More than forty million Americans struggle to pay their medical debt, and that includes people with health insurance. Healthcare costs have gone up at an alarming pace. Health insurance covers only part of those costs, leaving patients stuck covering deductibles and co-pays until they reach an out-of-pocket maximum.
Unfortunately, many medical issues don’t fall neatly within a single plan year, leading to multiple years’ worth of deductibles to meet and medical bills to pay. So, it’s not surprising (but it is outrageous) that medical bills are the leading cause of bankruptcy.
Dealing With Medical Bills
The medical industry acts as a black box when it comes to billing practices. It’s nearly impossible (even for experts) to figure out how much care will cost ahead of time, leaving patients with no idea how to plan for medical costs.
And like most medical expenses other than those for routine care crop up unexpectedly, they can’t be avoided; if you break your ankle or your kid spikes a super-high fever, it needs to be treated right away, and you deal with the money part later.
Before you pay any medical bill, no matter what size, look at it carefully. Medical billing mistakes are freakishly common (especially if you have a common name). They can lead to you getting billed for procedures you never had or insurance company rejections because of a typo.
Paying medical bills you don’t need to pay can be double trouble for your budget; just try getting a quick refund from a medical provider or an insurance company for something you paid in error. Any time you get a medical bill, do these four things:
- Don’t ignore it, even if it stresses you out—open it right away and deal with it before it gets sent to collections, messes with your credit, or lands you in court.
- Make sure the charges match the services you got on the dates you got them.
- Submit it to your insurance company, even if the doctor’s office says they submitted it.
- Check with your insurance company to find out why they aren’t covering the bill.
If it turns out that the charges are legit and will not be covered by insurance, either pay the bill or contact the provider to either negotiate a lower charge or set up a payment plan (more on these in a second).
Surprise medical bills crop up most frequently due to emergency room visits and hospital stays. These unexpected expenses may be the result of receiving care from out-of-network providers, even if the hospital itself is in your insurance network.
As patients rarely have control over who will be treating them in these situations, you could end up with massive medical bills through no fault of your own.
How To Pay Off Medical Debt
Medical bills pile up very quickly—even for people with solid insurance coverage. That debt can demolish your budget, wipe out your emergency fund, and max out your credit cards. There are some things you can do to keep that medical debt from thoroughly trashing your finances.
The least expensive way involves negotiating with doctors, hospitals, and other service providers; they want to get paid and will almost always work with you as long as you contact them and ask.
Other alternatives involve borrowing with interest, either through medical or regular credit cards or personal loans; these options will cost more, but if they can keep you from ending up in court (for a lawsuit or a bankruptcy filing), they may be worth it.
1. Work Directly with Your Service Providers
Medical service providers have a lot of flexibility when it comes to setting prices, but those prices aren’t etched in stone.
Those providers can be purposely vague in their billing practices, hoping that patients will just suck it up and pay whatever they charge, but that also gives them a lot of wiggle room in negotiations. If a bill doesn’t make sense (like $400 for bandages, for example), call the phone number on the bill (it won’t be your doctor) and ask them to reduce the charges.
If that’s outside your comfort zone, there are companies that will negotiate medical bills for you, but their services aren’t free. When you can’t pay a bill all at once, practically all providers offer payment plans.
You have to call them to get this set up, and it’s best to do it right away before a collections agency gets involved. In most cases, as long as you stay in touch with your providers and make all of the scheduled payments, they won’t charge interest or take any other actions to collect the debt.
2. Borrowing to Pay Medical Bills
If you will need to borrow money to pay medical bills, do it before these outstanding debts start to take a toll on your credit score. You have a few different options here, so do a little research and figure out which will be the least harmful to your finances.
- Use a credit card with a promotional zero percent APR to pay off all the bills, then pay off the credit card before the no-interest period expires (and do not use this card for anything else).
- Apply for a personal loan to cover the outstanding bills if you need more time than a credit card promotional period offers; you’ll pay interest, but the payments will be fixed and steady, and you won’t have to deal with a sudden spike in the interest rate.
- Pay it through the medical provider’s in-house financing, which many providers now offer; these come with higher interest rates than personal loans but often longer payback periods so monthly payments could be smaller.
There are also many government agencies and charitable organizations that offer assistance in paying down medical debt. Find out if you’re eligible for Medicaid or CHIP (Children’s Health Insurance Program) at www.usa.gov (under the “benefits, grants, and loans” section). Look into similar programs on your state website. You can find a list of charities that help people struggling to pay medical bills on the Cameron’s Crusaders website.