How Not to Let Medical Debt Push You to Bankruptcy?
Even in a nation that is as advanced and affluent as America, medical expenses continue to be a serious problem for millions of people, even those who are covered by medical insurance. An report cites the Kaiser Family Foundation that personal debt is the single-largest reason behind the filing of bankruptcies in America. Another report by the same organization states that as much as 53% of people without medical insurance had problems in paying for medical bills and even among the insured, 43% reported to having problems with paying their share of the medical bills they had racked up. Even more worryingly, 59% of the respondents reported that their medical debts were under collection. The grim fact emerges that medical treatment in America can be quite expensive and can easily cripple your finances even if you have medical insurance. Some practical tips for dealing with medical debt effectively so that you are not forced to file for bankruptcy:
Do Not Ignore Unpaid Medical Bills
Pretending that your medical debt does not exist will not make them go away even if the amounts are relatively minor. In fact, ignoring medical bills will make the situation worse because the service provider will normally follow up with you for a few months before turning your account over to a professional debt collection agency. At this point in time, your bills are reported as unpaid to the credit bureaus and your credit score gets negatively impacted. It also opens up an opportunity for the service provider to sue you for not paying them. If they are successful in getting a judgment against you, your wages may be garnished or you may be forced to pay up along with a penalty or even sent to jail if you cannot pay.
Ensure You Have the Actual Bill from the Service Provider
It is important not to confuse the explanation of benefits with the bill. The explanation is typically sent by the insurance company and lists the various things that have been paid by the insurance company. A thorough reading of the statement will give you an accurate idea of how much your liability is to the service provider and you can tally it when you receive the bill. When the bill does come, you need to examine it carefully for errors. The billing can be quite complex and mistakes on the part of the provider can happen; you may be charged for service that you did not receive or the amount can be incorrect. When you spot errors, you should follow it up with the provider and the insurance company to limit your dues.
Negotiate Hard to Reduce the Amount
Regardless of whether you have a cash problem or not, it can pay to negotiate with the service provider. There are invariably some charges that can be immediately slashed. The hospitals and clinics follow pricing standards that can vary a lot and you should find out why the insurance company has not paid for certain items. Providers also charge different amounts from the non-insured that may far higher than what they charge to the insured. Insist on paying the amount they charge to insured patients if your plan does not cover the service received. If the bill amount is very high, you can try for a settlement citing your financial circumstances that may lead to a bankruptcy filing if the provider is not amenable to substantially reducing the due amount. Read up on debt settlement reviews online to get an idea of how much saving is possible. If you have spent a very long time in the hospital and run up an enormous debt, it may be worthwhile engaging a medical debt advocate who is a specialist in understanding the bills and negotiating to reduce the amount. Typically, you can expect to pay around 30% of the amount saved.
Make Arrangements for Payment
If you are not in a position to pay your bill in full within the due date, you should contact the office of the provider and ask whether they have a payment plan so that you can pay the bill in equal installments over the next few months. Not only will your provider be assured that you are not ignoring the payment but also, in many cases, be able to offer you a period of 3-6 months to pay the amount, however, do check whether they charge any fees for the convenience. Ensure that the payment is sent in by the due date every month to prevent your account from being classified as delinquent and reported to the credit agencies. You can also explore the option of subscribing to a medical credit card or even charging the bill to your existing credit card and then transferring the balance to a zero percent balance transfer card that can offer you an interest-free period for as long as 24 months if you have a good credit score. Be extra careful to pay off all the dues within the interest-free period to avoid deferred interest charges.
Examine the Possibility of Hardship Assistance
If your income is very low when compared to the amount of the medical debt, you can request to be considered for a hardship assistance scheme that many hospitals and clinics have. There are some states that make it mandatory for providers to give the services free or at reduced rates to low-income patients. You will, of course, be required to provide all the documents and proof regarding your household income to be eligible for the assistance. On many occasions, it may be necessary for you to have applied for Medicaid, which can be used to pay off your bills within a specific time frame, so apply as quickly as possible after receiving the provider’s bill.
Medical debt is not something you can run away from. It is better to have initiated some concrete action to pay it off before it is turned over for collection. You can be harassed by the collection agents and there will also be a negative impact on your credit score that will make access to future credit more difficult and expensive. The provider or the collection agency may even sue you for not paying, which can add to your woes.