NerdWallet's Smart Money Podcast - My prescription drug costs are wrecking my budget. What can I do?

Episode Date: August 5, 2019

Having Type 1 diabetes can be expensive. Just ask Paloma Kemak, aka Glitter Glucose on Instagram, who pays over $1,000 a month for her insulin. Dayana and Sean talk with her about her experience living with diabetes and offer tips to help manage the costs.

Hello and welcome to NerdWallet's Smart Money Podcast, where we answer your real-world money questions in 15 minutes or less, so you can get smart, then get back to doing you. I'm Sean Piles here at NerdWallet HQ, joined by my co-host, Dayana Yochum. So today we're talking about a topic that unfortunately affects everyone at some point in their life, and that topic is medical bills. And we're joined by Paloma Kemmick aka Glitter Glucose, on Instagram. She's a diabetes advocate and influencer who has traveled across the country and even to Mexico on the hunt for affordable insulin. Yes, thank you so much for having me. So I'm here because I, like you said,

I live with type 1, and there's no cause, there's no cure to this disease. And my medical expenses, just for insulin a month, are about $1,000. So I need all the advice you can give me. Well, I mean, that is an eye-opening figure to me. $1,000 a month, that is not an insignificant chunk of change. That's, for some people, a month's rent or a couple car payments so it really is can be a very big barrier to saving and in planning and it's an expense I never thought I would have right and as you said there's no getting around it and so

that's why we're happy to help you through this thorny question and so in this episode of smart money podcast we going to talk about how to manage a really big unavoidable expense in your budget, one that recurs every month in this case, and then go into some tips about how you can manage medical expenses. Let's get to it. So Paloma, at the heart of this issue is the fact that you have a huge unavoidable expense in your budget that there's no getting around, and it takes up a big chunk of what you have coming in. Yeah, to our listeners, I mean this might seem like a niche topic but a hundred million

Americans are dealing with this very this specific issue and even if you're not diabetic it could be another medical cost or a chronic illness that you're having to cover in your budget. Yeah, you have to fork out a lot of cash every month just to sustain your life, really. So Paloma, how have you prioritized this expense in your budget? Well, for me, my first priority is obviously staying alive. So I pay the cost, and if something else slips under, whatever happens to other bills happens, but at least I'm alive. So'm alive so at nerd wallet we do have some guidelines for this one of

them is a budgeting guidelines the 50 30 20 rule so 50% of your budget goes to cover your must pay expenses we're talking about the roof over your head the food in your belly the medication that that you need. The other two, 30% and 20%, 30% of your budget goes to cover the nice to have. So it's the subscriptions, it's the eating out, it's the vacations, it's, you know, the stuff that makes life nice. But, yeah, we don't want to deny you. And then the final 20% is a really important one, and that is money to cover, go pay off debts if you do have debts,

but also that's your savings. So you want to be able to save 20% of your income to cover both short-term needs but also for long-term. I feel like my wants went from like this to like yeah but I want to go back to that 50% that covers the needs the absolute necessities because I imagine we might be underestimating what you pay yes because you know we're talking about insulin but that's not my only medical expense I were an insulin pump, I have a glucose monitor, I have doctor's appointments, so really my expenses are a

lot more than $1,000. Okay, just to get really personal here, how much more than $1,000? I think we should we should keep it real here and let people know what this... It's almost $2,000. So $2,000 a month of really must-pay expenses, right? And so I imagine you've made a lot of sacrifices of that wants category. What have you done? I drive an expensive car. It only has one hubcap on it. But I am married, and, you know, I do feel guilty at times

that this is something that my husband has to deal with, too. So not only did I never think I was going to deal with this, I'm sure he never thought this was something he would deal with. Right. And you have to find some way to do it. There's always going to be a sacrifice because, as you said, your health is number one. Right. And so in general, for anyone who's struggling with a tight budget, the wants category is going to be where you can make some cuts. So whether it's a short-term problem or an ongoing expense like you have, Paloma, you can find things to cut even though they're not very fun. You know, you can cut your Netflix subscription. Cable. Cable, yeah. And if it's a bigger thing like you're dealing with, as you were saying, you get an

inexpensive car. You can maybe trade in a car so you get something more affordable. Shop around for insurance. Find ways. You have to get really creative as you know well. And another smart tip for budgeting in general is first go for the big ticket items. You don't want to exhaust yourself by trying to cut every $2 or $5 expense. Right. The latte mess. The latte factor.

