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Tips To Help Keep Your Medical Debt From Crippling You Further

hand holding a stethoscope on moneyAccording to an article published on, one out of 5 Americans have overdue medical debt in their credit report. Not only that, more than half of the collectibles in credit reports are usually health related debt. This is based on the latest federal report.

The article discussed that this type of debt is different from the rest. This is because it is a debt that you usually have no choice but to make. Health is something that you cannot forego or delay. If you need to pay for a medical treatment and you need it now, there is nothing that you can do but to borrow money for it. If not, you could make things worse and end up developing an illness that can endanger your life. When you are faced with medical debt, you cannot think twice. It is not like home loans, student loans or even credit card debt. These three can be delayed if you want it to and it will not cost your life. But when it involves your health, you know that you cannot gamble with it. You will plunge through the deepest debt pit if it means saving a life.

But here’s where it gets ironic. If you do make yourself better by borrowing money, your debt troubles could make you sick once more. It is an unfortunate cycle that may very well keep you in debt for a very long time.

Tips that will help you manage your medical bills

Like any other debt, it is possible for you to manage your medical debt – as long as you know the rules. You need to understand and implement the right practices so you can keep the big medical bills from ruining your financial life.

Here are a couple of tips that you can use.

Go for where it is cheap as much as you can.

If you have to borrow money in order to get medical help, make sure that you get the cheapest option. Of course, you do not want to sacrifice the quality of health care that you will get. However, there are options that will not cost as much but will give you the health care and treatment that you will need. For instance, if your doctor can operate on you in a local hospital, you may be able to save on the cost of using the facilities. Or if you can opt for an outpatient procedure, then that is what you should look into. Ask your physician if they can give you the cheapest brand of medicine, then that will help you afford your medications. Just make sure that anything that you can save will benefit your out-of-pocket costs.

Check your medical bill thoroughly.

This is very important. Sometimes, your bill will contain costs that you did not benefit from. It can include services or treatments that you did not get. Sometimes, the people making the bill make mistakes too. You need to check every detail of your bill and dispute anything that you know was not done to you – including the quantity of what was given to you. Feel free to call the billing department of the hospital or healthcare facility to ask questions.

Do not negotiate your medical bill immediately.

Another thing that you need to remember is to wait a few weeks after you receive your bill before you call about it. In most cases, the medical service provider will not negotiate if the bill was just sent to you. You can wait a couple of weeks and not do any harm to your credit report. Just make sure that your medical bill will not reach the collections stage. Otherwise, it would be more difficult to negotiate. According to a published report from, debt collection is a top complaint from consumers since 2013. There is an estimate of 43 million consumers with medical debt problems that are already in collections. Try not to add yourself to this statistic.

Be polite when calling about your medical bill.

If you want to ask for a lower price, remember that politeness will get you further than being right. Try to keep a level head and be courteous at all times. You are asking a favor after all. You need to get on the good side of the people at the other end of the line. That way, they will be more willing to help you out. You may be able to get them to waive some of the fees or at least, give you better payment terms so it will not be too heavy on your budget.

Inquire if you can get a discount if you will pay in cash.

If you have the capabilities to pay in cash, then make sure you can get something out of it. This is what you will use as leverage. Of course, you will not give this immediately. You will not tell them that you have some cash to use as payment. Negotiate first and when you have haggled back and forth, inquire if you can get a discount in case you can pay in cash. Let them know that you will do your best to acquire the finances – you just want to know if it will be worth your while. Sometimes, they do not want to go through all the trouble of collecting installments that they will agree to your cash payment – even if it is with a discount.

These tips should help you lower the total medical debt that you need to pay for.

How health related debts can ruin your life

All of your effort to lower the amount that you have to pay for your medical bill will help you in the long run. Even if you have a health insurance, you need to be meticulous when it comes to what you will pay for your medical treatments. Here is a video that shows you the devastating effects of medical debt.

Evidently, there are so many negative things that can happen if you do not take care of your health-related debt. Here are some of them.

Ruined credit report

An article published on revealed that your medical bills will not be as destructive to your credit score as it used to. This is thanks to the efforts of New York attorney general Eric Schneiderman. New policies have been enforced to make sure that unpaid medical bills will not be placed in consumer credit reports until after 180 days of being delinquent. This is to help consumers who are waiting for their reimbursement from their insurance companies. But despite this, you need to be careful. It can still ruin your credit history if you do not act fast. If you have to reimburse bills from your insurance company, then make sure they comply immediately to avoid going into default. Stay on top of things even if your health insurance is comprehensive.

Inability to get future medical treatments

When you currently have unpaid medical bills, you may have trouble getting treatments in the future. Some may refuse you additional treatments until you pay off what you owe before. Or if you owe another hospital, you may personally be hesitant to go to the doctor because you know that it can result in more medical debt for you and your family.

