emergencies
The table below displays the average cost of common health emergencies to better anticipate your spending should the emergency arise.
| Health Emergency | Avg. Cost |
|---|---|
| Bleeding | $350 - $675 |
| Stomach Pain | $150 - $1500 |
| Allergic Reaction | $345 |
| Shortness of Breath | $1,000 |
| Seizure | $370 - $17,126 |
| Heart Attack | $2,000 - $16,950 + |
| Stroke | $3,000 - $ 20,000 + |
Source: Cost Helper
Please note, these are estimates and averages. True cost of care can vary based on severity and treatment plan.
Cost of Emergency Visits By State
When looking at the overall cost of health emergencies, it's important to consider differences between states and even cities. In the United States, there is federal legislation and policies that set a nationwide standard for healthcare costs. However, each state and respective cities can have individualized healthcare regulations and laws that impact all aspects of healthcare costs, including ER care. Consider the following list of the average ER cost by state:
| State | Avg. ER Cost | State | Avg. ER Cost |
|---|---|---|---|
| Maryland | $623.00 | Indiana | $1,618.00 |
| Maine | $952.00 | South Dakota | $1,641.00 |
| West Virginia | $1,127.00 | Pennsylvania | $1,645.00 |
| Montana | $1,138.00 | New York | $1,668.00 |
| Louisiana | $1,184.00 | Missouri | $1,717.00 |
| Massachusetts | $1,200.00 | Kentucky | $1,740.00 |
| North Dakota | $1,245.00 | Rhode Island | $1,750.00 |
| Michigan | $1,273.00 | South Carolina | $1,758.00 |
| Kansas | $1,294.00 | New Hampshire | $1,787.00 |
| Arkansas | $1,304.00 | Illinois | $1,818.00 |
| Iowa | $1,377.00 | Washington | $1,841.00 |
| Vermont | $1,386.00 | Nebraska | $1,844.00 |
| Wyoming | $1,411.00 | Washington D.C. | $1,879.00 |
| Ohio | $1,435.00 | Tennessee | $1,883.00 |
| Oregon | $1,437.00 | Virginia | $1,941.00 |
| Minnesota | $1,462.00 | Alaska | $2,070.00 |
| Utah | $1,464.00 | Hawaii | $2,076.00 |
| Oklahoma | $1,466.00 | Idaho | $2,159.00 |
| Connecticut | $1,493.00 | Arizona | $2,283.00 |
| Alabama | $1,496.00 | Texas | $2,318.00 |
| Wisconsin | $1,496.00 | Nevada | $2,583.00 |
| New Mexico | $1,574.00 | Colorado | $2,886.00 |
| Mississippi | $1,583.00 | California | $2,960.00 |
| North Carolina | $1,589.00 | New Jersey | $3,087.00 |
| Delaware | $1,596.00 | Florida | $3,102.00 |
| Georgia | $1,596.00 |
Source: Mira
How to Determine How Much You Should Be Saving
Knowing the average cost of the ER and the average cost of common emergencies is a good starting point for determining how much you should have saved in case of a health emergency.
General Emergency Funds
Medical emergency funds can typically be a part of a general emergency fund, that is there to support you when any type of emergency strikes i.e job loss or large car repair. For a general emergency fund, it is recommended that you have three-six months worth of expenses saved. Expenses would include the total amount that you spend on your mortgage or rent payment, car, food, credit card payment, etc. — any type of monthly recurring expense.
Medical Emergency Funds
Looking specifically at health emergencies savings, experts suggest your target amount of savings should equal your health insurance’s out-of-pocket maximum, regardless of whether you have individual or family coverage. For the 2022 plan year, the out-of-pocket maximum for marketplace plans cannot exceed $8,700 for an individual and $17,400 for a family.
For example, if your health insurance plan has an out-of-pocket maximum of $4,000, you should have $4,000 in a savings account in case of a health emergency.
If your out-pocket maximum amount is out of reach, start small and create smaller benchmark goals. For example, make $1,000 dollars your first goal. Once you reach $1,000, make your next benchmark amount $1,250 and the one after $1,500.
It is important to note that growing your health emergencies savings account does not have to happen immediately. Especially if you are balancing other financial priorities, putting a large amount in your health savings might be difficult. However, over time if you contribute what you can afford, be it $5 or $500, you will have something to fall back on when an emergency strikes.
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Saving for Health Emergencies Frequently Asked Questions (FAQs)
How much should I save if I don’t have health insurance?
Without health insurance, you will incur a much higher cost than those with insurance and will be expected to pay the entire amount that is billed from the hospital. The out-of-pocket maximum provides a more concrete estimate of the cost that you will incur in an emergency. However, without insurance coverage, it's hard to estimate exactly how much you should be saving. In this situation, having a goal of $1,000 saved is a great starting number that you can gradually build up to.
Experts recommend starting by setting aside 2% — 8% of your monthly income towards your health emergency fund. For example, If your monthly income is $4,000 you should at least put $80 in your health emergency fund, per month.
What type of account should you put your health emergency fund into?
Deciding the type of account you want to utilize is equally important as developing benchmarks to grow your savings. If you are uninsured or have insurance without a High Deductible Savings Plan (HDHP), a high-yielding savings account makes the most sense. High-yielding savings accounts do not fluctuate in value and have significantly higher interest rates, between 0.40 and 0.60%. Higher interest rates on your account allow you to automatically grow your savings amount, by the agreed percentage rate.
If you have a High Deductible Health Plan (HDHP), a Health Savings Account (HSA) is recommended. With an HSA, the money you put in is tax-deductible and can be withdrawn for medical expenses penalty and tax-free.
What is the difference between an FSA and an HSA?
If you have healthcare insurance through your employer, you may have the option to enroll in a Flexible Spending Account (FSA). FSA are a common type of account that can be used to save money for health and medical emergencies. Unlike a HSA, FSA are owned by your employer and will not transfer over, if you change jobs. FSA also has a yearly contribution maximum of $2,750, in comparison to the individual maximum of $3,600 and family maximum of $7,200 of an HSA.
With an HSA, the amount you contributed and saved throughout the year will roll over to the next term, while with an FSA only $550 can roll over to the next year. FSA and HSA also differ in tax savings and penalties for removing funds. With an HSA, funds for medical expenses can be taken out for free and before the age of 65 there is a 20% penalty for funds used for nonmedical purpose tax-deductible. FSA does not allow funds to be used for nonmedical expenses and the money is contributed pre-tax from your employer.
Bottom Line
Unexpected medical and healthcare expenses are one of the leading causes of a lifetime of debt. Especially if you don’t have insurance, being hit with a huge medical bill without health emergency savings can be life-altering. However, financially preparing for health emergencies in advance can make those situations less stressful.
Health emergencies happen and health costs are constantly rising. With Mira you won’t have to worry about how much your bill will be, at just $45 per month and $99 per visit for local urgent care, you will be prepared to expect the unexpected. Learn more about how Mira provides you coverage when you need it the most.
Originally from Houston, Texas, Alexandra is currently getting her Master's in Public Health with a health policy certificate at Columbia University. One of her life goals is to own her own art gallery!
