Tuesday, July 1, 2008

Health Care and Medical Bills

Medical bills can create a huge amount of stress related to debt management and the emotional and physical toll of health issues. The Commonwealth Fund recently published a survey indicating that 45% of underinsured Americans and 51% of uninsured people have problems paying medical bills. Many of these individuals and families were borrowing to pay off medical bills which only delay the inevitable financial strain and pending problems to pay off debt. Often, consumers are not sure what to do and get deeper into debt by ignoring the problem. If the bill gets turned over to a collection agency, the opportunities to work out a solution substantially decrease. The ability to negotiate a payment with the health care provider disappears. As reported in the Dallas Morning News, patients need to continue an open dialogue with the medical office to set up feasible billing arrangements.

According to the National Consumer Law Center, Americans are living longer, in part due to dramatic advances in medical care. One of the costs of longer life expectancies is that someone has to pay for this medical care. While access to quality medical care is essential for seniors and should be a universal right, it can leave them saddled with unmanageable medical debt, and consumer law remedies are critical in helping seniors avoid financial ruin due to overwhelming medical bills. Medical debt issues are critical for many older Americans, especially low- and moderate-income seniors. One out of seven older Americans has reported that paying medical bills was either "very difficult" or used up all their savings. While many do have access to health insurance to pay for the bills, there are still gaps in the systems that burden seniors with substantial health care debt.

If you are burdened with large medical bills, you should know that there is a range of powerful consumer tools at your disposal. There are a number of legal and non-legal strategies, including:
--Informal advocacy and negotiation.
--Finding outside sources of funds to pay the medical debt.
--Debt prioritization strategies.
--Bankruptcy.
--Potential affirmative claims under federal and state fair debt collection practices acts, state consumer protection acts, and other state laws.

Also, according to the NCLC, another effective method to deal with medical debt is to find someone else to pay for it. Be sure that you apply for any assistance programs to which you are entitled. This may include government or private programs, such as:
--Insurance
--Medicaid
--Medicare Savings Programs (Qualified Medicare Beneficiary, Specified Low-Income Medicare --Beneficiary and Qualified Individual Programs)
--Pharmacy Assistance Programs
--Charity Or "Free Care" Eligibility
--Other Charity Programs

The NCLC also reports that sometimes people simply cannot afford to pay medical bills and all their other bills. In that case, it is important to make sure that you do not forego payment of higher priority bills, such as mortgages or car loans, in order to pay medical bills. Medical bills are unsecured debt, and as such usually should not take priority over secured debt or essential expenses such as food and utilities. However, the priority of a medical debt does depend on your individual circumstances and may need to take non-financial factors into account, such as ability to obtain future care from a certain facility to which you owe a debt. You should understand that you should never move medical bills up in priority because of debt collection harassment.

