Medical Debt Hurdles and Remedies

Medical debt is a huge problem in America today. So many people struggle to pay their medical bills, even people with health insurance. Medical debt can wreck your credit score and make it hard to get loans or even a job. What can you do if you have medical debt? This article will explain the hurdles people face with medical debt, and suggest some possible remedies.

The Medical Debt Crisis

Research shows that about 137 million Americans face financial hardship each year because of medical costs. That’s more then 1/3 of the population! High medical bills are the #1 reason people would consider raiding their retirement savings or 401(k)s. And even after wiping out their savings, 66.5% of bankruptcies are linked to medical issues.

Why is their so much medical debt today? Health insurance premiums and deductibles keep rising, so people have to pay more out-of-pocket for care. Also, more people are choosing high-deductible insurance plans to save on premiums. But then they can’t afford the thousands they have to pay before insurance kicks in.

Its not fair. Getting sick shouldn’t mean financial disaster. But that’s the reality for millions of Americans today.

Problems Caused by Medical Debt

Medical debt doesn’t just hurt your wallet – it can wreck your whole financial life. Here are some of the biggest problems medical debt causes:

• Damaged credit – Unpaid medical bills get reported to credit bureaus, lowering your credit score.
• Higher insurance rates – Insurers may raise your rates if you have past-due medical debt.
• Legal action – Hospitals may sue you or try to garnish your wages to collect on bills.
• Bankruptcy – High medical bills are the leading cause of personal bankruptcy filings.
• Avoiding care – People skip treatment because they can’t afford past medical bills.
• Employment issues – Some employers check credit and may not hire people with medical debt.

As you can see, medical debt can hurt you in so many ways. It’s important to get help before it spirals out of control.

Review Your Medical Bills Carefully

The first step is to look closely at all your medical bills. About 80% of medical bills contain errors – make sure you weren’t overcharged for anything. Also check that your health insurance was billed properly and covered what it should.

If you find any errors or overcharges, contact the hospital billing department right away. Politely ask them to correct the bill and re-submit it to your insurer. This could resolve the issue so you don’t end up with unpaid medical debt.

Ask About Financial Assistance

If you still owe money after investigating billing errors, ask the hospital about financial assistance. Most hospitals have “charity care” funds to help lower income patients. You may be able to get your bill reduced or even eliminated.

Every hospital has different rules on who qualifies for charity care. But it’s always worth applying if you’re struggling with medical bills. The worst they can do is say no.

Negotiate With Providers

If the hospital won’t lower your bill, try negotiating directly with your health providers. Many doctors and clinics are willing to charge less for patients paying cash without insurance. Ask politely if they can offer a “self-pay discount” – often around 30% lower then their standard rate.

You can also ask to set up a long-term payment plan. Offer to pay whatever you can afford each month – even if its just $20. They’d rather get paid slowly then send the bill to collections.

Seek Legal Protections

Some states have laws protecting patients from aggressive medical debt collection. For example, New York prohibits wage garnishment and liens on primary homes to collect medical debt. Texas sets limits on how much providers can charge uninsured patients.

Look up the patient billing laws in your state. You may have more protections then you realize. Non-profit groups like the Health Consumer Alliance offer advice on fighting medical debt.

Prioritize Critical Bills

If you simply can’t pay all your medical bills, focus on the most important ones first. Letting emergency or primary care bills go unpaid can cause providers to refuse future service. Pay those to preserve your access to care.

Debt collectors are usually more aggressive pursuing hospital bills then small clinics. You may have more leverage negotiating with local doctors then giant health systems.

Seek Tax Deductions

Some medical expenses may be deductible on your federal income taxes, which could lower what you owe. Deductible expenses include health insurance premiums, doctor/hospital costs, prescription drugs, and mileage for medical trips.

Save all receipts related to your medical care. Talk to a tax preparer to see if your unpaid medical bills qualify you for larger deductions.

Manage Credit Score Damage

If unpaid medical debt is already hurting your credit, take steps to manage the damage. Getting errors fixed on your credit report can help improve your score. You can also write letters to credit bureaus arguing that medical debt shouldn’t count against you.

Some credit cards for people with bad credit don’t consider medical debt in their approval process. This can help you rebuild credit even if you’re still paying medical bills.

Consider Bankruptcy

Personal bankruptcy may be an option if your medical debts are totally unmanageable. Under Chapter 7 bankruptcy, most medical debt can be discharged so you don’t have to pay it.

However, bankruptcy damages your credit for years to come. Try all other options before resorting to this last step. Consult a bankruptcy attorney and credit counselor first.

Dealing with medical debt is stressful, but you have more options than you think. Be persistent and don’t give up hope. With the right moves, you can get back on the road to financial health.