How to cover the cost of electrolysis

According to The Hair Removal Forum, the average cost of electrolysis in the US is $9,000-$19,000. Here, we will explore how to cover the cost of electrolysis with common financing options.

Do you even need Electrolysis?

Before we start, it’s important to know that everyone’s transition is their own journey and there is no one-size-fits-all set of surgeries or steps to cure YOUR gender dysphoria. An Electrolysis procedure is not a requirement to be MTF and you shouldn’t feel that it is. Plus, the electrolysis procedures are very expensive. The LGBT community is a loving community that celebrates diversity. If electrolysis and the costs associated with it aren’t for you, stop reading now and check out these cute kittens.

Health Insurance Doesn’t cover the Cost of Electrolysis

Health Insurance providers only cover services that are deemed to be medically necessary. This means, if a surgical procedure changes your appearance, it probably will not be covered. There is some grey area in general, especially for the transgender community. For transgender-related procedures, we recently researched what is and what is not typically covered by health insurance and compiled a list of 27 most requested procedures that are not covered based on health insurance documents. Unfortunately, Hair Removal (both laser and electrolysis) are not covered by the nation’s top insurers.

Elective or “cosmetic” treatments are not covered by insurance and therefore need to be paid for through other means. The Money.LGBT team has put together this guide to walk you through various financing plans to help you understand the costs, benefits and long-term effects a financing plan may have on your wallet. 

The Options for Financing the cost of electrolysis:

While it is not recommended to take on additional debt, nearly all of the following options involve borrowing. This decision is ultimately yours. We take the “know before you go” approach to taking on additional debt, and suggest you review our debt reduction plan before you make any final plans. Ultimately, you will be following a plan to chip away at any new debt down the road, so it’s better to prepare yourself for what is to come.

Below is a list of common ways to finance surgical procedures:

Doctor or Surgical Center Financing:

Many practices and hair removal centers offer financing plans. This is essentially a personal loan offered by a bank which partners with your doctor to finance the surgical procedure. The annual interest charge offered is typically between 5.99% to 27.99% depending on your loan amount, the expected length of the loan, and your current credit score. Loans for financing surgical procedures are typically available starting at $2,000 and up to $50,000 for each loan.

Example: Doctor or Surgical Center Financing 

Let’s suppose you decide to finance the cost of your electrolysis at a hair removal center. You have been quoted $10,000 for your electrolysis treatments. If this full amount was financed at a 10% interest rate, one would pay 36 payments of $322.67. You will pay a total of $1,616.19 in interest charges.

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Personal Loan:

Another common approach for financing the cost of electrolysis is through personal loans (loans directly from a bank). If you are considering using surgical center financing, it’s smart to cost out a personal loan as well and choose the best option for you. Most personal loans charge 10-12% in annual interest and require payments in monthly installments over a set period of time (typically one to seven years).

Personal Loan Example: 

Again, let’s use the $10,000 cost of electrolysis example. Assuming that you could find a personal loan at a 10% interest rate, one would pay $322.67. You will pay a total of $1,616.19 in interest charges– which would be the same (or similar) as the surgical center financing.

Borrowing from Your Retirement Account:

-WARNING THIS IS A BAD IDEA-

Yes, if you have a pile of cash saved in your 401(k) account, it might be possible to borrow from your retirement. However, not all retirement accounts allow you to do this for elective medical procedures and there are definitely alot of drawbacks. Most 401(k) plans do allow for this with a 401(k) loan, however, this option is not available for either Traditional IRA and Roth IRA accounts, and also surprisingly more expensive than traditional borrowing.

Most employer sponsored 401(k) plans allow you to borrow money from your retirement account. The amount you can borrow is limited by the IRS to 50% of your balance, up to $50,000. As with any other loan, you are required to pay the amount owed. Borrowing from your retirement account effectively reduces your potential earnings until you pay back the loan, but if you have exhausted all of your other options, this may make the most financial sense. Also, if you plan on switching jobs soon- this option is not recommended. Most 401(k) plans require immediate repayment to the loan upon leaving the firm.  To further understand the Pros and Cons for borrowing from your retirement account, discuss with your 401(k) administrator. You can also read this article which we found to be helpful or simulate your specific scenario in a 401(k) loan calculator.

Borrowing from Your Retirement Account Example: 

Let’s take the same $10,000 electrolysis procedure we evaluated above and now borrow the $10,000 using a 401(k) loan to finance the cost of electrolysis.

Most 401(k) plans impose an upfront loan origination fee of $75 and an annual interest of the prime-rate plus 1%. With the current rate of 6.25% this “loan” will cost you $992.72 in interest and fees, making a total of 36 payments of $305.35 per month. In addition, you will lose out on investment return that this $10,000 would earn if it sat in your 401(k) account. This is not a recommended option.

Medical Credit Cards (such as Care Credit):

Medical cards are credit cards that are specifically designed for medical expenses (including doctor’s bills and hospital stays). These cards are designed to help individuals pay off healthcare costs when they are in a bind. While these cards to not offer cash-back rewards, points, miles or other perks, they do often offer promotional sign up offers such as offering 0% interest for the first 6, 12 or 24 months. However, when it boils down to it, Medical Credit Cards, (such as Care Credit) are really just credit cards. If one fails to make a minimum payment during a promotion, interest is charged retroactively and is currently at 16.9%.

Medical Credit Card Example:

The most common medical credit card is Care Credit. Again, we will use our favorite procedure (the $10,000 Electrolysis) and will finance this with Care Credit. Based on Care Credit’s payment calculator. The $10,000 hair removal surgery can be financed over 36 months in payments of $347, bringing the total cost you to $2,462 in interest charges. 

Regular Credit Cards:

Credit cards are a common (and dangerous) way to pay for medical expenses. As a sign-up offer, new cards often offer a 0% introductory period. Keep in mind that the introductory period is usually short (up to 18-months) and jumps up to 17%++ quickly afterward. Where people get into trouble is they pay for a medical procedure on a credit card and then continue to use that card for everyday purchases. This increases the balance beyond an affordable level leading to a long-term debt crisis.

Credit Card Example:

For this example, I am going to explore the bad side of credit cards- what usually happens. Rather than paying for a procedure with a new introductory rate card, I will pay for the procedure with a card that has an existing balance on it and a 17% interest rate. The $10,000 hair removal procedure gets added, I quickly allocate that money elsewhere and soon can only make minimum payments. Assuming you were able to pay off this procedure in 36 months, you would do so with 36 payments of $356.00, and a total amount of interest of $2,834. 

Save and Pay Cash

Ok, if you are reading this article, we get it, you probably don’t have the cash. However, it’s worth saying that this is the only option that will not have long term impacts to your finances. Budgeting for a future procedure is the wisest option and can be done.

One of the most effective ways to save is to set up a Savings Account and set up an automatic transfer from your checking account to your savings account each time you get paid. If you receive a bonus, overtime, or a pay increase simply port all of the additional money earned into your savings account.

Helpful Calculators we used to write this blog:

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