According to CreditCard.com, if you've been hit with an unexpected medical bill, your first thought might be to reach for your wallet and pull out a credit card. Don't, experts say. Savvy consumers should comparison shop for payment options when paying for medical expenses. Consumer counselors suggest negotiating lower bills with medical providers before paying the bill. Here are some helpful tips they offer:
1. Everything's negotiable. You may be able to get a portion of the bill reduced. A hospital bill typically includes items for surgery, anesthesiology, medications, X-rays and other expenses. Contact information for each should be included on the bill. Try talking to the service providers to see if they will reduce their fees in any way.
2. Payment plans. If you can't pay the entire balance at once (and many people can't), work out a payment plan with the doctor or hospital. Some charge no interest; others do. Make sure the plan is realistic and based on your ability to pay. Stick to the plan. If your circumstances change, contact the medical provider and try to negotiate a different arrangement. Get all payment terms in writing by asking the medical provider to send you written confirmation so there is proof.
3. Credit reports. According to Experian and TransUnion -- two of the three major credit reporting agencies -- hospitals, doctors and medical providers rarely report payment information to the bureaus. On the other hand, payments on credit cards, installment loans and lines of credit are all reported to the credit bureaus. So working out a payment plan with the doctor or hospital may be a better option for you if you're concerned about medical debt lowering your credit score.
4. Charity begins at the hospital. The majority of hospitals across the country, especially nonprofit hospitals, have charity care programs that pick up all or part of the cost of care for indigent or special needs families. Some restrict such aid to the uninsured or offer discounted services to the insured with limited incomes. Medical bill negotiators complain, however, that the availability of these programs is often poorly publicized in hospitals. Patients must often ask about them and actively seek them out. Don't be embarrassed to ask! Hospitals have financial counselors and patient advocates who may be able to offer advice.
5. Accurate billing. Review the bill. Hospital bills often arrive several weeks after your visit and may be several pages long. Don't put it aside for later. Go through the charges. Are they accurate? Billing disputes should be resolved before putting the expense on a credit card or loan installment.
6. Collection agency calls. Don't ignore them. If your account has gone to a collection agency, you have already received written notice in the mail. Dodging or avoiding the collector will only make matters worse and further damage your credit report.
7. The fine print. If you have a company-sponsored health insurance plan, pay attention to the details of what's covered -- not just how much the office visit co-pays are, but the lifetime cap, the deductible, and what services are or aren't covered.
8. Denial of service. A medical provider may ask you to pay all or some of your outstanding balance before you can make another appointment. This may be less likely to occur if you have been in touch with them and followed through on repayment plans in the past. If you have a long relationship with the doctor, ask to speak to him or her directly to plead your case. Note: By law, if you have a medical emergency, a hospital must treat you regardless of your ability to pay.
9. Local assistance programs. Your state or local government may have assistance programs that can help offset medical costs. Call your city, county or borough government representative or municipal social service agency or community organizations.
10. Support groups. Connect with local support groups and charities. Members of cancer, diabetes, autism or other illness support groups may prove a valuable resource base for finding doctors as well as navigating the complex health care system.
11. A little help from your friends. Feeling overwhelmed or intimidated by the whole process? Medical bills can be complicated as can figuring the best payment options for your family budget. If you're facing a medical crisis, you may not want or have the time or energy to deal with the fine details, but are comfortable in asking a friend or someone you trust to help. Because of privacy laws, that person will need written permission to discuss the details of your bill with the hospital or doctor.
12. Do your homework. When looking for a new doctor, in addition to asking questions about weekend office hours or board certification, ask about financing options for bill payments. 13. Budget. Budget. Budget. Everyone should have a family budget and have money set aside money in an emergency fund. Most financial planners advise having three to six months' living expenses in case you are unable to work or are hit with an unexpected bill.
14. Insure against job loss. Consider getting short-term disability insurance, which pays you part of your salary should you become ill and cannot work. Loss of income from an illness is a major factor in many medical-related bankruptcy filings.
15. Nonprofit credit counselors. Get help. Find an accredited counseling agency to help you sort through the bills and draft a payment plan that works for your family budget. The two major accrediting agencies for credit counselors are the National Federation of Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. Each has an online referral service to certified local counselors.

U.S. News and World Report said in 2007 that hospital and doctor bills, copayments, deductibles, and other medical expenses have contributed to the balances of nearly a third of low- and middle-income households that have credit card debt. Medically indebted young people between the ages of 18 and 34 have the highest level of credit card debt of any age group, and many in this age bracket don't have health insurance. Healthy young people are more likely than other age groups to shrug off the need for health insurance, leaving them financially vulnerable if they get sick. In addition, young people just starting out in their careers often don't have a financial cushion to absorb unexpected medical expenses. When people are sick they want to be treated and they want to get well. They sometimes feel obligated of pay off their bills even though they don't have the resources to do so, because they want to maintain a good relationship with their medical providers.

Paying for medical bills can be highly stressful. In addition to dealing with health care issues, the added emotional and mental strain can lead to other physical complications such as high blood pressure and other medical conditions. Before you pull out your card to pay for medical services, consider trying to negotiate the payment terms with your provider. Some will offer long-term plans or a reduced fee, especially if you're uninsured. When it comes to medical bills, talk may literally be cheap, as reported by U.S. News and World Report. Be careful with your health, and your bank account will thank you.

Until next time. Let me know what you think.

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