Over the years T and I have come up with and endured several different kinds of health care emergencies. We dealt with these in a variety of ways. At first, because we were economically strapped we just used a credit card system. Someone got sick, we pulled out the card or rather a card since we, like a lot of other folks, really didn’t know too much about how our interest compounded. Then, as we began to become moderately successful, we began to look at the possibility of insurance taking some of the load for the various and sundry health care needs that came our way. Our son, C, played a part in this since his school athletic program required he be covered. So once we started with him it seemed only natural to find a plan the covered T, too. I was already covered through my job but since we hadn’t yet married neither she nor our son could be included there.
Anyway, we picked out an insurance company, Blue Cross, and began paying out monthly premiums on an 80/20 plan with a copay and a deductible. The not so funny thing was that now that we were insured we seemed to stay relatively healthy and after two years we totaled up the costs ($1735.00 the first year and $1800.00 the second) and came to the conclusion that maybe just setting the same amount aside in a savings account would serve the same purpose. So that’s what we did and though we didn’t know it at the time we were also starting our first Emergency Fund. As a matter of course, as our business had become more successful, we had begun to pay off our credit cards, too. And because we were doing that we began to look at the interest rates, 19.9, 22.4, 21.1, 17.8 on the different cards we used and think about how best to get out of this debt. This was back in the late 90’s and we knew nothing about the things that seem so natural to the Personal Finance world of today. We worked so much – full time day jobs plus our concession business on the weekends and in the summers – that we really didn’t have time for frivolous spending. We just started attacking the cards from two directions. Each month we paid extra on the card with the largest balance and at the same time we tried (and mostly succeeded) to pay off any new charges against a card within the monthly charge period. This strategy just made sense and it worked to the point where we were actually finally out of debt.
At this point, in 2001, we decided to take the next step with our concession business and move from a sole proprietorship to a corporation. (I’ll save that story for another post) Once we had a corporation and a business plan, we began to realize the possibilities. As employees of our corp, T and C were both eligible to join our corporately paid for health plan, which they did. The corp then was able to write off the health-care plan as part of its operating expense.
Still, the habits we had developed through our growing years stayed with us. Since the corp now took over the health care, our personal savings began to grow into what we now realize really is an Emergency Fund. One which, when that health care emergency finally hit this last winter, we were able to tap into to cover our share of the copay and the 30% that the plan didn’t cover. The corp plan costs $5200 a year with a deductible of $1000 and a 70/30 split on the expenses so when T came down with colitis and needed surgery that ended up costing a little over $12,000 the plan covered everything except for our $3700 share. And our Emergency Fund, well let’s just say it’s time to start a new one.