Consistent emotional stress

Like any other debt, when you have unpaid medical bills, you will feel some form of emotional stress. You cannot sleep well because the worry that you will feel as you fail to make payments will be a burden to you. Not only that, you will feel embarrassed that you are unable to pay your dues. It will be difficult for you to enjoy your life especially when the collection calls start coming in. Try to keep yourself from this stress by managing your medical debt.

Unless you take care of this debt, you might suffer the consequences for a long time. The list is actually beyond these three. So be wise when it comes to your medical bills and get help if you think it is difficult to do this on your own.

What You Need To Know About Medical Debt And Your Credit Score

stethoscope on top of coinsDid you know that medical debt is one of the reasons why a lot of Americans are having troubles with their credit scores? We all know how important credit scores have become in our society today. This score measures your creditworthiness. Before you are approved of a loan application, the creditor or lender will always check your credit score to determine how risky you are when it comes to payment behaviour. The idea is, when your credit score is low, there is a higher chance that you will not pay back what you borrowed from creditors and lenders.

But recent studies have shown that not all individuals with low credit scores are entirely irresponsible when it comes to debt. According to an article published on, over half of the overdue balance on consumer credit reports is caused by unpaid medical debt. Most of them are unpaid because of reimbursement delays from health insurance companies. Other causes include medical billing errors and disputes that have yet to be resolved.

Apparently, there is some shady business going on when it comes to collecting medical bills. When the hospital, health facility or medical professional have unpaid receivables, they turn it over to medical debt collectors. These collectors go after consumers for payment – even when it is clear that the payment should be coming from health insurance companies. To pressure consumers into paying their bills from their own pockets, debt collectors file an unpaid report to the major credit bureaus. This results in a low credit score for a lot of consumers.

These findings came from the Consumer Financial Protection Bureau or CFPB. They have been compiling reports, complaints and observations with the intention to protect consumers from this seemingly unfair practice of reporting medical debt.

Based on the article from CBS News, the efforts of the agency is effective because a medical debt collector had been apprehended because of these shady practices. A settlement with Syndicated Office Systems had resulted in a $5.4 million payout to more than 23,000 consumers who had been wrongly hounded for medical bills. This payout is in checks of $100 to $1,000 – depending on how each consumer is affected by the illegal practices of the medical debt collection industry.

New rules when reporting health-related debt to credit bureaus

If you are currently burdened with medical bills, you need to understand the new rules that should protect you from getting a bad credit score.

Based on the December 2014 report published by the CFPB in their website,, an estimate of 43 million Americans are found to have overdue medical bills. Most of these consumers are found to have ruined credit reports because of this debt.

According to the findings of the agency, there is something wrong with the way the system incurs, collects and reports medical debt. Among the things that was discovered to be wrong includes the following:

  • Confusing billing process for medical expenses. Some consumers incur a lot of bills – from the hospital, separate treatment sessions, professional fee, etc. These multiple providers can be quite confusing. Not only that the cost sometimes vary from one client to the next because of factors like the insurance, etc. This is why some consumers are unaware of how much they really owe in terms of their medical bills.
  • No standard practice in reporting overdue bills. The lack of standard procedure when reporting overdue medical debt is another reason why this is a big problem for consumers. There is no clear indication when their unpaid medical bills will end up in their credit report. Other debts will wait until after a pre-determined period passes before they report the unpaid debt to the major credit bureau. For medical bills, it can vary from 30 to 180 days. It depends on the health care provider when they will send the report.
  • Practice of “parking” unpaid debts on credit reports. This means the debt collector reports the unpaid medical bill and does not inform the consumer about it. This practice puts the consumer in danger of damaging their credit report without being given the chance of doing something to prevent it.

To deal with these problems, the CFPB required credit reporting companies to provide them with accurate reports on a regular basis. This will help them examine how to deal with the problems that consumers are facing when it comes to their medical debt. The agency would like to make the credit reporting market accountable for the accurate credit reports that consumers have. This market includes the credit bureaus (Equifax, Experian, and TransUnion), and the creditors and collectors providing the report.

Apart from the CFPB, a group of State Attorney Generals are also working on this problem too. According to an article published on, it will soon be easier for consumers to correct any errors on their credit report – especially if it involves their medical debts. The article mentioned how the three major credit bureaus have agreed to improve how they report medical debt and how they will deal with any errors that customers are complaining about. This change is part of their response to the settlement with Eric Scheiderman, the New York State Attorney General. The changes will be implemented six months from March 2015. The credit bureaus are expected to provide trained employees that will review the complaints of consumers and investigate accordingly.

