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It is not just medical emergencies that make an emergency fund a good idea. Your good health doesn’t mean you won’t have an emergency. An emergency fund is for emergencies, which you can’t predict
That is up to you. Not sure you need 2 emergency funds for different types of emergencies
Chief
It entirely depends upon what kind of health insurance you have. Any health insurance would have out of pocket max. Usually it would take quite a while for the bills + insurance processing to complete so it’s almost never an emergency in true sense.
You should also not just look at good health as the only criteria for this purpose. Anyone can simply slip and fall a flight of stairs and result into 200K of medical claim.
Bottom line - you really don’t need to keep 10K as emergency specifically for this purpose. Definitely an overkill.
I have a 20K general emergency fund, but specifically have 10K for medical related expenses/emergencies
Honestly I thought you were going to ask if 10k is too little. I don’t understand how risk tolerant some of y’all are. 10k can be nothing in a true emergency
10K for medical, I have 20K for any other emergencies
If you have insurance then keep close to the total max out of pocket amount in cash - shouldn’t need any more. If you don’t have insurance then get it. I was diagnosed with leukemia in my mid twenties and racked up over a million in med expenses in less than a year. It happened while I was unemployed but luckily I had private health insurance. Shit happens
Rising Star
Do your parents have money?
It's a relevant question, not an insult. My parents get me gifts in that range frequently no matter how I say otherwise. The money's going to be mine eventually, it would be difficult to ever spend it all. If they have money, I'd imagine they'd volunteer to help in a medical emergency.
You should look into whether your company offers a High Deductible health plan with an HSA (Health Savings Account). HSAs are a great way to save for health related emergencies and offer numerous tax advantages. Not to mention you can invest some of your HSA in a brokerage account and grow tax-deferred earnings from that.
I do have an HSA that I max out but would like to save it for post retirement health issues
Pro
I tore my ACL and the amount I paid that year including surgery, constant physiotherapy, MRIs, and visiting fee made me get a better plan from next year. That’s why I am always surprised by people having a HSA and a high deductible plan.
I tore my acl three months back and had high deductible with hsa. Wish i didn’t , the physical therapy fees are killing me
I think 10k for medical is good assuming that’s your 2X max out of pocket expense for insurance. I’m doing the same but my fund is in an HSA account that’s invested in the marker for growth.
I’m set up similarly to you (except in early 30s) in that I have a general emergency fund (6 mo full living expenses) and an HSA that I’ve been investing and plan to only used post retirement (among other saving budgets). I don’t foresee a separate medical emergency budget on top of that being beneficial. If I were in your shoes, I would rather max out retirement accounts, other investments, or save for a home.
We’ll done, by the way! You obviously have good financial bearing.
More like financial anxiety 🙃
Thanks for the context. I agree that it is not beneficial and I should invest it instead
Pro
Id keep enough to cover my expenses for 6 months.
6 months living expenses if you lose your job. That’s all you need. Short term and long term disability insurance policies at work got you covered. Invest the rest.
Ive been out of the US so long it’s so hard to relate to hoarding $10k for medical expenses. I pay my health insurance of €140 every month and my max out of pocket each year by law is €385 (though I can opt for a higher one for a lower premium). I don’t even have to think about medical emergencies as something that could bankrupt me. #geoarbitrage