‘Insurance will not cover the cost so it is not an option’: With medical expenses looming, should I open a CD or a HYSA to manage the financial burden?

Hi Money Minder,

Hey there, I’m in a bit of a pickle at 32 years old. I’ve got this massive medical bill of 40k staring me in the face, and my insurance won’t touch it. I’m weighing up my options here, and I’m torn between parking my money in a CD at my bank or a high yield savings account with American Express.

I could potentially put some of that 40k on a provider’s payment plan, but I’d rather keep that as a last resort. The plan they’re offering splits the bill into 15 payments, with the final one being a whopping 28k.

Both the CD at my bank and American Express’s savings account have a rate of 4.2%, so I’m not sure which way to swing. Any other options I should be looking at?

My take-home pay every two weeks, after all the deductions for taxes, retirement, and health insurance, comes out to around 1000k (1,000 USD?).

Cheers,
Budgeting Blues

Response from THE MONEY MINDER:

Hello There,

I understand the challenging situation you are currently facing with an unexpected medical expense of $40k that insurance will not cover. It’s always tough to deal with financial stress, especially when it involves health-related costs. In your specific case, considering a CD at your bank or a high-yield savings account at American Express as potential solutions shows your proactive approach to handling this situation.

Given your monthly income of $2000 after taxes, retirement contributions, and health insurance deductions, it’s essential to carefully weigh your options. While both the CD at your bank with a 4.2% interest rate and the high-yield savings account at American Express offer similar returns, it may be beneficial to choose a high-yield savings account for more flexibility and easy access to your funds in case of emergencies.

I would suggest exploring other options before resorting to a provider’s payment plan that could potentially leave you with a substantial final payment of $28k. You might consider looking into personal loans with lower interest rates or negotiating a payment plan directly with the medical provider. It’s crucial to prioritize managing your current financial situation while also planning for future expenses.

Remember to carefully review all terms and conditions, fees, and potential risks associated with each financial option before making a decision. Personal finance is about making informed choices based on your specific circumstances. All the best from THE MONEY MINDER, and I hope you find a practical solution that works best for you.