Not only that, the credit bureaus are required to wait 180 days before they are allowed to add any unpaid medical debt in the report of the consumer. This is meant to give the consumer enough time to work on their unpaid debt before it damages their credit report.

According to the CBS News article mentioned earlier, some of the problems need to be put into law and thankfully, legislators are also working on it. In May of 2015, US Reps. John Carney (D-Delaware) and Andy Barr (R-Kentucky) introduced a bill known as the Medical Debt Relief Act. This bill seeks to allow the erasure of paid medical debts from credit reports within 45 days after full payment. It might be a long time before this is passed but the step in that direction is already taken.

How to keep medical bills from ruining your finances

While all of these steps are being taken, it is important for consumers to take their own steps to keep their medical debts from ruining their personal finances. According to the report from CFPB, there are 15 million consumers who only have medical debt on their credit report – nothing else. 20% of credit reports have at least one overdue medical bill. There are too many consumers being affected by the bad credit reporting practices for unpaid medical bills. You need to make some effort to keep your debt from ruining your financial life.

Of course, dealing with big medical bills is easier said than done. It takes dedication, self control and constant vigilance to help keep your debt from ruining you. Here are four things that you can do.

  • Keep yourself healthy. Prevention is better than cure. If you can avoid it, do not incur the debt. Live a healthy lifestyle so you do not have to spend on medical expenses.
  • Get insurance. If you know that your family is prone to certain illnesses, have yourself insured. It is better to be prepared by buying the right health insurance for you and your family as well. That way, you do not have to break the bank every time someone in the family falls ill.
  • Save up for emergencies. Apart from a health insurance, you can also avoid medical debt if you save up for these unexpected expenses. Grow your emergency fund so you have something to dip into when you need it the most.
  • Deal with your other debts. One way that you can also keep your medical debt from ruining you is by paying off your other debts. In most cases, people with too much debt are stressed. We all know how stress can cause a lot of health issues. Do not let stress rule your life so illness can stay away from you too.

How To Keep Control Of Your Medical Debt

medical debtAre 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.

get out of debtHire 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.

10 Tips When Dealing With Medical Debt

man shackled by dollar signMedical debt can be a real problem for anyone. The rising healthcare costs can really pull a family into a financial crisis. There is nothing that you can do about it because you cannot ignore getting the medical attention when you need it the most. There are home remedies that you can do, that is true. But it does not apply to all types of sickness. This is especially true for children and the elderly. Both of these age brackets do not have robust physical bodies and you want to give them the medical attention that they need if they get sick.

While the need for healthcare should never be compromised, a lot of people are opting not to avail of it because they lack the finances to pay for the high fees involved. According to a report published on the, 43% of adults (80 million) are having problems getting the healthcare they need because of the costs. With 84 million Americans either uninsured or underinsured, a lot of them are not financially prepared to face this type of emergency.

The same site also mentioned how more than 75 million aged 19-64 years have availed of medical attention but are having problems paying their bills. 32 million are also reported to have a lower credit score because of their unpaid medical debt.

If you are one of these people who are burdened with a lot of medical bills, you need to start acting on it to keep it from totally ruining your life. Not only that, you have start making the right preparations that will help you avoid future medical cost problems.

10 ways you can deal with your medical bills

Learning how to deal with big medical bills is simple yet the implementation can be tough. Just start with knowing your options and you can take it from there. Here are 10 tips that we have for you when you are burdened with medical debt or you have just received your billing.

  1. Try not to ignore the bills. Trust us when we say that ignorance is not bliss – especially when it is debt that you are ignoring. In fact, the more you pretend that it is not there, the more it will grow. You will find yourself buried in debt and that can have serious effects on your financial standing. Regardless of your financial situation, you will find that there is a proper way of dealing with your medical bills.

  2. Check the bills thoroughly. When you receive your bills, make sure that you check every little detail. Sometimes, there are treatments and services listed that are not part of what you received. Even if you have health insurance and you got the bill stating that they paid for it, check the balance. Make sure you are not missing out on a participation fee that you are expected to shoulder.

  3. See which items in your bill should have been covered by the insurance. You also have to check and make sure that any item that is billed to you is really your obligation. Some of them may be intended for the insurance to cover. Review your policy and make sure that you are being billed correctly.

  4. Create a payment plan. When you have your bill, you need to create a payment plan immediately. Do not postpone it and make sure you incorporate it in your budget as soon as possible. That way, you can see if you have the funds to pay it off.

  5. Find a way to pay off the debt. In case your budget is not enough to incorporate the debt, you have to find a way to increase your income to pay it off. You can either earn more money or you can cut back on some of your expenses – at least until you have fully paid off your medical debt. If you can afford the payments, you can setup automatic payment transfers to make sure that you will not miss out on your monthly obligations.

