Healthcare costs are unpredictable. You could spend $500 all year on routine care, or you could break your leg and hit your $8,000 out-of-pocket max. But you can't just hope for the best - you need a budget.

Here's how to actually plan for healthcare costs without guessing.

Average Healthcare Costs (2026):
Individual health insurance premium: $600-800/month
Average out-of-pocket spending: $1,500-3,000/year
Total healthcare spending per person: $10,000-12,000/year

Step 1: Calculate Your Guaranteed Costs

These are costs you'll pay no matter what - even if you never see a doctor all year.

Monthly Premiums

This is the big one. Multiply your monthly premium by 12.

Example: $650/month × 12 = $7,800/year

Don't Forget: If you get premium subsidies through the ACA Marketplace, only count what YOU actually pay after subsidies. The subsidy covers the rest.

Prescriptions You Take Regularly

If you take daily medications, you can predict this cost pretty accurately.

Example calculation:

  • Blood pressure med: $20/month × 12 = $240
  • Thyroid medication: $10/month × 12 = $120
  • Total: $360/year

Routine Preventive Care

The good news: Most plans cover preventive care at 100% (annual physical, mammograms, colonoscopies, etc.). But budget for copays for non-preventive visits.

Estimate:

  • Primary care visits: 2-3 visits × $30 copay = $60-90
  • Specialist visits (if ongoing): 2-4 visits × $60 copay = $120-240

Step 2: Build Your Emergency Healthcare Fund

This is where most people get blindsided. You need cash available for your deductible and out-of-pocket max.

Know Your Numbers:

  • Deductible: What you pay before insurance kicks in
  • Out-of-Pocket Maximum: The most you'll pay in a year (worst-case scenario)

Healthcare Budget Worksheet

Guaranteed Annual Costs:

  • Monthly premium × 12 = $__________
  • Regular prescriptions = $__________
  • Expected doctor visits = $__________
  • TOTAL GUARANTEED: $__________

Emergency Fund Target:

  • Your out-of-pocket maximum = $__________
  • Minus: Money already in HSA/FSA = $__________
  • AMOUNT TO SAVE: $__________

Step 3: Decide on Your Savings Strategy

Option 1: High-Deductible Plan + HSA (Health Savings Account)

How it works:

  • Choose a high-deductible health plan (HDHP)
  • Contribute pre-tax money to an HSA
  • Use HSA funds to pay medical expenses
  • Money rolls over year to year (unlike FSA)

2026 HSA Contribution Limits:

  • Individual: $4,300
  • Family: $8,550
  • Age 55+ catch-up: Extra $1,000

Best for: People who are generally healthy, can afford to pay cash upfront for medical care, and want to save on taxes.

Pro Move: Max out your HSA every year. Even if you don't use it, it's basically a super-powered retirement account. After age 65, you can withdraw for ANY reason penalty-free (just pay income tax like a traditional IRA).

Option 2: Low-Deductible Plan + Monthly Savings

How it works:

  • Choose a plan with a lower deductible (but higher premium)
  • Set up automatic monthly transfers to a savings account
  • Target: Save enough to cover your out-of-pocket max

Example: If your out-of-pocket max is $6,000, save $500/month for 12 months.

Best for: People with chronic conditions, families with kids, or anyone who prefers predictable costs over tax savings.

Option 3: FSA (Flexible Spending Account)

How it works:

  • Employer-sponsored pre-tax account
  • Contribute up to $3,200 in 2026
  • Use-it-or-lose-it (usually $640 max rolls over)

Best for: People who have predictable medical expenses (braces, planned surgery, regular prescriptions).

FSA Warning: Don't over-contribute. If you don't use it by year-end, you lose it. Only contribute what you're 100% sure you'll spend.

Step 4: Plan for Specific Life Events

Having a Baby

Average cost: $2,500-5,000 after insurance (assuming no complications)

Budget includes:

  • Prenatal visits and tests
  • Delivery (hospital, doctors, anesthesia)
  • Postpartum care
  • First pediatrician visits

Pro tip: If you're planning to get pregnant, switch to a lower-deductible Gold or Platinum plan during Open Enrollment. The higher premium pays for itself.

