Large medical bills are a different kind of debt. This is partially because they don’t come from traditional lenders, and because you can be swapped with a very large amount of debt in a short period of time. In addition, the storm can come without warning – one day you don’t owe anyone a dime, and a month later you owe many thousands of dollars to various healthcare providers. The last thing you want is for a health emergency to put you in the poor house and crash your credit rating at the same time.
There are seven ways to deal with large medical bills – and some of the strategies deal with “preventative medicine” – taking action before the bills hit, to the degree that that’s possible.
1. Go Through All the Right Channels Before Any Major Medical Procedure
If your medical event is the result of an emergency situation, there’s not much you can do here. But if it is a situation that you knew was coming, such as a major surgery, you need to do all that you can to make sure that your liability is limited.
Start by becoming completely familiar with your health insurance policy. In particular, pay attention to deductibles and copayments. Copayments are the percentage of your medical expenses, beyond your deductible, that you must pay up to a certain dollar limit. For example, if your plan has a $4,000 deductible, and a 20% copayment up to $10,000, you have to pay an additional $1,200 plus your deductible.
Here’s how that’s calculated: $10,000, less your deductible of $4,000, equals $6,000 X 20% (.20), equals $1,200.
In this case your actual out-of-pocket liability will be $5,200, not the $4,000 deductible you are expecting. This is typical of health insurance policies, so even if you are not aware of it, it’s something you seriously need to check out. It will almost certainly apply.
Beyond the basic dollar amount of out-of-pocket you will be responsible for, you should always make sure that your procedure is approved by the insurance company, is being performed at in-network facilities by in-network professionals. Also make sure that any pre-certifications have been filed by healthcare professionals as required. Failure to obtain pre-certifications is a major reason why health insurance claims are rejected.
This is why you need to do all you can in advance of your procedure. It will minimize the amount you owe after the fact.
2. Never Ignore Correspondence From a Healthcare Provider or Your Insurance Company
Before, during, and after your medical event, you’ll be hit with a blizzard of correspondence. It will come from both your health care providers, and your health insurance company. Never ignore this correspondence. You need to be aware of everything that is transpiring between your providers and the health insurance company.
And when you see something that looks like a glitch in the process, you must get involved.
3. Make Sure Every Bill Possible is Paid By Your Health Insurance Carrier
Though health insurance companies are contractually obligated to pay your healthcare bills, that doesn’t mean they do so willingly. As well, there is a certain level of bureaucracy in most insurance companies that ensures that the process will be anything but smooth and straight.
For this reason, YOU need to match insurance payments with medical bills. If you can’t locate a payment, you have to assume that it was never made. In that case, you’ll have to become a liaison between the medical providers and the insurance company, to make sure that everything that the insurance company is supposed to pay, does in fact get paid.
Up to this point, these strategies focus on minimizing your out-of-pocket medical expenses. Once all that is taken care of, and you’re left with the actual amount that you owe, your efforts will have to take a different direction. To what extent that will be the case will depend upon how much you owe, and on your ability to pay.
4. Ask the Healthcare Provider for Hardship Consideration
If after insurance has paid all of its portion, and you still owe a large amount of money – that you can’t afford to pay – you can ask the healthcare provider for hardship consideration.
Healthcare providers, particularly hospitals, will often write down large debt amounts for patients who can’t afford to pay. This is not generally an automatic process, so you may need to provide documentation to prove your situation. This may include providing income documentation, and even proof of your non-medical obligations. Your credit report might be very helpful towards that goal. The provider may lower the debt obligation, or even cancel it entirely, if it is clear that you cannot pay.
Some hospitals and even large medical practices even have departments set up specifically for this purpose. They may have written procedures for hardship consideration, and you will need to get in touch with the party or parties who handle that part of the business.
5. Settle Your Debts For Less than the Full Amount – If You Can
If you are not a genuine hardship consideration case, you may still be able to settle your medical debts for less than the full amount due. This is another common practice in the healthcare field. But it’s important to understand that it is an option that is generally available only to those who have sufficient funds to pay off at least part of the amount due.
For example, if you owe a hospital $5,000, they may agree to accept $3,000 in full payment. The catch of course, is that you have to have the $3,000 available to make the settlement. If you don’t, you should still request that they lower the total amount due, and then agree to a payment plan.
6. Set Up a Payment Plan
If you can’t pay a medical debt balance in full, you should try to set up a payment plan. In this way, you will set up a series of monthly payments that fit within your budget, and are agreeable to the provider. These agreements are often interest-free, as the medical provider mostly just wants to get paid.
As a rule, you should set the monthly payment below what you can actually afford. The reason for this is that if you can’t afford to make higher payments, you can violate the agreement with a single missed payment.
In addition, you should make sure that you have extra room in your budget so that you can save up some money while you are making payments on the debt. This will give you the cash at a later date to settle the remaining balance for less than the full amount you owe.
7. Get Legal Help If You Need It
If you owe more in medical bills then you can reasonably afford to pay, and you can’t get a hardship case, you may need to seek legal representation.
I’m not talking about a credit negotiation firm here, but an actual law firm. Lawyers have the ability to deal with large institutions, like hospitals, and to negotiate large medical debt payments.
Still another reason why you may need an attorney is because of the possibility of bankruptcy. Medical bills are a major reason why people file for bankruptcy. And it is often a necessary step if you have a major medical event but don’t have health insurance.
It’s not the preferred way to deal with large debts, but it may be the only reasonable course if you’re facing tens of thousands of dollars in medical bills that you can’t possibly hope to pay on your own. A law firm that specializes in credit issues can help you with all of the options related to large medical debts.