  6. Do not disregard the medical bills of your kid. Even if the name on the bill is your child’s the form you accomplished in the hospital or health facility makes you responsible for it. You will ruin your credit score in the same way if you ignore this debt.

  7. Search for other options that will help you pay off your debt. If you have low income, you may qualify for Medicaid. If you are a senior, you can qualify for Medicare. Do not ignore these options because they can help you avoid medical debt.

  8. Use your credit card to avoid having your debt sent to the collections agency. In case you really are short in cash, just use your credit card. Not everyone will suggest this but if you know that you will be receiving money in the next few weeks, you can rely on your card for emergencies. Just make sure that you will pay it back.

  9. Research your debt relief options to help with medical debt. If your funds are really not enough to pay for your medical bills, you have to get debt relief help. You have a lot of options before you. Credit counseling and debt management can help you restructure your debts and lower your monthly payments. Debt consolidation loan can consolidate your payments under one lona. Debt settlement is a great way to get your medical debts reduced. Know these options and see which of them will suit your financial capabilities.

  10. Opt for bankruptcy. If you know that you really do not have the money to pay off your dues, you can opt to file for bankruptcy instead. Study from revealed that in 2013, 1.7 million Americans are bound to declare bankruptcy because of their inability to meet their medical debt obligations. The same study also found out that 56 million Americans below the age of 65 years are struggling to pay off their medical debt. If you have no other choice, you have to simply declare bankruptcy. Chapter 7 bankruptcy will discharge any debt that cannot be paid off by your liquidated assets (if any). If you are filing a Chapter 13 bankruptcy, you will go through a court-ordered repayment plan.

How to prepare for the rising health care cost to avoid debt

A medical debt infographic published by National Debt Relief showed that 33% of consumers did not use or delayed their prescription because of lack of funds. 39% did not even go to a doctor for fear of medical bills. 36% opted out of a medical treatment because they know they cannot afford it. You do not want to be part of this statistic. You want to be able to spend for your health care costs and that of your family – especially your children.

Here are some tips for you to prepare for health care and not end up in medical debt.

  • Budget for it. Put aside a sum of money every month for your emergency fund.

  • Look for a comprehensive health insurance. You can browse the for information about your different options.

  • Check with your employer for a health coverage. They may have one that you do not know of.

  • Understand any genetic illness that runs in the family and find the appropriate organization that is known to give financial aid for it. You can approach your local government, church or charities. That way, you know where to go to when it strikes.

Of course, the best way to really prevent medical debt is to simply take care of your health. Eat nutritious meals, sleep well and exercise daily. That is the only way you can keep healthy the natural way.

Can Medicare Really Help Seniors Avoid Medical Debt

man tripping on insurance documentsOne of the fears of retiring individuals is how they will ensure that their funds will outlast them. Given their age and physical condition, they are unable to earn money to help them finance their needs. This puts them at a risky situation.

Of all the expenses that retirees are faced with, the most important tip to keep their retirement fund from retiring is to make sure that their health care costs are covered. Otherwise, they can put themselves in danger of medical debt.

The thing about getting old is the deterioration of your physical body. Even those who have the most robust body when they were young will eventually have their strength fade away. This is a fact regardless of your lifestyle. Among the things that you need to prepare for in retirement, is your ability to pay for these costs. They will come. That is certain for everyone.

Health care costs endanger retirees to be in debt

But while there is a need to prepare for health care costs, we are sometimes taken off guard by how expensive it is to get medical treatment. This is how a lot of us end up in medical debt. conducted a survey back un June 2013 and it showed the following statistics:

  • An estimate of 56 million Americans (64 years old and below) is expected to struggle in paying off their medical bills. 35M will be contacted by collection agencies, 17M will have a lower credit rating and 15M will use up their savings to try and stay out of medical debt.

  • 10 million citizens below 65 years old will not be able to afford paying for basic necessities because of health care expenses.

  • 1.7 million will declare bankruptcy because of unpaid medical expenses.

If this true for the younger ones, how more perilous will it be for retirees. Those within the ages 19 to 64 years (the main respondents of the NerdWallet study), are all still within the working age. The chances of them being able to earn income to pay off what they owe puts them in a better position than their elders.

The same study also noted that the main reason why medical debt is more likely to happen is because of the rising cost of health care. While some people should be responsible enough to save up for this, the high cost can sometimes make it inadequate. This is what is really causing the indebtedness of a lot of people. In some cases, consumers are opting out of getting medical treatment or following on their medical doses because it is just too expensive for them.

In fact, the National Conference of State Legislatures (NCSL) reported that health spending in the country last 2013 was estimated at $2.9 trillion. While the growth compared to the $2.8 trillion in 2012 is relatively small, the amount in itself is staggering. The report published on showed that the average spending in 2011 was $8,680 per individual. The report believes that this will go higher once the actual 2013 figures come in.

