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Are you one of the roughly 40 million Americans wallowing in medical debt? As the cost of healthcare continues to increase almost geometrically so do medical debts. In fact these now account for 52% of collection accounts on credit reports. This is far ahead of all other types of debt including even credit card debt.
While it’s possible to plan how much you will spend on a car or a house it’s virtually impossible to plan on how much you’ll spend on an illness or because of an injury. Of course, at the time you receive care the last thing on your mind is how much it will cost you. You might find it easy to haggle with a car salesman but are you going to haggle with a surgeon over the cost of repairing a heart valve are removing a tumor? You might not want to go this far in keeping control of your medical debt but here are ways you can at least keep it in check.
Carefully review all medical bills
If you review a bill and don’t recognize one of the providers, write down the date of service and then check to see if you had any kind of medical treatment that day. If you had a more complicated procedure, get an itemized bill from the provider so that you can see what the charge was for each service you received.
Keep all bills and documents organized
If you find one you need to dispute, write to the provider, and include a copy of all relevant documents. This could be records from your doctors’ offices or credit card statements. Make sure they are copies; do not send original documents.
Be sure your providers have your correct insurance information
If you don’t know exactly what your insurance covers and what it doesn’t, you need to review your policy to determine this. Also, make sure that your insurance information is accurate and up-to-date. If your providers don’t have your correct insurance information there could be a small mix-up leading to big bills for expenses that should have been covered by your insurance.
Act fast
When you receive a bill, you need to first verify whether your insurance company is paying for all or part of it. If you believe an error has been made and you don’t think you really owe the bill you need to act quickly to dispute it. If you don’t pay it or dispute it the bill can end up at a collection agency and this is something you definitely don’t want to happen.
Try negotiating
There is always the possibility that the hospital will negotiate with you. For example, you might be able to get the tab reduced if you pay the whole amount up front. You could also ask the hospital for the same rate that’s charged people with insurance. Or it’s possible you could get the hospital to let you pay off your debt in installments and with no interest charge. Some hospitals won’t agree to this but it never hurts to ask.
Forget using a credit card
It’s never a good idea to put a medical bill on a credit card as the card could have an interest as high as 19% or even higher. Plus, it will look just like a regular debt to other creditors. Instead, do what was suggested above and ask your medical provider for a payment plan with little or no interest.
Hire a debt settlement company
If you have a huge medical debt and the hospital or provider refuses to give you a payment plan you may want to contract with a debt settlement company. These companies have debt counselors that are experienced at negotiating medical debts and are almost always able to do better than you could yourself. In fact, debt settlement is the only way to get debts reduced short of filing for bankruptcy.
While a debt settlement company will charge you a fee, the money it saves you will more than offset it and you’ll still end up saving money. Also, if you have multiple medical debts and contract with a debt settlement company you will have consolidated your debts. This is because you will no longer be required to pay all your various providers. Instead, you will have a payment plan with a fixed monthly payment for a fixed amount of time. This will generally be from 24 to 48 months depending on the severity of your debt.
How debt settlement works
When you contract with a debt settlement company it will contact your providers (and any debt collectors) and notify them that it will be settling your debts. This should stop any harassing phone calls from your providers or from collectors.
To pay for your settlements, you will send the debt settlement company the money you would have used to pay your bills. Ethical debt settlement companies will deposit this money into a trust account that you control. When enough money has accumulated to settle off one or more of your debts, the settlement company will contact you and ask you to release the money. No reputable debt settlement company will use any of your money to cover its fee or to pay any other of its costs. The money will be used only to pay off your debts. At some point the debt settlement company will offer you a payment plan. Assuming you accept the plan you would then have just one payment to make a month.
Be aware that there is one down side to using a debt settlement company. Your creditors will treat your debt as paid in full but this is not how it will be reported to the three credit reporting bureaus. It will be reported as “settled,” “settlement” or “settled for less than full amount.” This will stay on your credit reports for seven years. It will also damage your credit score. However, the damage won’t be as severe as if you had declared bankruptcy.
The net/net
Medical debt can be staggering. We read recently of one person that thought he had planned a procedure where his insurance would cover everything. But then he was hit with a bill of $117,000 from a surgeon who had been called in at the last minute. If you do find yourself drowning in a pool of medical debt, take heart. As you have read in this article there are ways to control it and without having to take on a second or even a third mortgage.
