How to Deal With Huge Medical Bills

A report from the American Journal of Medicine shared some sad statistics about the state of American medical care and medical bankruptcies: A 2009 study revealed that 62.1% of U.S. bankruptcies had a medical cause that year. That figure is in stark contrast to 1981, when only 8% of bankruptcies listed medical debt as a root cause.

Some good news may be on the way, however. Consumer Reports revealed that personal bankruptcies dropped 50% from 2010 to 2016, presumably due to the passage of the Patient Protection and Affordable Care Act, or ACA, along with an improving economy.

Unfortunately, Obamacare hasn’t solved all of American’s healthcare woes, as it hasn’t been able to fix the underlying cause of medical debt: the astronomical cost of healthcare in America. We spend more on healthcare per capita than any country in the world. As PBS reported last year, the amount of money spent on healthcare in the U.S. surpassed $10,000 per person – a new record.

Big Medical Bills in the Post-ACA Era

Part of the problem is just how complex and expensive the healthcare system is, says consumer protection lawyer and advocate SaraEllen Hutchinson. Obviously, catastrophic accidents can cause huge medical bills – and the hugeness is often a result of bills coming from multiple different sources.

“The ambulance, hospital, surgeon, anesthesiologist or nurse anesthetist, labs, and x-ray film readers all are different businesses with separate bills,” says Hutchinson. “Some of them may be in your insurance network, and some of them are not.”

If you’re unconscious in an ER and they’re working to save your life, chasing them all down to find out what insurance is going to pay for and what’s considered your out-of-pocket obligation is probably not your first priority.

“You will probably have to track them down later,” she says. But, by then, the damage has already been done. And while you can end up with astronomical medical bills if you’re uninsured or underinsured, you can quickly rack up thousands of dollars in medical expenses even if you have health insurance. The bigger your medical bills, the more you’ll need to pay, whether you have health insurance or not.

“Insurance is not like a health club membership where you can go and use everything you want for one monthly fee,” she says. “When you buy insurance for driving your car, you don’t get reimbursed for your gasoline or oil changes. And if you crash, you pay your deductible before the insurance kicks in.”

And while Obamacare has helped many people get access to health insurance, the premiums and deductibles can be excessive on their own. For 2017, the maximum out-of-pocket limits for ACA plans worked out to $7,150 for individuals and $14,300 for families.

If you’re living paycheck to paycheck – or worse, suffering from a reduced income due to your injury or illness — that might as well be a million dollars.

Five Ways to Deal With Huge Medical Bills

If you’re dealing with insurmountable medical bills, it’s important to know your rights, as well as which resources might help the situation. Here are some of the best tips for anyone trying to overcome massive medical bills or debt, straight from Hutchinson and other experts:

#1: Make sure all bills and statements are correct!

All around the web, you can find examples of situations where medical bills were just plain wrong. Sometimes, people are charged for procedures they didn’t even have, or charged astronomical sums for simple procedures or supplies by accident. Other times, the insurance company bungles the claim and asks you to pay for covered services or amounts over your annual out-of-pocket max.

According to Rachael Norman, founder and CEO of GetBetter.co, your first step with all medical bills should be looking them over for accuracy. If you’re unsure what anything means, you can call your hospital or medical office and ask for a description of each service, too.

From there, it’s always a good idea to check with your insurance and make sure that the amount shown on the bill takes into account any payments and discounts from your insurance policy. Lastly, check that the bill was processed correctly by your insurance company, says Norman.

“Ask your insurance company to review with you what they paid and check to see if any errors were made,” she says. “Many medical bills are coded incorrectly. These mistakes can result in your insurance paying less than they should. For example, an emergency room visit might accidentally be coded as an office visit, resulting in a lower insurance payment and a higher bill for you.”

Related: Best Health Insurance Companies of 2017

#2: Negotiate a payment plan with your doctor or hospital.

As Hutchinson notes, it’s common for people to want to avoid medical bills because they’re stressed or tired or sick. But, that’s the last thing you should do if you hope to reach a resolution.

“If you know this is going to be a hardship, do not stick your head in the sand and wait until everything gets sent to collections, because it will only get worse once debt collection agencies have a hold of your phone number,” she says. “Be proactive and ask the hospital about a hardship payment plan.”