So what are the chances of our elders to avoid medical debt when health care costs continue to rise? How can they hope to give themselves the right treatment as their bodies age?

Facts about Medicare that can help avoid health care debt

This is where Medicare actually steps in to provide help with medical bills. One of the things that you need to accomplish before you retire is to understand how this government program can benefit you once you reach retirement. In most cases, people are scared that the coverage of this program will not live up to the health care benefits that you got through your employer.

Well there is only one way to find out and that is what this article will try to help you with.

So how does Medicare help seniors and will it keep them from medical debt? Here are important facts that you need to know about it.

  • While it is run by the federal government, the doctors, hospitals and laboratories are mostly private. They only enter into Medicare contracts and that is how 75% of your bill with them gets paid by the government. If your family doctor has a contract with Medicare, then you are free to continue consulting with them while letting the government pick up most of your tab.

  • Medicare, is not really free. It is, in essence, still a health insurance that you have to pay for on a monthly basis – just like the health insurance provided by employers. Unless you are eligible to get low-income assistance from the state, then this is something that will still go out of your pocket. Visit to know more about the costs that you need to pay off.

  • The great thing about Medicare is you get a lot of options. You have the traditional plans that allow you to go to any doctor in the country or state. There is also the various Medicare Advantage health plans that are oftentimes similar to private health insurances. Sometimes, you can choose from 50 health plan options. This makes it ideal to have a plan that will suit your personal health needs. For instance, Part A means you are covered for hospital stays, home services and hospice care. Part B covers the professional fee of the physician, outpatient expenses and any medical equipment that you will have to pay off. You can combine these and end up with the Traditional Medicare or just get one for your use. Part C, or more commonly known as the Medicare Advantage combines Part A, B and in most cases, D. Part D covers payments for prescription drugs. There is also the Medigap that covers the out-of-pocket expenses of Traditional Medicare.

  • Medicare will not charge higher premiums for existing ailments – which means you can choose to get covered for almost any health related concern.

  • There is a requirement to work long enough to be able to qualify for this health insurance. Also, you cannot avail of this when you decide to retire early. It has to be when you reach the age of 65. That means you may have to deal with a couple of years without health coverage – unless you go for a private insurance plan.

In essence, Medicare is a monthly premium that you have to pay off so you can prepare for the health expenses that you will have in the future. It is a good idea to get this so you can avoid medical debt. Any out of pocket expenses will not be as damaging as it should be if you opted out of this government program.

How to finance your medical expenses and avoid credit

Getting ready for retirement requires you to go through a lot of tasks and it all begins with knowing. If you know that your family has a history of hereditary ailments, you may want to make sure that you are prepared for this. Apart from learning about Medicare, here are a couple of tips that can help you deal with the unexpected medical costs that can put you in debt.

  • Know your other options. Apart from Medicare, if you know that you will need more coverage, research on the right health insurance that can give you what you need. In most cases though, Medicare can supply what you generally need.

  • Get your dietary intake straightened out. Prevention is better than cure and most health related problems can be dealt with by eating right. If your family has a history of diabetes, then ease off the sweets. If you have a history of heart ailments, then stay away from food that will endanger your heart.

  • Live a healthy lifestyle. Lastly, make it a point to take care of your body. Exercise, sleep well and prepare yourself for old age. You only feel weak when you stop doing something.

How Medical Debts Will Affect Your Credit Score

Woman stressing over debtsIf an avalanche of medical bills has hit you, we can empathize. As you may have read, healthcare costs continue to rise dramatically and with no end in sight. It’s possible that Obamacare will help slow down the increase but it may be several years before we know this one way or another. In the meantime if you’ve been slammed by medical bills, you may be wondering the effect it will have on your credit report.

No affect at all

If there’s any good news to being hit by big medical bills it’s that it won’t have any effect on your credit score or credit report. Healthcare providers usually don’t report their uncollected bills to credit bureaus. That’s the good news. The bad news is that these debts are still on their books. As a result, the financial officers in hospitals sometimes clean things up by selling those debts to collection companies. The really bad news is that these professional collectors will not only hound you indefinitely, they will report your debts to the credit bureaus. Plus, they have a knack for calling you just before you apply for a mortgage or some other kind of loan or when you’ve applied for a job – so you know that your credit report will be reviewed.

Have you seen your credit report recently?

The only sure way you can know what’s happened with those medical debts is to check your credit report. You actually have three credit reports, one each from the three credit-reporting bureaus – Experian, TransUnion and Equifax. They are required by law to give you a copy of your credit report free once a year. If you don’t want to go through the hassle of contacting each of the credit reporting bureaus for your credit report, you can go to the website and get all three of them simultaneously. Again, this will be free – at least once a year.

