Paying Medical Bills to Avoid Bankruptcy

Paying Medical Bills to Avoid Bankruptcy
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Josh Smith
By: Josh Smith
Updated: April 12, 2019
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As it turns out, the average American spends over $10,345 on healthcare each year. In many cases, these costs can skyrocket with each hospital visit — especially for those who don’t have adequate insurance or any health insurance at all, circumstances about 44 million Americans face today.

Many people may not be able to repay because they are not financially stable enough to pay for premium medical insurance in the first place. However, this isn’t just a problem for those who are in dire financial straits. This is an issue that can affect pretty much anyone who needs medical attention.

Reports show that medical bills are the biggest cause of bankruptcy in the U.S., with about 26% of Americans struggling to pay off their medical expenses. Since medical emergencies can happen to anyone, what can you do to ensure that your medical bills don’t send you into bankruptcy?

Your Medical Bills May Qualify for Forgiveness or Reduction

Most people don’t realize this, but the final figure you get from your doctor’s office can often be negotiated down. And, in some cases, that bill can be forgiven entirely. You just need to know how to go about it. Here are the steps you need to follow:

Get a Clear Picture of the Entire Bill

This is absolutely crucial to the process. Knowing how much you owe — and for what — is the first step. Be sure to get a bill that includes an itemized list of everything that was done and how much each procedure, test, or medication cost. This is the best way of finding out if some things within that bill can be paid off by your insurance or if items were tacked on erroneously.

Once you have a clear picture of exactly how much you owe (and for what), then you can start planning your next step from a position of knowledge.

Contact Your Doctor’s Office and Your Insurance Company

Medical bills can be rather complicated, and mistakes are not uncommon. You need to ensure that your bill has no errors. The best way to do this is by contacting your doctor’s office for clarification.

Once you’re sure everything on your bill should be on your bill, you need to contact your insurance company to find out what they do and don’t cover, as per your policy. Cross-reference that information with the bill you have to ensure correct allocation.

After you’ve checked each item on the bill, plan to follow up to make sure that the insurance company has held up its end of the bargain by paying whatever it is supposed to cover.

Photo of Medical Bill

Make sure you go through all of your medical bills to verify that your insurance has paid out on everything it is supposed to cover.

It’s important that you are proactive when it comes to addressing your medical bills. Assuming that your insurance will pay the entire bill will not work. That sort of oversight can be the reason some accounts go into collections.

You assume the insurance will cover the bill, and your doctor, having received no communication from your insurance company, assumes you will cover it. Six months down the line, no one has said anything to anyone, and your account ends up in collections. Once this happens, you have credit score issues to worry about.

After you’ve made sure your insurance has covered whatever amount it is going to cover, take a look at where you stand. If you still find yourself with hefty medical debt, then it is time to employ additional tactics.

Other Ways to Attack High Medical Bills

While there are no easy solutions to high medical bills, you aren’t completely out of options if your insurance (or lack thereof) has left you with a sizable debt. Of course, it’s necessary to realize that everyone’s situation is unique, and not all options will work for all individuals.

Check for Financial Assistance Programs

If the amount you owe is fairly large, you’ll likely be able to work out a payment arrangement with your doctor’s office that will allow you to make monthly payments. That means you have some room to maneuver and negotiate. Moreover, most hospitals have financial assistance programs they make available to their most vulnerable clients.

You are most likely to qualify for such a program if:

  • You don’t have insurance: If you’re uninsured, you can request a reduction in your bill. Often called the “cash price” or the “out of pocket price,” most items on your medical bill will likely have a reduced rate for consumers without insurance.
  • Your post-insurance bill is still too high: Just because you have insurance doesn’t mean that insurance will cover the entire cost. Sometimes, insurance only pays for part of your medical bill, leaving you with a hefty chunk of debt. If this is the situation, then you can find out if you qualify for financial assistance from the hospital.

Ask the finance department at the hospital to see what kind of financial assistance it can offer to help you manage your medical bills. In many cases, they will have one or both of the following forms of assistance:

  • A low- or no-interest payment plan: This is the standard option most hospitals will take. The best part is that these types of financial assistance programs tend not to have strict credit score requirements. While it’s true that this option doesn’t reduce your final bill, it does make it easier to manage by giving you a workable monthly payment plan. This way you slowly pay off your bill, and the hospital doesn’t send your account to collections and ruin your credit score in the process.
  • Bill reduction or total forgiveness: If you owe a large balance and you can demonstrate to the hospital that you are willing but unable to pay, they’ll usually try to find a way to work with you. This may include a payment plan, but may also involve reducing your bill or — in extremely rare cases — forgiving it entirely.

If for some reason, even after trying to renegotiate with the finance department, the hospital does not offer any financial assistance and insists that you pay off the entire bill, then you may need to consider one of the following options.

Take Out a Personal Loan

If your medical bills are getting out of control, you can consider taking out a personal loan to pay them off. While you’ll then have to repay the loan, you can have a little control over the size of your monthly payments. Plus, personal installment loans can have terms of up to six years, giving you more time to pay off your debt.

The interest rate you are offered for a personal installment loan will vary based on your credit profile and the lender — especially with bad credit — so be sure to compare options to find a good rate. Online lending networks, like those below, can be an easy way to shop lenders.

   
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Loan Amount Interest Rate Loan Term Loan Example
$500 to $10,000 5.99% - 35.99% 3 to 72 Months

See representative example

In some cases, you may be eligible for a low-interest medical loan, which are loans specifically designed to be used to pay off medical debt. You can check with your doctor to see if they work with any medical lenders.

If All Else Fails, Find Professional Assistance

One final option to consider is to hire a professional debt or bill negotiator who is more likely to get you a better deal with the hospital in question. While it means yet another cost, a significant reduction in your medical debt could be worth the investment. Of course, make sure you thoroughly research anyone who will work on your behalf before hiring them.

Just because you have massive medical debt doesn’t mean you have to file for bankruptcy. Lots of options are available, and if you find one that works for you it may help your finances and your credit profile.