In life, the one thing we can expect is to expect the unexpected.
That is particularly the case for sudden or severe health crises, injuries or chronic illnesses that lead to medical debt. And despite our best intentions to budget and save for such events, often, even the most dedicated savers cannot afford to pay the price. Medical debts are unlike other debt because it is exorbitantly priced and adds up quickly, so quickly in fact that it can go from burdensome to insurmountable in a matter of weeks. There are no debts more apt to crush your finances like unexpected, catastrophic medical debts. If you find yourself under the stress of medical debt, it is important to remember that you have options. Let’s talk about some of those options here.
Don’t be an Ostrich
The first thing to do, or rather NOT to do is ignore it. Too often when we get overwhelmed or stressed, it is easier to pretend it isn’t happening rather than face it. Some people won’t even open their mail, but throw it in a pile and hope it goes away. This behavior is counterproductive because it won’t go away, and in fact, the amount you owe can continue to grow through late fees, collection charges and interest. So face it, open it and while you’re at it, make sure it is accurate.
Make sure it’s accurate and fair
After you take our advice and open your bill; read it, line by line. Be sure that the services charged were services rendered and be on the lookout for duplicate charges. Sometimes you may receive separate bills for the same service; a good example of this would be for surgery, where you may get a bill from the surgeon, the anesthesiologist and the hospital. If you have trouble reading or understanding your bill, call the billing department of the health care establishment and have the charges explained to you. Additionally, if you feel the price of the service is too high, you can dispute the cost. You can bolster your argument by giving them evidence of cheaper service through a competitor’s price or with the Healthcare Bluebook price; The Healthcare Bluebook is a free resource that provides the average prices for a variety of medical services. You can find it at https://www.healthcarebluebook.com. Additionally, doing this in advance of your appointments may help you choose healthcare providers more wisely.
Understand your health insurance coverage
If you are fortunate enough to be covered by health insurance, be certain that you comprehend your coverage. Once you know what the responsibility of your insurance is, verify that they have paid their portion. A powerful tool to aid you in this quest is a booklet called the Explanation of Benefits (EOB) that your health insurance company is required to send to you every year. In this mailer are all of the benefits (and their cost) that your health insurance company is required to cover and additionally it also lists what they do not cover. If you find yourself muddling through the EOB without a full comprehension of the details, call the customer service phone number in the EOB or on the back of your insurance card and ask them for clarification.
Low-income medical coverage
If you are a low-income household and you find yourself with significant medical debt you may qualify for Medicaid, a joint federal and state program for low-income individuals and families. Best of all, in some cases, Medicaid can cover expenses you have already incurred (up to 3 months prior). To see if you or your family are eligible for Medicaid, visit your state’s Medicaid website.
Alternative methods of financial aid
If you do not qualify for Medicaid, take heart. Almost every hospital offers financial assistance. Depending on your earned income and assets, financial aid can range from 100% coverage to a significantly more modest discount. Before you can qualify for this kind of financial aid, you must first use up all of your other available resources such as health insurance (if you have any) and any other public medical benefits you have (or qualify for). It is best to apply for financial aid soon after you receive your bill as most hospitals have a relatively short time limit for which you are eligible. Do not wait until it goes into collections! To apply for financial assistance simply call the billing department of the health care institution you are trying to pay and ask them about their financial hardship program options.
In-house payment plans
Let’s face it, health care is expensive, and even the most affluent person can’t afford thousands of dollars in one fell swoop. So, it makes sense then that most hospitals and doctor’s offices offer interest-free payment plans. After all, gradually getting the full amount is preferable to losing money by sending your account to collections. Usually, your monthly payment is negotiable, but if you find that they ask for more than you are comfortable paying, a little pushback will usually get a good compromise.
Paying debt with more debt
Once the stress of collections begins to take its toll, you may be tempted to take out a loan or use your credit card to pay off your medical debt once and for all. Although this is a feasible way to pay your bills, in reality, due to interest payments, it puts you in more debt. Furthermore, if you cannot make the payment on your medical bill, how will you make the payment to your loan or credit card? The only suitable way to pay off debt with borrowed money is to find terms with a 0% interest introductory offer and to pay it off within the promotional period.
When collections come to call
If you have medical bills that have gone to collections, you are likely feeling the pressure of owing money that you don’t have. Sometimes collection agencies use unsavory tactics to scare you. Many people go through this experience feeling that they have nowhere to turn and that they will lose everything. Take heart that all is not lost and know that you still have options. To stop the harassment; you can send a “Cease and Desist” letter to the collection agency. Sending this letter does not mean that you don’t owe the money, but it does reduce the harassment. You can also ask for a settlement amount to reduce the total amount you owe (sometimes up to 50%!). Of course, that only helps if you have the settlement amount to pay.
Be sure to check the statute of limitations before you pay on old collection accounts. Some people don’t realize that there is a statute of limitation on debt collection that is determined by your state. Once a debt passes beyond that statute of limitation, a debt collector no longer has the right to sue you for payment. A simple Google search will help you find the information you need.
If you are drowning in debt and tired of being harassed; if the prospect of working with collection agencies is too overwhelming, or they just aren’t working with you, Family Financial Education Foundation can help. We are a non-profit credit counseling services that can provide debt management solutions and assist in resolving creditor disputes. We offer free consultations. You can call 877-789-4172 or visit www.ffef.org for more information.
The (not so) taboo option
The last option is one often spoke of in a hushed voice with a sense of dread. Bankruptcy. Although bankruptcy does warrant serious forethought and should be a last resort, it is a necessary tool when debts have crippled your life. Sometimes there is simply no other option when you need to get out from under the weight of crushing debt. There are two types of bankruptcy; Chapter 7, which completely discharges your listed debts, and Chapter 13, which allows you to pay back your listed debts over time. Your individual situation determines which choice is the best for you.
If you need help determining if Bankruptcy is the right choice for you, or if you need help filing for bankruptcy, Family Financial Education Foundation can help. We offer pre and post bankruptcy courses with knowledgeable certified credit counselors leading the way. We also offer online and over-the-phone bankruptcy counseling. Call 1-877-789-4172 for a free consultation or go to www.ffef.org to learn more.
While it is important to pay your debts, debt should not consume your life. Medical bills happen, and it is important to face the situation and utilize the tools at your disposal. You will find peace of mind as you chip away at your medical debt until eventually, you are free from it.