What to look for

When you get your credit reports you should review them carefully looking for the following negative items.

  • Charge-offs
  • Debt collections
  • Bankruptcies
  • Foreclosures
  • Tax liens
  • Lawsuits or judgments

If you find one or more of these items you can bet that it’s having a negative effect on your credit score. This is assuming that they are not errors. If you find negative items that you believe are not yours, it’s critical that you dispute them. All three of the credit-reporting bureaus have online forms where you can dispute items. You will need to have documentation backing up your claim. The credit bureau is then required by law to contact the company that supplied the information and ask it to be validated. If that company is unable to validate the debt or if it doesn’t respond to the credit bureau within 30 days, the bureau must remove the item from your file. As you might imagine, this could have a very positive effect on your credit score.

The ultimate answer

Of course, the ultimate answer to medical bills is to pay them. This will not only keep them from going to collection but do you really want to owe money to a provider that you may need again in the future? Let’s suppose that you owe $1500 for a colonoscopy. You’ll probably need another one in five years. Do you want to go back to that gastroenterologist owing him or her $1500?

Seven long years

Did you know that negative information will stay in your credit report for seven years from the time of your delinquency? But that’s not the important fact. The important one is that if you make a payment on an old debt, it could restart the clock. In other words, it could have been five years since that debt was sent to collection but if you make a payment on it, you could be liable for more years.

What  you need to do

There are several things you should do if you’re faced with a mountain of medical debts.

Check the statute of limitations in your state. Every state has a statute of limitations on debts. This can be as few as five years or as many as 10. In any event, you should check with your state’s attorney general’s office to see what is the statute of limitations where you live. If you have some really old medical bills, the statute of limitations may have expired so that a collection agency could no longer sue you.
Try to negotiate a settlement – if the statute of limitations has not passed, you should contact the hospital, clinic or doctor that provided your services and try to negotiate a settlement. Your medical provider will probably be very interested in settling with you if the statute of limitations has passed.
Get any agreement in writing. If you are able to negotiate a settlement, be sure you get everything in writing before you make any payments.
Keep your proof of payment and settlement agreement just in case a debt collector contacts you.

Your other optionsBankruptcy

If you can’t pay those medical bills and the provider won’t settle with you, you do have some options. For example, you could pay off the debt with a credit card(s), which would allow you spread out your payments over a number of years. Second, you might be able to find a foundation that would give you a grant to pay off those bills. Finally, you could declare bankruptcy, which unfortunately is what many American’s have done. In fact, medical bills are now the leading cause of bankruptcies here in the U.S. If you’re facing such a mountain of medical bills that bankruptcy seems like it might be a good option, watch this video.

What You Need To Know About Medical Credit Cards

If you’ve been hit by a huge out-of-pocket medical bill, you might be tempted to sign up for a medical credit card. Companies such as Wells Fargo, Citigroup, GE capital and J.P. Morgan Chase offer these cards. They provide a credit line specifically to cover medical procedures and treatments for your entire family – including pets. These cards are becoming more and more popular due mostly to rising healthcare costs. However, it’s important to understand that one of these cards will not reduce your debt. It would only serve to increase it. One member of a Boston-based consumer advocacy group pointed out that the irony that “these cars are probably best suited to people who already have financial resources.”Stethoscope strangling money as in medical bills

How these cards work

The way medical credit cards work is similar to other credit cards. You take out a loan to pay for your treatment and then pay the money back over time. These cards can be used for most medical care, dental visits, vision care, cosmetic treatments and surgeries, veterinary care and hearing care. Most people who sign up for one of these cards do so at the office of their healthcare provider. The card may come with 0% interest for as long as you pay each new charge within a certain time, which are usually six to 24 months. Some medical credit cards have extended payment plans for up to 60 months at a fixed interest rate.

The devil is in the fine print

Before you sign up for one of these cards make sure you read the fine print. If you’re facing a big medical or dental bill, a card where you pay no interest can seem like a terrific option. But most require that you make a minimum monthly payment and if that payment is late, your interest rate could increase drastically.

To avoid interest charges

If you make your monthly payments on time and pay off each of your charges within the allowed time period, you can avoid having to pay any interest. However, if you carry your balance past the promotional period, you could be subject to high interest rates of 24% to 30% of the original purchase amount and these rates could be retroactive to the date of your purchase.

Be aware of your options

Fortunately, there are options available that could help you pay for that medical or dental procedure and without the danger of ending up with a 30% interest rate. One of the best is the no-interest payment plans offered by many healthcare providers. Most of these providers will even discount your bill if you pay cash. In fact, I have seen medical bills slashed by hundreds of dollars because the patient paid in cash.

