Medical Bill Debt & Costs
The average U.S. consumer spends more than $10,000 a year on healthcare. That's 50% more than consumers in other countries. Healthcare expenses vary, depending on your level of insurance, but it’s important to have a medical debt plan.
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Seniors & Medical Debt
Medical debt is troublesome for seniors, who may be dealing with mortgages or credit card debt. Too many consumers believe government will take care of expenses like nursing home, assisted living, and other health-related expenses.
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Health Insurance Costs
The U.S. government estimates that seniors spend $7,620 a year just for Medicare coverage Part A and B. Costs for supplemental care coverage (Plan C) vary, while costs for prescriptions (Plan D) average just over $41 a month.
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Medical Debt & Costs
The Affordable Care Act, better known as “Obamacare,” helped a record number of Americans enroll in health insurance plans, but did nothing to slow the spending on healthcare. Thanks to the ACA, 91.2% of Americans had health insurance at the start of 2017, up slightly from 90.9% the year before. However, Americans spent $3.3 trillion on healthcare or about $10,348 per person. That is up 18.9% in just five years. Healthcare spending in the U.S. accounts for 17.9% of the gross domestic product.
Medical Debt Consolidation & Forgiveness
Americans have significant trouble when it comes to paying for their medical treatments, especially when they already are in debt with credit cards, auto loans and mortgages. The Kaiser Family Foundation/New York Times survey in 2016 found that 26% of Americans between the ages of 18-64 said they had problems paying medical bills.
According to a 2016 Kaiser Family Foundation study, 52% of debt collection actions in the U.S. contained medical debts. Medical debts were responsible for half the bankruptcy filings.
But there are options for dealing with those bills. Debt.org can help with options like debt consolidation, debt settlement and as a last resort medical bankruptcy. If you or someone in your family has encountered a serious condition, find out where you can get medical debt relief that eases the situation. You have options for medical debt help that remove the stress of paying for healthcare.
Debt Relief Options
Negotiating Medical Debt
Doctors and hospitals lose money when your debt is sent to collections, so they should be willing to cut a deal if you negotiate directly with them. Figure out what you can afford to pay each month and see if they come up with a payment plan to match that.
If you are uninsured, try asking for the rate they give insured patients. Doctors and hospitals tend to cut insurance companies a break in fees.
Medical Debt Consolidation
Hospitals don’t charge interest on medical bills. That is important to know because the primary goal of debt consolidation is to lower your interest rate. Medical debt consolidation is only an option if you have already paid the bills with a credit card. In that case, it’s the same as credit card debt consolidation.
Qualifying for Medicaid
Medicaid provides free or reduced cost insurance for low income individuals. Both income and assets determine your eligibility.
Requirements vary from state to state, but you will qualify if your earnings are below the standard for the Supplemental Security Income (SSI) program. The SSI limit is $750/month in “counted income” for 2018. In general, if your total earnings are less than $2,250/month you should qualify.
Applicants can only qualify with less than $2,000 (or $3,000 for a couple) in assets. That is in cash and savings. Personal property like a car and a house are generally excluded.
Asking Family and Friends for Help
Crowd-funding websites like GoFundMe or YouCaring, which is now owned by GoFundMe, have made it easy to set up a donation account. Nearly half of the money raised on those two platforms ($930 million of $2 billion on GoFundMe) were for medical bills.
You shouldn’t need to worry about tax implications because donations and gifts don’t count as taxable income up to $15,000 per individual gift.
Law/Acts Relating to Medical Debt
Over the last few years, governments and institutions woke up to the fact that a lot of Americans were being unfairly punished on their credit reports for medical debt.
The urgent and unexpected nature of medical debt doesn’t accurately reflect someone’s true credit worthiness. A study by the CFPB showed that one-in-five credit reports contain medical debt that distorts the consumer’s credit position.
Finally, in 2017 a law was passed that required credit reporting agencies to allow a 180-day grace period before medical debt is listed on credit reports. This gives doctors, hospitals and insurance companies time to figure out the billing and who is going to pay.
More importantly, it gives patients a buffer period to dispute certain charges before it shows up on their credit report, or time to look for financial assistance for medical bills.
In addition, any unpaid medical bills on your credit report that later get paid by insurance have to be removed from the report. That prevents the negative marks from lingering and lowering your credit score.
The Fair Isaac Corporation newest scoring model, FICO Score 9, minimizes the impact of medical debt. You won’t be punished as severely for medical debt in collections and paid medical debt as you would traditional debt.
More legislation has been proposed to erase punitive damage caused by paid medical debt and eliminate credit penalties related to healthcare, but the bills have yet to make it out of Congress.
Make Sure the Bill is Accurate
The first course of action when leaving a doctor’s office or hospital is to check with your insurance company to make sure that they were billed properly. You want to be sure your insurance was applied correctly, and that they paid for everything you were supposed to be covered for, before you pay the remaining cost.
Always review your medical bills for inaccuracies. Mistakes are common. Health care is expensive. Don’t pay for treatment you didn’t receive.
Check for these common mistakes in your medical bills:
- Double billing – check to make sure it isn’t a duplicate bill for something you have already paid.
- Services not rendered – a fraudulent charge made by a health provider for a service that wasn’t delivered. Dishonest health providers might do this to inflate bills they think will be covered by the government or insurance anyway.
- Coding errors – health providers use codes when they submit claims to insurance companies. Sometimes these codes can have typos that accidentally bill you for a more expensive medication or procedure.
Free Health Care Providers & Non-Profits
There are government programs other than Medicaid that provide free or reduced-cost health care. Some non-profit organizations do the same.
Health Resources and Services Administration (HRSA)
The HRSA is a good place to start. They are an organization run by the federal government with a mission to “achieve health equity through access to quality services.” Their website has a database in which you can search for an affordable health center in your area.
Hill-Burton Obligated Facilities
If your income is below the federal poverty line, these facilities are required to provide you with free care. Those with an income up to twice the federal poverty line might qualify for reduced-cost care. You may even apply for assistance after medical bills have been sent to collections. Decades ago these facilities took grants or loans from the federal government to update their facilities with an agreement that they would offer free care to low-income Americans.
This website lists clinics that offer services for free or reduced rates. These clinics are run by nonprofit organizations or receive federal grants and state subsidies. Some of the services include:
- Pediatric health
- Dental work
- Women’s health
- Behavioral health
About The Author
Max Fay has been writing about personal finance for Debt.org for the past five years. His expertise is in student loans, credit cards and mortgages. Max inherited a genetic predisposition to being tight with his money and free with financial advice. He was published in every major newspaper in Florida while working his way through Florida State University. He can be reached at [email protected].
- Metrejean, C (2018 March 1) Donation-Based Crowd Funding and Nontaxable Gifts. Retrieved from https://www.journalofaccountancy.com/issues/2018/mar/donation-based-crowdfunding.html
- Matthews, J (N/A) How Medicaid Works: Eligibility Requirements & Coverage. Retrieved from https://www.caring.com/articles/how-does-medicaid-work
- American Council on Aging (2018 March 21) Medicaid Eligibility: Income, Asset and Function Requirements for 2018. Retrieved from https://www.medicaidplanningassistance.org/medicaid-eligibility
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