Medical Debt: Part I

People who face large amounts of debt often have done nothing irresponsible; careless spending and poor financial planning are not the causes of many such hardships. In fact, almost 40% of all adults in the U.S. deal with debt problems that stem from medical care -- expenses that are largely unavoidable and frequently unexpected.

Despite the fact that incurred medical debt is necessary for so many people, it still is considered equivalent to other types of debt in your responsibility to repay. However, sometimes running up medical debt is necessary, and no one should have to forego treatment because of financial fears. This article, together with Part II, should help you both to plan for and to deal with medical debt.

Planning Ahead

Of course the best defense against any type of debt is a good offense, though admittedly this is easier said than done. You have heard it before, but it deserves one more mention: if at all possible, you should have an emergency fund set up for purposes such as unexpected medical procedures.

It can be difficult to set aside much needed money each month for protection against a hypothetical situation, but the importance of an emergency fund cannot be underestimated. Any amount of money that you are able to invest on a monthly basis will help you, should medical debt arise.

Arguably even more important than an emergency fund is the need for health insurance. While policies vary widely, and while a very serious medical situation may go far beyond the scope of your coverage, insurance can only help you.

Many policies cover a wide range of doctors’ visits and procedures, and all will cover costs that otherwise would be yours to pay. Insurance does not always work as extensively as we would like, but it is an invaluable resource for you and your family.

It is important to consider your financial situation and medical options before the need for medical care is imminent. For example, consider seeking treatment at a free clinic when possible. Compare charges between doctors and hospitals before deciding where to have a procedure. And, if possible, always get a second opinion before procedures are done – you certainly do not want to incur debt for a procedure that was not necessary in the first place.

No matter how much you plan ahead and save money where you can, however, medical expenses often are necessary, and primarily are the responsibility of the patient and his or her family. So, how can you handle an expensive medical bill when there was no way to avoid it?

Medical Bills

When you are charged with a medical bill, whether it is for a visit to the doctor’s office or the hospital, payment usually will be required either when services are rendered or within 30 days. Examine your bill immediately to make sure that there are no errors, that the services listed are the services you received, and that you understand what you reading. If you do not, you may ask a medical bill auditor to explain.

If you find an error on your bill, alert the medical provider as well as your health insurance provider. Keep accurate records of your disputes in writing and keep copies of everything. You do not want to be held responsible for unsolicited charges that they claim you agreed to pay.

When it comes time for payment, your medical provider probably will ask if you would like the bill sent to your insurance company. If they do not, you should ask them to do so. Because it is your responsibility to pay your bill, it also is your responsibility to make sure that your insurance company receives the bill in a timely fashion. You must follow up to ensure that this process is working properly.

If 60 days have passed and no payment has been made by your insurance company, contact them. If they will not pay or if you have an outstanding balance, then you must make arrangements to pay the medical provider.

Just as with other debts, interest may be added to your balance, so you will want to act quickly to come up with a solution to your medical debt. If you are able to pay at this point without excessive financial hardship, it is best to do so.

Go to Part II of this article.