While most adults are comfortable budgeting around mortgage and auto payments, many are now struggling with unforeseen liabilities. According to the Survey of Income and Program Participation, 1 in 10 American adults owe medical debt, with millions owing more than $10,000.
Once upon a time, health insurance was the key to keeping medical costs in check, but no longer is that the case. Currently, 92% of people in the United States are covered by some form of health insurance, and yet, medical debt sits at $195 billion.
Fortunately, with a bit of planning and perseverance, there are ways to save on the excessive cost of healthcare. In this article, we walk you through how to avoid incurring massive medical bills and how to reduce the damage if you do.
The Diversity of Medical Debt
While true that the uninsured, minorities, seniors, and lower-income households carry a sizable percentage of the outstanding medical debt in this country, they are not the only ones. One unplanned hospital stay can wipe out anyone’s finances and often strikes those who carry no other debt. Here are a few statistics on people forced to claim medical bankruptcy resulting from out-of-pocket healthcare costs:
- 45 years – the average age of those claiming medical bankruptcy
- 46% of people claiming medical bankruptcy are married
- 60% of people filing for medical bankruptcy attended college
- 20% of military families experience medical bankruptcy
- $44,622 – the average debt that sends households into medical bankruptcy
- 20% of consumer credit reports include one or more medical collections
- 22% of consumers in collections are there strictly for medical debt
- 54% of consumers with medical debt have no other debts on their credit reports
The good news is that the three nationwide credit bureaus — Equifax, Experian, and TransUnion — are implementing changes to how medical debt appears on consumers’ credit reports, beginning July 1. This action removes nearly 70% of medical debt collection from credit reports.
An Arm and a Leg
Sadly, some people are paying the high price of neglected health with their physical well-being. Per a study out of Stamford, nearly 50% of people with medical debt (or the fear of acquiring it) intentionally avoid seeking treatment.
Looming healthcare costs are a concern for adults of all ages, with people from 18 to 64 reporting that they’ve refused medical care:
- 21% have declined a doctor-recommended medical test or treatment because of the cost
- 32% have postponed getting medical care because of the cost
- 40% have used home remedies or over-the-counter drugs instead of going to the doctor because of the cost.
Preventative (Financial) Care
Going to the doctor isn’t a luxury, it’s a necessary component of a healthy life. Fortunately, with a little planning, you’ll get the necessary care without going into an unreasonable amount of debt. Here’s how:
Get a Good Faith Estimate
The No Surprises Act went into effect earlier this year. It gives those without health insurance a breakdown of the charges for a planned procedure. Those with insurance can ask for the same information and submit it to their insurance company to estimate out-of-pocket expenses.
Communicate with Your Doctor
With health insurance premiums increasing nearly 50% over the past decade, some people choose to forgo coverage. For these patients (and even those with insurance who can’t afford sky-high deductibles) many providers offer self-pay discounts.
If you’re concerned about healthcare costs, tell your doctor. Chances are they’ll find ways to trim the price, like offering medication samples or having you come in less often.
Confirm Your Insurance
If you carry more than one type of health insurance, verify that your provider has them all. Multiple policies may cover different aspects of your care. Without complete information, the remaining balance falls to you.
Make the Most of Medicare
If you’re on Medicare, consider adding Medicare Supplement Insurance or Medigap to help cover the cost of premiums, copays, deductibles, coinsurance, and the required 20% for physician bills.
If the $150 per month price tag for supplemental insurance is too steep, consider Medicare Advantage. It covers some of the out-of-pocket costs that traditional Medicare doesn’t, often with no additional premium if you pay for Part B.
Lastly, see if you qualify for a Medicare Savings Program. Seniors with few assets and a limited income are often covered for deductibles, premiums, coinsurance, and copayments.
After (Financial) Care
Even with proper planning, it’s possible to wind up with a big medical bill after receiving care. Both the provider and your insurance company are hoping you’ll just pay it. Don’t. Before pulling out your checkbook, exhaust the following options:
Verify Benefits Before Paying
Responsible people often pay their bills on autopilot. If you receive an invoice from a doctor, verify that the billed amount is actually what you owe. The hospital or provider must first submit the charges to your insurance company for payment. Once they have, you’ll receive an explanation of benefits from your insurance stating the amount you owe the provider. If something seems off, contact your insurance for clarification and assistance.
Check Their Work
If you get a large medical bill, ask for an itemized copy and check it over line by line. More than 80% of medical bills contain errors, including duplicate charges and fees for services you didn’t receive. Dispute all mistakes with the provider and/or your insurance company.
Mention Medical Mistakes
Medical mistakes happen and could reduce the amount you owe. If you went in for a procedure and wound up with an infection, mention it to your provider. If the error resulted in a longer hospital stay, missed work, or other financial hardships, tell the doctor. Though they aren’t obligated, they may reduce the amount you owe based on an unforeseen outcome.
Request Financial Assistance
Many hospitals offer financial assistance but don’t tell patients unless they ask. In fact, nonprofit hospitals are mandated by law to provide assistance, yet nearly half bill patients who qualify for discounted or free care. The following states require all hospitals to provide financial aid to low-income patients:
- New Jersey
- New York
- Rhode Island
Doctors want to get paid, and you don’t want debt, chances are there is room for compromise if you just ask. It’s possible to shave 15% off your bill by offering a one-time payment to your provider or by setting up affordable monthly payments, often without interest.
Ask for Help
Navigating the world of medical bills and health insurance can be daunting, but help is available. The Patient Advocate Foundation is a nonprofit organization that assists patients with chronic, life-threatening, and debilitating conditions access care and financial aid. They offer various programs, including copay relief, case management, and scholarships. You’ll find numerous resources on their website, many free of charge.
Keep it off Your Credit
Though it may be tempting to pay for high-dollar medical bills with your credit card, there is a better alternative.
Regardless of what you purchase, unpaid credit card debt often winds up in collections. Collections can remain on your credit report for seven years and may lower your score leading to higher interest rates or being declined future loans. Plus, the interest paid on credit card purchases is often astronomical, amounting to tens of thousands of additional dollars spent paying off the original amount.
A more financially sound option is to explore a patient lending program through your provider. Medical loans facilitated by a local bank or credit union protect your credit by locking in a low-interest rate with monthly payments you can afford.