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The Rising Cost of Healthcare & How To Manage

Chelsey Zhu  |  December 7, 2022

You shouldn’t have to worry about money when you’re taking care of your health. Learn how to plan ahead and save for medical expenses.

It’s that time of the year again — open enrollment time! Whether you get your healthcare from one of the exchanges, your employer, or Medicare, this is the perfect time to take a closer look at your health plan and reevaluate if it’s the best option for you and your family. It’s also a really great time to dig deeper into how much you’re spending on medical costs, and whether those expenses caught you off-guard. In a year with record-high inflation, healthcare hasn’t been spared — the latest Consumer Price Index shows that medical care costs are up 5% from last year. 

Considering that healthcare costs have been rising for decades (and typically outpace overall inflation), we should all expect to spend more on our health in the coming years. But new research shows that we struggle to plan ahead when it comes to healthcare costs. On average, individuals estimate that their annual out-of-pocket healthcare spending is around $850, but in reality, they spend about $2,100. That’s 145% more than they anticipated.

These new findings come from the Lifetime of Healthcare Costs study conducted by Synchrony, a financial services company that offers healthcare financing solutions through its Health & Wellness platform. And on this episode, Synchrony Health & Wellness CEO Beto Casellas joins us to dig deeper into the data and how we can better prepare for healthcare expenses. As CEO, Beto oversees Synchrony’s network of 260,000 healthcare providers and the company’s CareCredit medical credit card, which helps patients pay for deductibles, treatments, and procedures that are partially covered or not covered by insurance, as well as healthcare for their pets. 

Listen in to hear Jean and Beto break down why we don’t set aside enough money for healthcare, and how that can lead us down the path of medical debt. Research published last year in the Journal of the American Medical Association found Americans owe $140 billion in unpaid medical bills to collection agencies. Part of the problem, says Beto, is that we don’t think about healthcare costs in the right way. Even though expenses might not be the same year to year, you should always count on them being there. Our recommendation? Save for healthcare the same way you would save for any big expense, like a new car or college tuition — by regularly putting money aside into a specific bucket. 

We dive into two different avenues for saving more — health savings accounts (HSAs) and flexible spending accounts (FSAs). Jean and Beto talk about how to use both kinds of accounts, how they differ from each other, and strategies for withdrawing your money. We also get into healthcare financing, or a formalized payment plan for medical bills. Beto tells us how financing works, who can qualify, and what we need to know about deferred interest. 

In Mailbag, we answer questions about managing a family member’s mortgage and finding a forensic accountant. And in Thrive, we share the results of our latest State of Women 2022 study, which shows that women are saving more, taking greater control of their finances, and prioritizing mental health. 

This podcast is proudly supported by Edelman Financial Engines. Let our modern wealth management advice raise your financial potential. Get the full story at Sponsored by Edelman Financial Engines – Modern wealth planning. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416

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The HerMoney podcast is supported by      Edelman
All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416

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