New Debt

music therapy

Image by emanuela franchini via Flickr

For the first time in 2 years(almost to the day), I am acquiring new debt that I can’t afford to pay off immediately.  On a credit card.

Last Thursday, my son entered vision therapy.  He has what is commonly known as a “lazy eye”, but is more properly called a “wandering eye”.  His eyes don’t always lock on to whatever he is looking at.  Instead, one of his eyes will (occasionally, but not always) drift to the side and shut off.  His brain doesn’t interpret the signals from that eye.

We had two sessions of tests to diagnose the specific problems: $350.

We will have 28 weekly sessions of therapy @ $140 per session:  $3920

There is an equipment fee: $85

That’s a total of $4355 over the next 7 months.

Insurance covers some of it, but the therapist is out-of-network, so it’s “pay first, get reimbursed later from the insurance company”.  If we pay up front, we get 1 session free, bringing the price to $4215, minus insurance.

I have a health savings account that I have been trying to max out to cover this, to make my payments all pre-tax.  I haven’t been able to get enough in there, yet.  In fact, since I don’t have my kids on my insurance, my maximum HSA contribution is $3050.

Since finding out that vision therapy was going to be necessary, I have managed to save $1000 in cash, and about $1500 in my HSA.   That’s $2500 of a $4215 bill, leaving $1715 that I still need to be able to cover.

Here is my plan:

We’re charging the entire $4215 at 11.9% interest on a card with a 2% travel rewards program.  This will give me $84.30 worth of travel rewards good for reimbursing any travel expenses.

I will immediately pay off $1000 from cash savings.

I will also immediately file for an insurance reimbursement, which will cover 80% – $500, or $2972 minus a bit.   Our insurance got a waiver on the pseudo-wonderful healthcare fraud act on the grounds that the plan sucks so bad that it would cost too much to comply with the law.  No joke.  I’m expecting about a $2500 reimbursement, and I have no idea how long that takes.

In 6 weeks, when I have maxed out my HSA contributions for the year, I will file for an HSA reimbursement for about $2500, leaving about $500 to cover some medical costs for the rest of the year.   Vision therapy doesn’t count against my deductible, since my kids are on my wife’s insurance plan.

Starting in June, my debt snowball will no longer be going to max out my HSA and will instead go straight to this card, to finish paying it off as quickly as possible.   That’s $750 per month.

Any money from any side work will also go towards this bill, but I don’t budget for that, because it isn’t reliable money.

The projected results:

$3215 on the credit card for 6 weeks @ 11.9% = $50 in interest payments.

After the HSA reimbursement, there will be $715 left to pay, which will be paid off in June for another $10 in interest.

When we get the insurance reimbursement, we’ll replenish the medical bill account, to start getting ready for the kid’s braces next year.  We’ll drop $1500 into that account and use the remaining $1000 as a debt snowball payment.

We’ll end up paying $60 in interest to save $140 in therapy costs, so it’s good math, but I hate the idea of racking up another credit card bill.   I could drop the interest costs a bit by raiding my emergency fund, but that still wouldn’t cover it all, and it would leave me with very little left for an actual emergency.  I could raid the emergency fund for half of its value($700), and reduce the initial interest paid to $25 and the total interest paid to about $40, then use the $1000 leftover from the insurance reimbursement to replace my emergency fund.

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  • 20 comments

    Comments

    1. I’m sorry to hear about your situation. Healthcare is absolutely insane in this country. Have you considered opening a lending club loan or asking for donations?

      -Ravi Gupta

      • Thanks.

        With the way I’m doing it, the miles redemption will outweigh the interest payment. Lending Club won’t do that.

        I also found out today that I’ll be getting a receipt each week, even though I’m paying in advance. That means I’ll be able to file for reimbursements more often, and get the money back while it’s still in the grace period.

    2. Having debt sucks but having a plan is awesome, and yours is actually going to work out for your benefit. You get some rewards, you’re getting reimbursement, you’re going to be fine. And your son is going to be so grateful.

    3. Sorry to hear about the condition. I have a cousin who was diagnosed with this issue as a child, and while I do still notice it a bit, it hasn’t stopped him from leading a great life. He’s currently running his own successful dental practice.

      I know that at some point, there might be some medical issues with my kid as well – you never know. Braces might be a few years away.

      Seems like you’re tackling the expenses head-on, with a good plan, and that’s great.

    4. Sorry to hear about your son. Family comes first and you are doing the right thing taking care of him and you do have a plan. By doing this for him, he will grow up not being inhibited by his eye. I am sure that he will be fine in the long run and so will your debt.

      Good luck,
      Joe

      • Thanks. Mostly, I just want him to have some depth perception.

        During his first vision therapy session, I found out how much 3D movies suck when you only use one eye at a time.

    5. Sorry about your son’s condition. I guess things could be worse. At least he doesn’t need surgery. The most important thing is that you have a plan and have considered the various alternatives. Ultimately, it sounds like it will be working in your favor.

    6. My daughter had this condition as a preschooler. They tried patching and glasses before recommending surgery. Vision therapy like you’re describing either wasn’t an option then or wasn’t recommended for her.

      I hope your son gets good results. While surgery was certainly scary when they recommended it, it was done as an outpatient and she has absolutely no issues today.

      Best of luck!

    7. My son has vision issues. Does your son’s school have a vision therapist and does he/she have any recommendations? I am not sure the age of your son, but if he is under 3, he may qualify for a program called “Birth to Three” and would use a vision specialist on that team. If he is over three, but not yet in school, he should receive therapy through the school system.

      • He’s 11. The school doesn’t have a vision therapist that I am aware of.

        • I would call the school and ask to speak with the Special Education teacher and see if she has access to a vision teacher. Perhaps there is one in the town or district, who is not based in your school. If you would like I can speak with my son’s current vision teacher. She may be able to give you some suggestions which may reduce costs. You can email me privately if you would like.

    8. It’s amazing how expensive health care is, but if you’re going to spend big on anything, it should be your children’s care.

    9. Sorry to learn about your son’s eye, but he’s lucky to have a caring parent like you. I think the credit card strategy is perfectly fine. May as well take advantage of rewards if you have to spend the money anyway.

    10. Kids are what makes it all worthwhile! Best of luck with the treatments.

      I never used an HSA, but I wonder if there is any way other associates at your workplace could donate unused funds at the end of the year to you. At my old employer, they let us donate saved up vacation days to folks who were ill and needed time off……

      • The HSA money doesn’t expire at the end of the year, so there’s no “use it or lose it” money for people to donate.

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