If your medical credit card debt spirals out of control

Medical credit card debts can spiral out of control just like any credit card debts. If this happens to you, you would be well advised to look at some alternatives for getting it under control. Many families have found help through consumer credit counseling. Others have been able to use the equity in their homes to obtain debt consolidation loans and used the money to pay off their medical credit card and other debts. A third way to manage those debts is through debt settlement. It’s a way to consolidate debts without having to borrow more money. In fact, debt settlement can actually be used to reduce debts.

How debt settlement works

Debt settlement is sometimes called debt negotiation. This is because it requires you to negotiate with your creditors to get your balances reduced. You’ll need to make no payments on any of your unsecured debts for probably six months before you contact your creditors and offer to settle with them. Your settlement offers would typically be 40% or 50% less than you owe. Many lenders will settle if you can convince them that it’s in their best interests. Of course, you would need to have the cash available to pay your settlements. But if you do have the money, debt settlement can be an excellent way to pay off those medical credit card bills and any other debts within a reasonable amount of time.

“What Happens If I Apply For Bankruptcy?”

pen, gavel and petition to file for bankruptcyWhile this is a legitimate question, a better question would be to first ask yourself, “should I file for bankruptcy”? Most people choose what’s called a chapter 7 bankruptcy or liquidation bankruptcy. This will discharge virtually all your unsecured debts but comes with a high price tag.

What a bankruptcy costs

I have seen attorneys advertising bankruptcies for less than $500. However, it’s important to remember the old adage that “you get what your pay for”. In other words, a $500 bankruptcy may not get you the same attention or service as one costing $1,000.

How long does a bankruptcy take?

It generally takes from six to 12 months to get through a bankruptcy, depending on where you live.

DIY bankruptcy

If you don’t own a real estate, you could probably handle the bankruptcy yourself. If you do have a house, you will need an attorney. He or she will file with the bankruptcy court in your district..

Your assets and debts

Shortly after you file for bankruptcy, you will be required to submit a report listing all of your assets and debts. The bankruptcy judge or trustee will review all this information and give it a “means” test to make sure you qualify for a chapter 7. If you fail this test, your bankruptcy will be kicked up to a Chapter 13, which is something entirely different.

Forced credit counseling

You will also be required to take an approved credit-counseling course before you complete the bankruptcy. With a chapter 7 bankruptcy, you will also be required to meet with your creditors. However, very few lenders will actually send representatives to that meeting, so it will probably be just you, your attorney and the bankruptcy judge or trustee.

The debts that will be discharged

A chapter 7 bankruptcy will only discharge unsecured debts and not even all of them. For example, you cannot discharge child or alimony debts, past-due taxes, debts created through fraud and student loan debts. It will discharge credit card debts, medical loans, personal loans and lines of credit. It will also not discharge secured debts such as your mortgage and auto loans.

What you can keep

You may remember from an earlier paragraph that a chapter 7 bankruptcy is called a liquidation bankruptcy as its purpose is to liquidate your assets to pay your creditors. However, you are allowed to keep certain of your assets, including the equity in your house (up to a certain limit), your motor vehicles (again up to a specified limit), your household goods and furnishings, your wedding ring, jewelry (probably up to $500 worth) and the tools of your trade.

The effects of a chapter 7 bankruptcy

As I mentioned in an earlier paragraph, a chapter 7 bankruptcy does come with a high price tag. It will reduce your credit score by an estimated 100 points so you will have a hard time getting any new credit for two to three years. A bankruptcy stays in your credit files for either or seven or 10 years (depending on the individual credit reporting bureau). Plus it’s a public record that will stay with you forever. Any time anyone pulls your public record it will see that you had a bankruptcy. This could be anyone from the federal government to a prospective employer or even a prospective spouse, This means it would pay to consider the issue very carefully before you file for bankruptcy as it will definitely have long-term consequences.

Do You Need Help With Medical Debt Relief?

Stethoscope on pile of moneyIf you’re struggling to pay off big medical debts, I can certainly empathize. I had a minor procedure done to one of my hands two weeks ago. The bill arrived yesterday and the cost was $5,000. Fortunately, I have insurance that will cover either all or most of that bill but I can just imagine how terrible it would be if you had to pay a medical expense such as this out of your pocket.

Carefully review all your statements

The first thing you need to do is to carefully review any statements you get from your healthcare providers. Hospitals and clinics are required to handle a huge amount of information about every patient and when there is a huge amount of information involved, mistakes can be made. In fact, I have seen estimates that anywhere from 30% to 80% of all medical bills contain errors. You want to make sure all of your charges are legitimate. If you do find errors, call your provider and ask it to make corrections on your bill and then resubmit it to you or your insurance company.

