How to Deal with Medical Debt So That You Can Survive a Medical Emergency
The cost of healthcare and hospitalization in America is generally so high that if patients do manage to survive their illnesses, medical bills can put them to risk of insolvency unless they are covered with an insurance policy that is rock-solid. Luckily, medical bills that are too large to be paid back need not cripple you financially if you know what your options are. It is possible to negotiate medical bills and you can even get assistance for chronic medical conditions that can potentially push you to financial ruin. Since medical debts get reported on your credit report only after the lapse of 180 days from the date of the bill, you have this time available either to pay it outright or negotiate a settlement that may include a deferred payment plan.
When faced by a medical bill that is clearly beyond your means to pay, you should immediately ask for an itemized bill and discuss with your insurance company regarding what they will pay for and what you will need to pay as per the terms of the policy. It is important to take action that will prevent the bills from being turned over to collections and get reported since it will have repercussions over the next seven years in terms of damaged credit that will hamper your ability to access fresh loans or financial products. According to https://www.cnbc.com, medical debt remains the biggest reason for bankruptcies in America. Some important aspects of handling medical debts that can save you from damaged credit and possible bankruptcy:
What to Do When You Get a Medical Bill
You should first examine the bill that you have received from the hospital and verify that all the details are correct. Look out for charges on account of services not received by you or overcharges. Pay special attention to coding errors and items with very high charges. Contact the billing desk in case you find any errors or unable to understand the entries in the bill. If the bill amount is unaffordable try to negotiate lower charges. It helps to know the prevailing rates in your area for the same treatment as you can use the information to ask for the charges to be revised. Find out if the hospital can offer you a payment plan but look out for charges and interest that may make it unviable.
Understand Your Insurance Policy Inside Out
Health insurers are under tremendous pressure to reduce the impact of claims on their bottom lines so it is quite common for them to refuse to pay certain items even though the expense is payable under the terms of your policy. This may happen due to a difference in interpretation of the requirement of the treatment or even a clerical error in a complicated reporting system. Also, study the Explanation of Benefits received from the insurance company to find out what items have not been covered under your policy and compare it with the policy. Ask the insurance company to explain complicated entries and conduct a review where necessary.
What If You Don’t Have Medical Insurance
Your best bet is to approach the doctor or the hospital and ask for the best possible discount with the promise of paying cash. Otherwise, you can ask for a payment plan and offer to pay the doctor the same rates as applicable for patients with insurance coverage. Dispute any high charge that you think was not necessary for your treatment or which was not discussed with you before the treatment was administered. Often a stern stance can reduce bills drastically. If you qualify for assistance, you can apply for Medicaid or any of the schemes that many hospitals have to help out low-income patients.
When You Have Medical Insurance
If you discover that certain charges have not been covered by the insurance company when you believe they should have been, approach the insurer after double-checking your policy with the assistance of your insurance agent. Make sure you file the appeal within the time allowed by the insurance company. Keep a proper record of all the correspondence and the phone calls you make because so that you can approach the insurance commission of your state if you require to escalate the issue.
How to Pay Medical Debt?
Medical debts are just like any other debt that you need to pay off. If you don’t have the ready cash to make the payment of even the negotiated amount, you can think of the following alternatives:
Take a personal loan: You can approach a bank or a private lender like liberty lending for a personal loan. The interest rate that you will be offered will not be as high as that of a credit card, however, it can still be steep if your credit score is not good.You can even consider a home equity loan but there is the risk of jeopardizing your home in case of default.
Use your credit card: While this may seem a simple solution, remember, credit card APRs are very high and you will end up spending a lot in interest expense by paying only the minimum due amounts. Paying off large medical bills with your credit card may drive you deeper into debt.
Settle the debt: If the bill amount is beyond your means to pay, you can either by yourself or through a professional debt settlement company approach the hospital to negotiate a settlement citing financial distress. While it can take time and enormous powers of persuasion, if you are able to establish that your hardship is genuine and you have no other option but to file for bankruptcy, you may get a substantial discount. Ideally, the settlement should be done before the debt is reported to the credit rating agencies.
Conclusion
It is very important to start dealing with medical debt early on because avoiding it does not make the problem go away and indeed makes it more serious. If the debt gets turned over to collections, you will have to deal with aggressive debt collectors and also take a hit on your credit score if the debt is reported. Credit score damage can be long-term and very difficult to restore making your access to fresh credit difficult and expensive.
