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As if dealing with an injury or illness isn’t taxing enough, adding medical debt on top of it can feel overwhelming to say the least. But there are numerous strategies and resources available to help manage and eliminate this type of debt. Let’s explore some practical steps you can take to address medical debt and regain your financial health…
Understanding your medical debt
Before taking action, it’s crucial to understand the unique nature of medical debt. Unlike other forms of debt, medical debt often comes with special protections and more flexible payment options. Medical debt doesn’t immediately impact your credit score, and credit bureaus wait one year before adding medical debt to your credit report. Additionally, paid medical debt is now removed from credit reports entirely.
First steps: Reviewing and validating your bills
Your journey to eliminate medical debt should begin with a thorough review of all medical bills. Many medical bills contain errors that could be costing you money. Here’s what to do:
Request an itemized bill from your healthcare provider. This detailed statement should list every service, procedure, and medication you were charged for. Review it carefully for:
- Duplicate charges.
- Services you didn’t receive.
- Incorrect billing codes.
- Charges your insurance should have covered.
Don’t be afraid to question charges that seem incorrect. Healthcare billing is complex, and mistakes are common. Request your medical records to verify all procedures and services listed were actually performed.
Working with your insurance company
If you have insurance, take these important steps:
- Contact your insurance company to ensure they processed your claims correctly. Request an Explanation of Benefits (EOB) for all related services.
- Appeal any denied claims. Insurance companies often deny claims that should be covered. The appeal process can be time-consuming but is often successful.
- Ask your insurance company about in-network vs. out-of-network charges. If you received out-of-network care during an emergency, you may be protected by surprise billing laws.
Negotiating with healthcare providers
Many people don’t realize that medical bills are often negotiable. Here’s how to approach negotiations:
Direct Negotiation Strategies
Contact the billing department and:
- Explain your financial situation honestly.
- Ask about available discounts, especially if you can pay a lump sum.
- Request the “cash pay” or “self-pay” rate.
- Inquire about any financial assistance programs they offer.
Most hospitals are non-profit organizations and are required by law to provide financial assistance. Don’t hesitate to ask about charity care programs, especially if your income is limited.
Financial Assistance Programs
Many organizations and programs can help with medical debt:
Hospital-based programs
Most hospitals have financial assistance or charity care programs. Income requirements vary, but you may qualify for significant reductions or complete forgiveness of your debt.
Government programs
- Medicaid: May cover bills retroactively for up to three months.
- State-specific programs: Many states offer assistance programs for medical debt.
- Medicare savings programs: Can help with Medicare-related costs.
Non-profit organizations
Several non-profit organizations specialize in helping people with medical debt:
- Patient Advocate Foundation.
- National Patient Advocate Foundation.
- Religious organizations and local charities
Payment strategies
If you need to pay the debt, consider these options:
Payment plans
Most healthcare providers offer interest-free payment plans. When setting up a plan:
- Ensure monthly payments fit your budget.
- Get the agreement in writing.
- Confirm that payments will prevent the debt from going to collections.
- Ask about any fees or interest.
Medical credit cards
While medical credit cards can be helpful, use caution:
- Many offer 0% interest promotional periods.
- Interest rates can be high after the promotional period.
- Missed payments can result in retroactive interest charges.
- Converting medical debt to credit card debt loses some protections.
Consolidation options
Consider debt consolidation if you have multiple medical bills:
- Personal loans might offer lower interest rates.
- Debt management programs can help negotiate with creditors.
- Non-profit credit counseling agencies can provide guidance.
Dealing with medical debt in collections
If your medical debt has gone to collections:
- Request debt validation.
- Know your rights under the Fair Debt Collection Practices Act.
- Negotiate settlements – collectors often accept 40-60% of the original amount.
- Get any settlement agreement in writing before making payments.
Prevention strategies for future medical debt
While addressing current debt, consider these strategies to prevent future medical debt:
Insurance optimization
- Review your health insurance coverage annually.
- Consider supplemental insurance if needed.
- Understand your policy’s coverage and limitations.
- Keep an emergency fund for deductibles and co-pays.
Healthcare cost management
- Stay in-network when possible.
- Ask about costs before procedures.
- Get pre-authorization when required.
- Consider payment plans for planned procedures.
Legal options
As a last resort, legal options are available:
Bankruptcy
Medical debt is dischargeable in bankruptcy. Consider this option if:
- Your medical debt is substantial
- You have limited income
- Other debt relief options aren’t viable
Consult with a bankruptcy attorney to understand:
- Whether Chapter 7 or Chapter 13 is appropriate
- The long-term implications
- Alternative options
Legal aid
Many communities offer free legal aid services that can help:
- Review medical bills.
- Negotiate with providers.
- Handle collection disputes.
- Advise on bankruptcy options.
The bottom line
Remember, the cure to resolving medical debt is more holistic than singular.
- Gather all medical bills and insurance documents.
- Create a complete list of what you owe.
- Review bills for errors.
- Contact your insurance company.
- Research assistance programs.
- Develop a realistic payment strategy.
- Seek professional help if needed.
With persistence and the right strategy, you can successfully address your medical debt and move forward financially. Remember that resolving medical debt takes time, but each step forward brings you closer to financial relief.
There’s always JG Wentworth…
While we don’t work with medical debt, if you have $10,000 or more in unsecured debt there’s a good chance you’ll qualify for the JG Wentworth Debt Relief Program.* Some of our program perks include:
- One monthly program payment
- We negotiate on your behalf
- Average debt resolution in as little as 48-60 months
- We only get paid when we settle your debt
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side?
SOURCES CITED
Burke, M., “Most medical collection debt is about to fall off of consumer credit reports.” NBC News. March 18, 2022.
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The information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 51% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.