How to avoid it, how to get rid of it

Whatever you think of the American healthcare system, one thing is clear: Americans pay a high price for healthcare. Those who obtain insurance through their employer…only 54 percent US employees in 2020 – pay handsomely for it.

The many Americans who do not have health insurance through work often pay even more to be covered. Consequently, there are more 31.6 million Americans who have no health insurance, according to the Centers for Disease Control and Prevention.

For those who have insurance, whether through work or on their own, medical care always involves out-of-pocket expenses. While some simple issues may only require a small copayment, more extensive medical care usually requires the patient to pay beyond what the insurance company will cover.

Worse still, millions of Americans without health insurance have to pay out of pocket for all medical expenses they incur.

This brings us to the health care debt crisis.

How big is the healthcare debt in the United States?

A 2022 study by the Kaiser Family Foundation (KFF) determined that 100 million Americans currently have health care debt. For some, the debt is in the hundreds of dollars: for others, the debt is in the five or six figures.

The 2020 US Census revealed that 17% of US citizens have medical debt. By analyzing the census data in more detail, KFF found that almost 1 out of 10 Americans owe more than $250 in medical debt. Americans owe at least $195 million for medical services.

Americans try to pay off these debts in a variety of ways: payment plans, putting the debt on a credit card, borrowing money, using their home equity, or even second mortgages. More than half a million Americans file for bankruptcy each year in order to deal with medical debt.

Let’s look at the question for two different audiences: those who currently have medical debt and want to eliminate it, and those who don’t yet have medical debt and want to avoid it.

How to Eliminate Medical Debt

For the most part, eliminating medical debt is like eliminating any other type of debt. You increase your personal income and reduce your expenses so that you have more funds to spend on debt. Debt consolidation, selling valuables, getting a loan, using home equity, and sadly, bankruptcy are ways to reduce any debt, including medical bills. suffering

However, there are steps you can take directly related to your medical debt.

  • Contact your insurer. Anyone who has had a serious medical procedure knows that the insurance process is slow and cumbersome. Payments arrive sporadically, and not all at once. Make sure your insurance company has paid everything it’s supposed to before looking for other payment options.
  • Examine your invoice. Are you billed correctly for the services provided? Are you billed for a service you did not receive? Medical billing errors happen all the time (some wonder if they really are “mistakes”). Billing companies may charge you incorrectly for out-of-network service. They may use the wrong code for a procedure, charging you for a more expensive service. And if a supplier “balances the bills”, you may not have to pay.
  • Can I use a payment plan? It’s really no different than a payment plan you have for a mortgage or an automobile. Medical providers often offer very low interest and penalty plans in order to get the money they are owed. A payment plan would at least reduce some of the stress associated with your debt. Some medical providers offer an interest-free payment plan. Unlike credit card companies or loan issuers who profit from interest charges, medical providers are not so keen.
  • Can I use my retirement savings without penalty? If you are under age 59.5, you can receive a distribution to a retirement account, without penalty, to pay for your medical expenses. However, these expenses must represent more than 10% of your adjusted gross income. This means that your medical bill must be extremely high for this to work in your favor.
  • Discuss a negotiated settlement. Unlike credit card companies, medical providers are often willing to discuss your outstanding debt. They can reduce your total debt if there is an amount that you are better able to pay. Medical companies don’t like to send overdue invoices for collection. It costs them money. A negotiated settlement of costs is not only possible, but is common practice.
  • Contact a medical debt counselor. If you can’t negotiate with your medical provider, hire a professional. You will be billed for the services of the medical debt counselor, but this fee will be mitigated by the lower total bill. In fact, make sure when talking to an advisor that you will NOT be charged more than what you save in mediation. There are nonprofits that aggregate the names of counselors and verify their practices so you know you’re working with a respected counselor.
  • Check your credit score for medical bill assessments. Since July 1, 2022, medical bills that are overdue or sent for collection can no longer be factored into your credit score. If a medical bill appears on your credit report, it should be deleted.
  • Your health insurance company may be willing to negotiate for you. If you think you are being charged unfairly or incorrectly, ask your insurance company to contact the provider.

Avoid medical debt

Avoiding medical debt may be impossible. But there are steps you can take to avoid incurring medical debt or to reduce the amount you owe.

  • Find out what’s covered. Before any medical intervention, check with your insurance if the cost is fully covered, or what percentage is covered. This requires that you get a detailed list from your doctor as to the procedures that are going to take place. If you don’t ask, doctors will rarely give these details in advance.
  • If you discover that the cost is not covered by insurance, or only partially covered, discuss the cost of the procedure with the doctor’s billing department. The medical provider may be willing to lower the cost of the procedure before it takes place and before you are billed for it.
  • Discuss your finances with your doctor before having an exam. Some doctors perform tests regularly and without worrying about their cost to the patient. If you are concerned about the cost of the tests, ask your doctor if there is an alternative test or if a certain routine test can be skipped.
  • Review your bill in detail, quickly. Contact the doctor’s billing department and discuss the specific costs for each procedure. Ask if this amount can be adjusted. It can’t hurt to do so.
  • Avoid emergencies, unless you have a real emergency. The cost of emergency services is significant. Talk to someone at your doctor’s office first; there may be a nurse on call who can help you. Research your illness before jumping in the car to the emergency room.
  • For insured persons, stick to network providers if possible.
  • Be proactive: take care of your health. Take advantage of preventative care available to you through your insurance, including wellness programs or health club memberships.

Once you have exhausted the steps above, if you find yourself in medical debt, go back to the “how to eliminate medical debt” steps.

You’re not alone!

As in almost all financial situations, you are not the first to have to deal with medical debt. Any effort you make to avoid or reduce your debt has been done by others, often successfully.

And, since medical debt is so prevalent, there’s no embarrassment in dealing with it. Half of Americans already do. Chat with friends or colleagues to see how they handled the situation. Find out what has worked for others and apply those methods to your situation. In the meantime, try to stay well.

The Epoch Times Copyright © 2022 The views and opinions expressed are solely those of the authors. They are intended for general informational purposes only and should not be construed or construed as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or other personal finance advice. Epoch Times assumes no responsibility for the accuracy or timeliness of the information provided.

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John A. Bogar