While negotiating a payment plan may not be ideal, it can set you up with affordable payments you can live with so you can move on with your life. Plus, making regular payments can help you prevent massive damage to your credit score.

Related: What to Expect When Filing for Bankruptcy

#3: Apply for charity care.

Many hospitals and healthcare providers offer a certain amount of charity care each year – as in, they forgive some medical bills for individuals who meet specific income requirements.

While you may dislike the idea of accepting charity, these programs can literally wipe your medical debt clean if you qualify. They can also reduce the amount you owe, making regular payments more affordable.

“Filling out Charity Care applications can feel like an onerous chore for someone who has already been through the wringer with the health care system itself, but it is time and effort well invested if it keeps you out of collections or bankruptcy,” says Hutchinson.

#4: Ask for a cash discount.

If you’re facing giant medical bills and don’t have any cash, even a 90% discount could be laughable. But, if you do have some money to kick in, it’s possible you could negotiate a discount for paying in cash right away.

“Many doctors offer pay now rates or cash discounts,” says Norman. “Even if the bill is now old, many doctor’s offices will honor these after the fact, especially if no one mentioned this to you when you were in the office.”

Hospital billing departments also offer early payment discounts at times.

“When dealing with a large hospital bill, ask if their billing department offers discounts for prompt payment or payment in full,” notes Norman. “This can sometimes save you 5% or more on the total bill.”

#5: Ask your health insurance company for a one-time exception.

You may also try your luck with your insurance company, as they may be willing to negotiate or strike a one-time deal, says Norman. “Some policies will make a one-time exception and cover a single bill at a higher rate if you ask,” she says.

Be careful, however, because companies that offer this will generally only allow it once per policy. In that case, you want to make sure your one-time exception packs a lot of punch (savings).

You can also ask your insurance company if there’s anything else that can be done, says Norman. For example, if your bill is from a doctor that doesn’t participate in your insurance network, sometimes your insurance will cover it anyway if no in-network options are available to you, she says.

But, you may never know unless you ask.

How to Prevent – or at Least Prepare for – Big Medical Bills

Dealing with unruly medical bills can be life-changing in the worst way. There may be nothing more stressful and disheartening than knowing you owe tons of cash for a medical expense that was possibly a very painful experience and probably wasn’t your fault to begin with. And it’s equally stressful to know your finances and your credit score are probably both in peril.

When it comes to big medical bills, an ounce of prevention is worth a pound of cure. While dealing with existing medical bills can be awful and can ruin your finances for years to come, there is plenty you can do to try to prevent the experience from happening to you.

One of the most important steps to avoiding big medical bills is having an emergency fund, says financial planner Jeff Rose of GoodFinancialCents.com.

“Setting aside several months of expenses and enough to cover your health insurance deductible and out-of-pocket max can save your finances in the event of a medical emergency,” he says.

If you have a qualifying plan, you can also open a health savings account, or HSA. These plans let you contribute pre-tax money that grows tax-free until you need it for qualified healthcare expenses.

Related: The Best Retirement Account You’ve Never Heard Of

Of course, that only works if you have health insurance to begin with. Thanks to the passage of the ACA, you can get approved for coverage regardless of pre-existing conditions. And if you earn less than 400% of the federal poverty limit (FPL), you can get financial help with insurance premiums and potentially co-pays, too.

Just like any other aspect of life, having the right insurance products can prevent a financial catastrophe, says Rose. “You buy auto insurance to protect yourself in the event of an accident, you need life insurance to protect your family, and you need health insurance to protect your finances.”

If you’re lower income, you may also want to see if you qualify for Medicaid. You can explore eligibility requirements on the Department of Health and Human services website.

Finally, take good care of your health, notes Hutchinson. “While we can’t stop someone from rear-ending us at rush hour, we can do a lot for ourselves to stay out of the doctor’s office and have money set aside for emergencies,” says Hutchinson. “Don’t waste your money on fast food, take-out, soda pop, sugary coffees, and that extra round of drinks.”

While you can’t prevent everything, you can try your best to be a good steward of your body and your health, and prepare your finances for emergency medical issues. Until the cost of healthcare comes down, that may be the best any of us can do.

Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.

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