Non-Emergency Uses of Your Emergency Fund - Live Like a Mensch
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Non-Emergency Uses of Your Emergency Fund


Photo courtesy of Joyous!

Recently, a friend told me that her husband's employer had switched health insurance providers. Their original insurance included a Health Spending Account that came with a debit-type card. Whenever they had to go to the doctor or pay for a prescription, they could use the card. (And by the way, I had never heard of an insurance policy like this, but I am a fan. A big one. Can we all do this, please? It makes a heckuva lot more sense than having to deal with the annoyance of paper check reimbursements).

In any case, the HSA for the new insurance is of the "you pay out-of-pocket and we'll reimburse you with a check for a random amount that may arrive sometime in the next two months, unless it takes longer" variety, on which I have ranted before.

My friend has a child with special needs who needs to see the doctor fairly regularly, and they live on a tight budget in Connecticut (a state whose name is a Native American word for "property taxes are HOW expensive?"), so she was lamenting to me the loss of her HSA debit card. She wasn't sure how she was going to pay for the first few medical bills while they wait for reimbursement. She also uses the Dave Ramsey envelope system, and she asked me if I had any insight on how to handle the coming money dilemma.

I suggested that she start a medical spending envelope with a gift of about $100 to $200 from her life happens/emergency envelope. That way, they would have the necessary cash on-hand to be able to handle the first medical bill, whenever it occurs. She is also going to be setting a little money aside each paycheck to go into the medical envelope, but it could be a little while before that builds up enough so that they can afford for someone to get sick. The emergency fund can just get filled back up with their normal contributions to it (that's why the money from it was a gift), and their medical envelope will receive the reimbursements from their HSA, so they'll be ready for the next medical bill.

I'm not sure what Dave Ramsey would have to say about my solution to this problem. (I suspect he'd approve, but it's hard to say). Sometimes, it's very easy to get into a very narrow definition of what constitutes an emergency--but I also think it's silly to stress yourself out over where money is going to come from for a particular category when you have money already set aside.

What do you think? Have you ever used your emergency fund for a non-emergency?



frugal_fun said:

The other thing you might want to relay to your friend is that if you just work with the billing person, medical offices will quite often wait for payment and it's interest free to boot.

We're still paying off bills from the surgery for our Daughter. We called, said we don't have the money, set up a payment plan and it's been all been interest free since then. (That will be paid off in the next 10 months if all goes well.)

They obviously prefer immediate payment and quite often set it up in the office so you're encouraged/pressed to give it. However, I've never been refused when I've asked about spreading out payments or sending a bill in the mail. I don't use high end providers either, though, so YMMV.

September 19, 2013 4:50 PM

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