Despite the best efforts to manage spending and minimize debt, a catastrophic medical event coupled with the limitations and required deductibles that accompany many health insurance plans can quickly lead to medical debt and financial demise.
According to CNN Health.com, more than 60% of people who go bankrupt have gotten to that point because of medical bills.
Though the costs of healthcare aren’t entirely within your control, there are steps you can take to minimize the financial ramifications of medical debt — and how much it ultimately costs.
1. Be on top of the medical debt paper trail
Tracking medical bills and insurance statements for accuracy can feel like a full-time job you’d rather not deal with, but the headache is worth the effort given the likelihood that you’re being billed inaccurately.
Up to 40% of claim statements passed between insurers and hospitals have errors. The key to catching them and avoiding medical debt is being proactive, and organized in how you review what you’re charged — and what your insurance covers.In his research, Stephen Parente, director of the Medical Industry Leadership Institute at the University of Minnesota, found that up to 40% of claim statements passed between insurers and hospitals have errors.
The key to catching them and avoiding medical debt is being proactive, and organized in how you review what you’re charged — and what your insurance covers. Start a filing system that helps you stay on top of all medical paperwork, whether you an old fashioned binder, or technology tools like Simplee to track medical bills and help spot errors and inconsistencies in insurance coverage.
Review and retain all “explanation of benefits” statements, hospital and doctor bills, and record detailed notes pertaining to follow-up conversations you have regarding your medical bills, including the date and time of the conversation, and with whom you spoke.
2. Question anything that is suspect
Verify your personal information, plan type, and the group insurance codes compared to your insurance card on every explanation of benefits statement, as well as the total out-of-pocket costs paid to date compared to the last statement you received on your medical debt.
Review the tests performed, labs ordered, and materials used on medical bills, particularly when there is medical jargon and terms like “kit” or “tray.” (Though such “packages” are intended to be an efficiency for doctor and patient, they may indicate that you’ve been billed twice for the same medical supply).
Question anything you don’t understand with your insurance provider, and request the doctor’s notes and your patient chart if you aren’t satisfied with the answer. (It is your legal right to receive such information under the American Hospital Association’s Patient’s Bill of Rights).
Likewise, if hospital bills use broad categories that don’t clearly explain what charges entail, the Bill also mandates that hospitals send a detailed bill upon request. Often times, medical billing errors occur due to wrong codes being assigned to wrong procedures, but you won’t catch them unless you understand what the categories mean.
3. Don’t postpone negotiations
Medical service providers and hospitals may be willing to negotiate, but don’t ignore bills to prove a point, or wrongly assume that doing so will increase the odds that they’ll negotiate.
Medical providers have no legal obligation to notify a patient of unpaid bills before turning them over to collections. Any outstanding balance, even one being paid down slowly, can go to collections unless you’ve made official arrangements for a payment plan. Medical providers have no legal obligation to notify a patient of unpaid bills before turning them over to collections. Any outstanding balance, even one being paid down slowly, can go to collections unless you’ve made official arrangements for a payment plan.
If you have a medical bill that you cannot resolve by the due date, contact the service provider’s medical billing department and speak with a manager or supervisor about a plan to resolve your medical bills, explaining that you cannot afford the balance you owe and why.
In some cases, hospitals may offer a finance plan to repay the charges over time, or may reduce charges down to an agreed upon amount. Resist threatening bankruptcy or non-payment; the bill will simply be turned over to collections and will impact your credit score, and reflect on your credit report.
4. Don’t pay even more for medical bills
Because most medical debt isn’t reflected on a credit report until the bill is turned over to collections, your own proactivity and urgency is of the essence when you’re facing medical debt.
If you have decent credit, consider applying for lower interest loans from traditional banks, credit unions, or even peer-to-peer lending sites.
Though you’ll pay some interest on such a loan, it will be far less costly than charging the debt on a high interest credit card, or withdrawing from a retirement account.
Depending on your income, you may also qualify for grants offered by medical foundations, non-profit organizations and even unions that can help to ease medical debt.
If medical bills do get turned over to collection agencies, they will hurt your credit score to the same degree as not paying a credit card or traditional loan.
How are you paying off your medical bills?