Planning for Our 2009 Medical Expenses Starts Now

In my household, budgeting for next year’s medical expenditures—supplies for diabetes, drugs for asthma, and medications for allergies—begins in October. This is the time when both my wife and I receive our benefit packages from work.

The joys of filling out benefits paperwork are akin to those of tooth extraction, and I used to wish the benefits I selected the year before would just roll over. But these days we can’t afford to let that happen—our medical needs change every year and their costs are escalating.

For example, in the middle of 2008, our son was diagnosed with multiple food allergies and asthma. After insurance coverage, we now spend more than $100 a month on medications for him. My medical expenses have changed as well, as my diabetes treatment regimen has evolved.

Earlier this year I was spending more than $200 a month for all my supplies and needs. My wife also coughs up about $40 a month on her meds. And then there are the doctor and dental visits for the entire family.

When our benefit paperwork arrives, our first focus is our companies’ flexible spending accounts (FSAs). They allow us to pay for most of our medical expenses with pretax payroll deductions.

Right now we’re tallying up our 2008 expenses to estimate what we’ll need to set aside for 2009. We’ll probably still fall short. Our expenses have exceeded what we’ve contributed to the plan the last three years running. This year we ran out of money in our FSAs in September.

To avoid that scenario in 2009, we’re going to try to put away some additional money in a regular savings account. (We’re not eligible for a health savings account because we’re not in a high-deductible health plan.) That way, we don’t risk putting too much money away that can only be spent on health care, and we can make sure that we’ve set enough aside to earn a little interest on it.

We’re also looking at ways to reduce our drug expenses, where possible, by switching to generic medications or cheaper (but just as effective) alternatives. What we won’t do is scale back on medications or avoid the routine checkups, which are so important when you have a chronic disease like type 2 diabetes or asthma. Sure, going a month or two without some of our prescriptions would make balancing the budget in 2009 easier, but if it makes my son’s asthma or my type 2 diabetes worse, paying for those conditions down the road will be much more expensive.

A far better solution is to prepare as best we can. So, bring on the paperwork!