Financial Assistance for Medical Bills

Think again if you believe having health insurance provides immunity from medical debt.

Good insurance will cover a large portion of the cost for medical treatment and prescriptions, but almost every policy today has a deductible that can go as high as $7,500.

Paying those costs can be tough, and for those without insurance or with substandard policies, the bills can be overwhelming. Almost 100 million U.S. citizens owe more than $220 billion in medical debt, and about 3 million of us owe more than $10,000. Not surprisingly, almost two-thirds of bankruptcies are caused by medical debt.

Deductibles and copayments rise each year for many insured employees, and half of the country’s adults say it is difficult to avoid health-care costs. Another recent survey showed that 20% of patients had trouble paying medical bills.

Do not lament, though. There are solutions and alternatives that can and should be pursued when seeking financial assistance for medical bills.

What Happens to Unpaid Medical Bills?

There’s a very good chance unpaid medical bills will be turned over to a collection agency. Just like credit card issuers, hospitals and medical practices sell debt they can’t collect. Unpaid medical bills fall into this approach.

The Federal Reserve estimates that more than half the accounts sent to collection agencies involve medical debt. If you are unable to negotiate with the collection agency, you could eventually face a civil lawsuit demanding payment.

Collections lead to letters, phone calls, emails and text messages demanding payment. Nonpayment will be reported to the credit bureaus. Although collection agencies can’t threaten you with arrest or call at inconvenient times, they will try to make you uncomfortable. They’ll remind you that failure to pay will severely ding your credit rating, making it hard to obtain loans in the future.

Yes, ongoing medical debt can turn your financial life into a nightmare.

What can you do? An early step, while the debt is still in the hands of the doctor or the hospital where you were treated, is to look for errors in the bills you received. Mistakes are quite common and could include double billing for a procedure, service, or supply. You can do this on your own or, if it seems too difficult, you can hire a medical billing expert to do it for you.

We’ll go over some other options as well, including Financial Assistance Programs.

Ways to Pay Medical Bills

A good first step is to try to negotiate a payment plan with a hospital or doctor involved. Most will work with you to find a payment plan that works. A $1,200 bill is a lot to pay at once. But a phone call to the hospital billing office might lead to a 12-month payment plan at a more affordable $100 a month.

Another option to check into are Financial Assistance Programs, also called “charity care.” These programs provide free or discounted health care to those in need. The program could help the uninsured and the underinsured, which refers to those with less-than-ideal health-care coverage.

Financial assistance programs can be found at your health-care provider or via a state agency. Nonprofit hospitals are required to give financial assistance to eligible patients who cannot afford payment.

To find the information, do an online search for “financial assistance for medical debt” and the name of the hospital. Or call the hospital and ask for information about their policy. Other non-profit or advocacy groups could help.

Many hospitals have patient advocates whose job is to help you find assistance. An online search for an independent patient advocate may help the cause. The Patient Advocate Foundation is a nonprofit that helps those with chronic illnesses receive and pay for care.

When seeking any kind of help, it’s vital to review and understand the medical bills and your insurance coverage. Bills can have errors, but so can consumers who are unfamiliar with their health-care policy. Knowing the details can be tedious, but knowledge is power when it comes to advocating for yourself.

Financial Assistance Programs

The Affordable Care Act (ACA) mandates that hospitals have a written Financial Assistance Policy. This information must explain the criteria for help and whether the care is free or discounted. It also must explain the basis for calculating what you’ve been charged and how to apply for aid.

To qualify for help via a financial assistance program, you must meet certain criteria, which vary by state or hospital.

Nationwide Children’s Hospital, for example, states patients must use all other available resources before qualifying for financial assistance. Eligibility after application is based on income (before taxes) and dependents in the household – with consideration given to other extenuating circumstances.

The state of Ohio’s OhioHealth Financial Assistance Program offers eligibility after application to those where family income is at or below 400% of the federal poverty line and lack another source from which to pay (savings, investments, extra home, etc.). Discounts range between 65% and 100% of the patient cost.

The University of Washington Medicine Assistance Form asks if you have applied for Medicaid. If you haven’t, it’s very possible the application will be rejected until you see if Medicaid will cover your bills.

Applications are not simple and must be filled out accurately; charities and hospitals do not want to reward fraud. The signed application may typically require statements for all banks (including for your spouse, if married), a detailed description of the need and verification of income for you and your spouse.

Documents that may be required include tax statements, pay stubs, an employment letter and/or proof of unemployment benefits. Retirees may have to send documentation of Social Security benefits, a pension or retirement income.

Applications can be obtained from the appropriate agency or hospital you apply to and must be completed honestly and accurately. It’s not a simple or painless process, but the potential reward at the end may make it all worthwhile.

How To Get Help From Financial Assistance Programs

Here’s a basic step-by-step breakdown of what it takes to apply for help from a Financial Assistance Program.

1. Get a Copy of the Policy

It’s important to understand the details of your request, and the way to know them is to ask for and read the individual financial assistance policy before applying. Hospitals are obligated to provide the policy.