If having a latte truly brings joy to your life, prioritize that. Cutting that out isn't going to make a ginormous difference in the long term, but driving a cheaper car, getting rid of a car payment, having a more affordable car, less fancy one means your insurance costs are lower. So that's another way to kind of prioritize all of your spending. So now let's talk about specific medical expenses, some of the ways that you've tried or you've heard people try to cut those kinds of costs. I've looked into patient assistance programs. I've never qualified for any, but I know that people, it's not recommended or allowed to trade supplies, but if someone has better insurance than the

other, they're like, hey, I have extras, here you go. I've even drove down to Mexico. I live in Arizona, so it's not super far of a drive for me because it's the same insulin but it's drastically cheaper. Really? Yes. Really. And my friends who live up north they've went to Canada. It's not illegal, it's perfectly. I had a prescription from my doctor, just bought it there and brought it back. I've heard of people even ordering supplies from just across seas and you may get it from China one month India the other month and it turns out that it's the same medicine but you're just getting it from anywhere else basically from your main place. Did no one else see these news

stories about that not being the same medicine and it being very dangerous? Definitely not recommended and risky but it's a fairly common practice because people they need to find some way to get this medicine. Right. Desperate times call for desperate measures. Another tip I've heard of working that works for people as well is calling your insurer and seeing if there's a way that they could possibly reduce the cost here. And there's no golden rule. It's not going to work for everyone. But one thing that I've heard works really well, when you're on the phone with your insurer, take the kind of kill them with kindness approach, where the sweeter you are to them, the more you have a story and you're just a real person. Even though it's incredibly frustrating, it can take you pretty far. I used to work at a

call center and I can attest that kindness will get you everywhere on a phone call. And even though it's kind of twisted that, yes, you're being sweet to a stranger over the phone to get insulin that you need or whatever it may be, I've heard that can be a really effective approach. I've never tried it, but you don't know if you don't try. Exactly. The answers always know if you don't try. Right.

Right. Another tip if you have a high dollar regular medical expense is actually to be strategic about your insurance. And in this case, a high deductible plan might actually be the better choice. Right. It might seem a little counterintuitive because you're going to have to pay more to hit that point. But because you have such ongoing high medical expenses anyway, it will pay off pretty quickly and you'll be paying lower premiums overall. And so it can be more cost effective. Very interesting. Yeah.

I'll have to look into that. Another great resource for you would be to fund a health savings account. They're also flex spending accounts. And the very cool thing about these accounts, it's kind of like funding a prepaid debit card, right? You put money in, only this money is pre-tax. So when, and then you use that money to pay for your medical expenses so if you're in the 25% tax bracket it's essentially like a 25%

off coupon on the medical expenses that you're you're paying for yeah and especially since your your cost can be kind of predictable there is a cap on how much you could put into these accounts per year. You're probably going to, you know you're going to spend that money, right? This is all, like, great news to me. I've never heard of this, so this is something I really need to look into. I'm so thankful to you guys for all these tips because I know it's not just about me. I know my followers feel the same. I actually asked them last week what kind of things do they do when they are having trouble affording their medical

expenses let me actually read some of the responses to you many said they took out a credit card and went into debt yeah which I mean that's actually not uncommon 60% of all bankruptcy filings have some medical expense and often their credit card related and it's unavoidable because people as you have as you know it's a need they have to cover it and the credit card can be the only way when you don't have that cash in your bank account and so if you're gonna do that unfortunately you know it does happen but if you're going to do that try to take out a low interest credit card so that way you're not paying more for what

your expenses already. No so so many helpful things. Someone said they adjusted their student loan payment, a lot of people went to Mexico, they rationed their supplies, which can be very... Right. It can be deadly. You shouldn't put your health at risk here. Unfortunately, the alternative, if it is going into credit card debt, then that might be the option. But there are resources to help you deal with that as well. Everyone has to kind of find their own solution, it seems.

But the goal still is to stay healthy. Yeah, for sure. I know. I can't wait to share these tips. Great. Well, thank you again for joining us. It's been a pleasure. Thank you for having me.

What a great conversation. It really was. All right. Let's get to our takeaway tips. All right. The first is when you're sorting through your expenses, a good rule of thumb is the 50-30-20 rule. And that was 50% of your budget goes to those must-pay expenses, which would include medical costs. 30% is the nice-to-haves and then 20% is your savings and also your debt payments. Right and second tip here when shopping for insurance, compare your options here. A high deductible plan can help you save money in the long run

if you have really big medical expenses. Also look into HSAs and flex spending accounts. And then we talked a lot about prescription drug costs. A good resource to check the price is called GoodRx. It's an app or a website that helps track the costs of the prices of drugs so you can do some comparison shopping. And if you see that what you're paying right now is really out of line, talk to your pharmacist. Make that phone call and try to sweet talk them into a better deal. And that's it for today. You can get more on this at nerdwallet.com slash podcast.

If you have a money question of your own, you can text us or call us at 901-730-6373. That's 901-730-NERD. Or you can email us at podcast at nerdwallet.com. And finally, a brief disclaimer, courtesy of the NerdWallet legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes.

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