The third player

Medical debt is more complicated than conventional debt if there is a health insurance company involved. When this is the case, you need to know your limits, co-insurance, co-pays or anything else in your policy that could affect how much the insurance company will pay versus your share of the costs. You may not even know how much you actually owe until several months after your treatment and your insurance company has paid its share of the bill.

Negotiate medical debt relief

Healthcare providers used to be fairly lenient in terms of how they treated medical debts. However, many of them have become more like businesses and are much tougher on debt collection. If you find yourself on the wrong side of a huge bill, the first thing you might do to get some medical debt relief is to contact your provider to see if you can’t negotiate a reduction in what you owe. If you could promise an immediate lump sum payment, you might be able to get that bill reduced substantially.

Request a payment plan

If you are unable to negotiate a settlement with a healthcare provider, you might be able to arrange a payment plan. Suppose that you owed $10,000. Your hospital or clinic might be willing to let you pay it off over a two-year period at around $416 a month. You might also be able to get it to waive any interest charges to help you get out of debt quicker.

Look for a foundation

If you have a rare or chronic disease there may be a foundation or federal assistance program that would help with your medical bills. How much assistance you might receive will depend on factors such as your age, health condition and insurance status. But it is possible that a foundation would help with co-pays, co-insurance, the cost of your drugs and even more. However, be aware that there are usually funding timelines so it is sometimes better to look for help early in the calendar year.

Put your medical debt on a credit card

If you have a credit card with a low interest rate, you might consider putting your medical debt on it. This would allow you to spread that debt over a period of time. And it would become more “flexible,” in that you wouldn’t have a fixed payment to make each month. Instead, you could pay just the minimum required by your credit card or you could heavy up on your payments to get out of debt faster.

Let the pros do it

Many families have found that the best help for medical debt relief is to let National Debt Relief settle those medical debts for them. Our trained debt counselors can negotiate with your healthcare providers to get your balances reduced so you could become debt free in 24 to 48 months. We charge no upfront fees. In fact, you pay us nothing until we have successfully settled your debts and provided you with an affordable payment plan.

How To Deal With Big Medical Bills

Stethoscope strangling money as in medical billsWhether we like to admit it or not, none of us is invincible. We can become sick or have an accident and end up in the hospital for days or even weeks. If we’re lucky we have health insurance that covers all or at least most of the expenses we rack up. And these can be huge. I’ve heard of hospital bills that totaled $100,000 or even more. I had a small procedure done recently to remove a basal cell carcinoma from my nose that took about an hour and cost $700.

More complicated

Big medical bills can be even more complicated when there is an insurance company involved. If you received a statement recently from a hospital or clinic, you’ll know exactly what I mean. There were probably categories such as Amount Billed, Amount Covered, Patient’s Responsibility and so forth. In fact, these invoices can be so complicated that you almost need a Captain Midnight Decoder Ring to figure out what you really owe.

Mistakes can be made

Hospitals, clinics and even doctors are required to generate massive amounts of paperwork these days. And any time there is a massive amount of paperwork, there is a massive possibility that mistakes were made. Whatever you receive a medical bill, the first thing you need to do is sit down and review it to make sure you’re being charged for the services you actually received. You can probably ignore the small stuff as you may or may not remember that you were given two aspirin at 4:00AM one day, but watch out for charges such as a PET scan you don’t remember.

Make sure you understand your policy

If you have health insurance, the second thing you need to do is to make sure you understand your policy. It could include co-pays and annual and lifetime limitations that might seriously affect how much of the bill your insurance actually covers. If you have questions about your coverage or the bill itself, take it and your policy to your HR department or to the insurance company itself and ask for a complete explanation.

Medical bills can be negotiated

It’s always possible to negotiate medical bills especially if you can pay cash to settle them. I‘ve heard stories of procedures that had been billed at $5,000 but were settled for $200. In the event you can’t settle out the bill, you should at least be able to negotiate a payment plan so you wouldn’t have to pay it off all at once. If you act in good faith, most hospitals and clinics will work with you to develop an affordable plan and might not even charge interest.

Use a credit card

If you can’t negotiate a payment plan with the hospital or clinic, you might be able to put the bill on a credit card. If so, you could chop it into bite sized payments and spread them out over several years. You would have to pay interest on the debt but this still might be better than trying to pay it off all at once or declaring bankruptcy.

Let us settle the debt for you

Another alternative for paying off a big medical bill is to let us negotiate a settlement for you. Our debt counselors are very experienced at debt settlements and usually save our clients thousands of dollars. We can settle medical bills and other unsecured debts such as credit card debts. We charge no upfront fees so you pay nothing until we can settle all your debts and you approve a payment plan.

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