2. Fill out Application Form

Fill out the form, carefully and completely. Sounds simple but being precise matters. The form asks for address, household size, names, and ages of those in the household and their incomes. Misrepresentations will lead to a denial of assistance, which leaves the bills in your hands.

3. Ask Questions

Filling out a form properly means being sure directions are clear and understood. If any questions arise– What does a procedure? How did the doctor arrive at this fee? — it’s worth taking the time to call the hospital, state or agency handling the application. Remember: The only bad question is the one not asked.

4. Notify Debt Collectors

It’s important to let a debt collection agency know you have applied for assistance. When notifying them, ask them to pause collections while the application is being completed, submitted, and reviewed. Debt collectors should honor that request.

5. Follow Up

Do not wait for answer. Once the application is submitted, feel free to follow up about the status of the application. If more information is requested, send it as soon as possible.

Negotiate Payment

It’s never a bad idea to try negotiating a bill with the doctor, hospital, or bill collector.

Ask what the lowest rate the provider charges insurance companies and try to get that rate applied to what you owe. Also, ask if the collector will accept a no-interest payment plan, or look into medical financing.

Remember, whether it’s a medical provider or a debt collector, the entity seeking payment will often prefer something over nothing.

You should explain your situation to the collector, emphasizing your inability to pay the full amount billed. If you don’t have health insurance, ask what Medicare reimburses for the service or treatment and offer to pay that.

Try to remain calm when you discuss your bill and always take notes. Be certain to ask the name of the person taking your call and any reference number that might be assigned to your account so that you can take the issue up with someone else, if necessary.

If you have enough money on hand to pay a reduced bill, offer to pay immediately. Also offer to provide information confirming your income. If a hospital or clinic sees your income is low, it might be willing to reduce, negotiate or even eliminate your debt.

Establish a Payment Plan

Working out a monthly payment plan with your hospital or health care provider could be a game-changer in helping pay the bills.

Most health-care facilities don’t want to go to collections. To avoid that step, they usually will work with patients to find a payment plan that will help the patient and ensure the hospital is paid, albeit over time.

Though medical debt can be onerous, it has one advantage over credit card debt – there is usually no interest due on what you owe. As a result working out a payment plan is a sound approach.

Some hospitals will accept credit card payments, but this step should be used with the greatest care. Only use a credit card if you can pay the entire bill immediately. If you can’t, interest on your credit card will be added to what you owe, and that interest can easily exceed 20% annually on the balance. A payment plan with a hospital usually has no interest.

Another advantage of a payment plan is it will keep the billing agency from selling debt to a collection agency. A medical provider that accepts a payment plan appreciates some effort is being made to pay the debt. The provider will generally not report you to one of the nation’s three giant credit-rating agencies, avoiding damage to your credit report.

Even if you haven’t come to an agreement with the hospital or medical practice, try sending a partial payment, perhaps 2% or 3% of the balance, each month. If the provider accepts your payments, it might be willing to cash your checks and hold on to the debt until it is repaid. The arrangement might benefit you and the provider, who can avoid selling the debt to a collector for pennies on the dollar.

Government Assistance for Medical Bills

Before deciding there’s no way to pay a medical debt, consider turning to a government program for help. Medicaid and the Children’s Health Insurance Programs (CHIP) both provide medical expense assistance to those who can’t afford insurance.

Medicaid and CHIP are federally funded, state-administered programs that offer help to those whose family incomes fall below certain thresholds. Contact your state’s human and social services agencies or a state Medicaid office to learn if you qualify.

If you are a veteran, have a disability or are at least 65 years old, you are likely to be eligible for Medicare or medical care through the Department of Veterans Affairs. Veterans should contact the VA, and seniors and people with disabilities should learn about Medicare. The Benefits.gov website offers a questionnaire that can help you locate an appropriate program.

Hire a Patient Advocate

If you lack the time or understanding to navigate the health care system yourself, it might be worth hiring a patient advocate, agents trained in how the system works and negotiating on your behalf.

This path is expensive, though eventually it may help. Patient advocates can charge as low as $100 per hour, but also as high as $400. They also will often charge 20% to 30% of whatever savings they might realize for you.

Qualified advocates are experts at analyzing medical bills and can ferret out irregularities. They can also conduct negotiations for you. The Claims.org website can help find an advocate in your area.

Other Alternatives to Medical Bills

Medical providers and collection agencies can both file lawsuits to collect unpaid debts. If you are unable to negotiate a repayment plan with them, a collection suit is always possible, and a judge might order your wages garnished to satisfy the debt. People with very low incomes are exempt, but those who make more are subject to garnishments that can dig into take-home pay and lead to other financial problems.

Filing for bankruptcy short circuits the whole process. Medical debt can be discharged or greatly reduced depending on the type of bankruptcy you file.

However, before considering medical bankruptcy, you should discuss the situation with a nonprofit credit counseling agency to go over options such as consolidating medical bills and determine whether bankruptcy makes sense. The counseling session is free and could lead to a better solution that avoids the painful problems caused by bankruptcy.