Everything you need to know – Forbes Advisor

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It is undeniable that health care is essential. Doctor visits, over-the-counter medications, and medical treatments are necessary to keep us healthy.

Whether you’re a fairly healthy person or live with pre-existing conditions, you probably know that medical bills can be expensive, making it all too easy to incur medical debt – where late payments are sent to an agency. collection – leading to stress and uncertainty about the future.

What is medical debt?

Medical debt is any balance or amount owed after receiving medical services or goods, according to Shannon P. Miller, a partner at national financial services law firm Maurice Wutscher in Philadelphia. “Broadly, this would include amounts owed that are not past due, as well as amounts that have not been paid and have become past due and sent to collections,” he says.

The majority of debt in third-party collections in the United States (58%) stems from medical bills, according to a recent report from the Consumer Financial Protection Bureau (CFPB). And, according to the Kaiser Family Foundation (KFF), medical debt is more prevalent for minorities and people with disabilities.

Additionally, approximately 43 million American adults have medical bills on their credit report, which amounts to $88 billion in unpaid medical debt.

Insurance coverage and medical debt

Unfortunately, health insurance does not cover all medical expenses. “There are always some sort of disbursements, like deductibles, coinsurance, and copayments,” says David Berg, president and co-founder of Redirect Health, a third-party health insurance administrator in Phoenix.

When health insurance doesn’t pay the full cost of the medical services or goods you receive, you’re responsible for the remaining balance, adds Miller, who represents one of the leading operators of general acute care hospitals and treatment centers. outpatient care. You can expect to be billed by or on behalf of the healthcare provider.

Virtually any type of healthcare can put you at risk for medical debt, with the most common types including diagnostic tests, hospitalizations, emergency room visits and outpatient services, says Jay Moore, MD, clinical director at Paytient, an employer and a sponsored health plan. medical expenses payment platform. “Unpaid invoices lead to bad debts, and bad debts lead to increased costs [for the patient and care provider],” he explains.

Medical debt frequently arises when people live with chronic or long-term illnesses and routine costs are expected, Berg says. However, a common source of medical debt usually comes from hospitalization costs, such as an emergency room visit, because those stays are often a surprise for many patients, he explains.

What happens if you ignore medical debt?

First, know your debt collection rights. Medical debt usually goes to a collection agency who will attempt to collect the amount you owe after 90 days of delay. Since debt collectors can only contact you about debts you actually owe, be sure to confirm that the debt belongs to you.

Ask the debt collector about repayment options if you do owe a balance. “Many times the debt collector may have the authority to settle the balance you owe for less than the full amount and/or offer repayment options that include paying a nominal monthly amount until the balance is be satisfied,” says Miller.

“The provider may also engage a law firm to pursue legal avenues of collection, including filing a lawsuit, obtaining a judgment, and then enforcing that judgment,” says Miller. In some states, this means the ability to seize wages, bank accounts, or levies on property, such as cars and even a home. Also, if your debt is flagged on your credit report as past due by collections, your credit score could take a hit.

Although this process may seem scary, you have protections as a patient. According to the debt collection rule, debt collectors have no right to harass you. If they call you, however, you don’t have to worry about going to jail, because medical debts are civil debts and jail time for such debts is against the law.

If passed, the Medical Debt Forgiveness Act of 2021 may also help. He is proposing to extend the waiting period for medical debts on a credit report to one year. The law also seeks to remove paid medical debt from consumer credit reports.

How can you tackle medical debt?

There are several ways to manage your medical debt, including:

  • Understand your health insurance contract. Take the time to carefully review your health insurance plan. You need to know exactly what it covers and what it doesn’t. If you are unsure, contact your supplier.
  • Setting up a payment plan. Invoices can still be sent to collections even if you are making payments. If you partially pay or make regular payments but miss the due date, the remaining amount of your bill could be sent to a collection agency. Talk to your provider if you can’t pay everything that’s owed. They may be willing to set up a payment plan.

However, many providers prefer to give a discount – up to 50% – if you can pay the balance that day, depending on the type and length of treatment, according to Maria Montecillo, private health insurance lawyer and billing in New York. This way, they can save on the administrative costs of payment plans.

  • Negotiate a lower price: Do not hesitate to negotiate with the health care provider for a lower amount. Explain if you are unable to afford the full cost and ask what they typically charge insurance companies or what Medicare covers.
  • Avoid credit cards: While it may be tempting to put your medical debt on your credit cards, it can do more harm than good if you can’t afford to pay your credit card bill in full. Some credit cards can come with much higher interest rates and easily increase your total debt.
  • Consider credit counseling: Credit counseling agencies are non-profit organizations that can help you with your medical debt. You can use the National Foundation for Credit Counseling to find a reputable agency.

How to find financial aid

Many hospitals and providers offer financial assistance programs for patients who cannot pay their bills. There are also charitable care programs, which provide free care to patients whose family income is below 250% of the federal poverty level.

“Ask the hospital’s billing department if you can apply for charity care. Even if you think you’re making too much money or have too many assets, many hospitals are privately run and don’t therefore don’t have to meet the poverty guidelines set by the state you live in,” Montecillo says. “It’s a free app, so the worst thing they can do is deny it. there’s nothing to lose.”

There may be programs that offer care at reduced rates. These are typically uninsured patients who are ineligible for federal programs and whose family income exceeds 250% of the federal poverty level which does not exceed 400%.

You can also get financial assistance for expensive drugs and if you don’t have insurance, you can take advantage of federal assistance programs such as Medicaid and the Children’s Health Insurance Program or CHIP to help cover the cost of care, says Berg.

He recommends that you get financial help before you intend to receive care, if possible, rather than after. “As it can take time to understand your options and get your support in place, doing this before your medical care can be a huge benefit to you.”

Even if you are still paying medical debt, rest assured that you can still receive the care you may need at many hospitals. Dentists, however, might have different stipulations.

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