Medical Bills Often At The Heart Of Financial Troubles
May 13, 2009
Increasingly, employers are reducing medical insurance coverage, increasing premiums or dropping insurance benefits altogether because the cost of health care is so high. Combining with this are the facts that the cost of health care outpaces the rate of inflation, and real wages have been stagnant in the US for more than a decade.
What is the result of this? About half of people who declare bankruptcy seek relief from unpaid medical bills when they file their bankruptcy petitions. Americans are increasingly paying more for health care, but relatively few taxpayers qualify for breaks when it comes to deducting medical costs on their tax returns.
How can you limit the damage from unpaid medical bills? Often, quick action is the key to keeping medical debts both in line and in good standing.
Like credit card debts, hospitals and medical service providers will sell uncollected debts to collection agencies if they don’t hear from you when they attempt to collect. When you receive a bill you can’t pay right away, talk to the hospital or service provider immediately and see if you can work out a payment plan. If you can make regular payments on the debt, this is often enough to keep the bill from being sold to a collection agency. Avoiding a collections action is important because this kind of negative information will land on your credit report and will stay there for years to come.
Keep all documentation on your medical services or hospital visit. Correct errors immediately. Often, patients are charged for services they’ve never received or double billed by mistake. Keeping tabs on your tab can result in substantial savings. Additionally, if you have insurance and your insurer has refused to pay a claim, find out why. Sometimes, claims that have been submitted incorrectly can be resubmitted for payment.
If the insurance company still denies a claim that you believe should be covered, talk to the state agency that regulates insurers. Most often, these regulatory agencies will review the disputed claim and determine who should pay the bill. They may or may not find in your favor, but it’s worth the effort to make sure you’re getting the coverage to which you’re entitled.
Try to negotiate with the medical service provider to see if you can get the bill reduced or get enrolled in a non-standard payment plan. Often, if the provider believes that you can eventually resolve your debt, they’ll choose to offer you better payment terms to avoid selling the debt at a steep discount.
Avoid using credit cards, 401(k) plans, and home equity to pay down your medical bills if you can. Credit cards will consign you to paying very high interest rates on top of high medical bills. Since medical debt is dischargeable in bankruptcy and retirement savings are protected, there’s no reason to tap into your retirement to pay off medical debts.