Surgery (Planned)

What to budget: Assume you'll hit your out-of-pocket maximum. Hospitals bill separately from surgeons and anesthesiologists.

Action steps:

  1. Get a pre-authorization from insurance
  2. Request a written estimate from the hospital
  3. Verify ALL providers are in-network (surgeon, anesthesiologist, facility)
  4. Set aside your out-of-pocket max in savings

Chronic Condition Management

If you have diabetes, asthma, heart disease, etc., your costs are more predictable.

Calculate:

  • Monthly prescriptions × 12
  • Specialist visits × copay
  • Regular lab work and monitoring
  • Durable medical equipment (glucose monitors, inhalers, etc.)

For most chronic conditions, budget $3,000-5,000/year in addition to premiums.

Step 5: Don't Forget These Hidden Costs

Dental and Vision

Most health insurance plans DON'T include dental and vision. You need separate policies or budget out-of-pocket.

Average costs:

  • Dental cleaning (2x/year): $100-200 each
  • Eye exam + glasses: $200-500
  • Dental insurance: $20-50/month
  • Vision insurance: $10-20/month

Over-the-Counter Medications

Stuff insurance doesn't cover: Pain relievers, allergy meds, first aid supplies.

Budget: $20-50/month = $240-600/year

Medical Travel

If you need to travel for specialized care, budget for gas, parking, hotels, meals.

Real-World Examples

Example 1: Healthy 30-Year-Old

  • Premium: $400/month = $4,800/year
  • Annual physical: $0 (preventive)
  • Maybe 1-2 sick visits: $60
  • Over-the-counter meds: $200
  • Total: $5,060/year

Emergency fund target: Save $3,000 (half of out-of-pocket max) in HSA

Example 2: Family of 4 with 2 Kids

  • Premium: $1,200/month = $14,400/year
  • Regular doctor visits: $500/year
  • One kid breaks arm: $2,000
  • Prescriptions: $600/year
  • Dental/vision: $800/year
  • Total: $18,300/year

Emergency fund target: $8,000 (family out-of-pocket max)

Example 3: 55-Year-Old with Type 2 Diabetes

  • Premium: $700/month = $8,400/year
  • Diabetes medications: $1,200/year
  • Endocrinologist visits: $240/year
  • Lab work and monitoring: $400/year
  • Primary care: $120/year
  • Total: $10,360/year

Emergency fund target: $6,000 (out-of-pocket max)

Budgeting Strategies That Actually Work

Strategy 1: The "Pay Yourself First" Method

Set up automatic transfers the day after payday:

  • $200/month → Healthcare emergency fund
  • $300/month → HSA (if eligible)
  • Premium auto-pays from checking

Strategy 2: The "Bucket System"

Create separate savings accounts for different purposes:

  • Bucket 1: Deductible fund
  • Bucket 2: Out-of-pocket max fund
  • Bucket 3: Dental/vision/misc

Strategy 3: The "Front-Load" Method

If you know you'll hit your out-of-pocket max (pregnancy, planned surgery), save aggressively at the beginning of the year. Once you hit the max, everything's free.

When Your Budget Gets Blown Up

Sometimes life happens and you need care you didn't budget for. Here's what to do:

  1. Don't panic and don't pay immediately
  2. Request itemized bills and check for errors
  3. Negotiate with the hospital/provider
  4. Ask about payment plans (usually 0% interest)
  5. Apply for financial assistance if you qualify
  6. Use a 0% credit card as a last resort (pay off before promo ends)

Bottom Line: Be Realistic

You can't predict everything, but you can prepare for the predictable and build a cushion for the unpredictable.

Minimum budget: Premiums + $1,000 emergency fund
Comfortable budget: Premiums + Regular care + Half your out-of-pocket max saved
Ideal budget: Premiums + Regular care + Full out-of-pocket max saved

Need help choosing a plan that fits your budget? Call David at (863) 640-3102. We'll look at your actual healthcare needs and find a plan that balances coverage and cost.

Questions About Healthcare Budgeting?

Call David: (863) 640-3102
Email: dhuff@healthmarkets.com

We'll help you understand your plan's costs and build a realistic budget for your situation.