How To Heal Your Finances From Medical Debt

Medical debt can easily place a person’s financial stability in peril, and it’s a problem anyone can find themselves facing. In fact, according to White House figures cited in December 2023, “one in three adults—nearly 100 million Americans—struggle with unpaid medical bills.” The burden often bars everyday people from “securing loans, seeking medical services, and affording the essentials they need to get by.” Meanwhile, most of us have no idea how to manage medical debt or the influx of bills that accompany a medical crisis. There are, however, some things you can do to regain some degree of control over your finances while working on lowering debt from medical bills.

1. Organize all of your medical bills. Seeing piles of bills and the balances displayed on them can be upsetting and possibly even confusing. Paperless online correspondence can make the situation seem even more distressing. However, you need to get a grasp on exactly who is billing you, the dollar amounts involved and what services each bill is for. Deciphering what a healthcare provider charged you or your insurance provider versus what the insurance provider actually approved and paid is key to knowing how much a provider is claiming that you owe.
   
   
2. Review each medical bill for accuracy. Medical reviewers have placed the rate of medical billing errors at anywhere from 30 percent to 80 percent. Typos reportedly account for about 25 percent of all errors. You may find charges for services you did not receive, or the services you received may have been coded and processed incorrectly. The conventions of medical coding for billing are complex. Common medical billing errors include incorrect modifiers, billing the wrong payer, omitting details on claims, failing to obtain or document prior authorizations, unbundling a single-code procedure, upcoding to a higher level code than justified, creating duplicate billing, failing to bill for services, failing to verify insurance and missing filing deadlines. If you find an issue that looks like a billing error, contact the provider to have them correct it.
   
   
3. Review your health insurance coverage. Make sure that you understand your health insurance policy’s coverage, deductibles, limitations and out-of-pocket expenses. An American Medical Association report estimates that “one in five medical claims submitted to health insurance companies are processed inaccurately,” leaving healthcare professionals with reduced reimbursements that are often passed on to patients. You may need to contact your insurance provider or work with your physician to resubmit for payment or to file an appeal. In reviewing your insurance coverage, you may also discover facets of the policy that need improvement, upgrades or supplemental coverage for the future.
   
   
4. Work with your care providers’ billing and finance departments. While most bills typically include credit card payment options, the interest rates on revolving credit often make paying an entire slew of medical bills by card costly. Instead, contact the billing departments to work out a repayment plan to better match your budget. You may be able to negotiate an installment plan or explore payment strategies like the avalanche or snowball method of lowering debt from medical bills. The avalanche strategy focuses on paying down the largest sums first to avoid or reduce additional fees or charges. The snowball strategy targets smaller debts first to get them out of the way and give you more resources to deal with the greater sums.
   
   
5. Double-check health savings accounts or flexible spending accounts for available resources. Often referred to simply as HSAs or FSAs, these accounts offer supplemental financial resources and incentives for qualifying expenditures. If you’re unfamiliar with all the details of your particular plan, you may be missing out on money you could earn and apply to eligible medical bills.
   
   
6. Apply to financial assistance programs for patients. The Affordable Care Act—ACA—requires hospitals to publish written financial assistance and emergency care policies. These policies define eligibility standards for free or discounted care, how charged amounts are calculated and how you can apply for help. Hardship and charity care measures are designed for individuals who need help paying their medical bills. Many states, nonprofit organizations and advocacy groups also have programs in place to help. Once you apply for assistance, notify billing departments and any collection agencies that may be trying to collect from you to pause collections while your application is pending.
   
   
7. Stay in contact with the providers you owe and any organizations you have applied to for help. While the temptation is strong to withdraw or be angry, maintaining calm, positive relationships with providers and assistance organizations is key in working out a plan of action. Being willing to speak with a knowledgeable person within the care systems you are using may lead you to an option or assistance you weren’t aware you were eligible for.
   
   
8. Seek out financial counseling to explore options allowing repayment. Experts frequently recommend creating a budget that prioritizes lowering your medical debt, but what that means can differ widely from person to person. Financial counselors are professionals who specialize in providing personalized guidance on how to manage your money and other assets as well as your debt. They can offer solid budgeting strategies for medical expenses and your other responsibilities, using financial options wisely and improving your overall financial health. They can also provide insight into how low-interest credit card balance transfers and various types of personal loans, for example, may be able to help you consolidate debt or repay debt on more favorable terms.

Manage Medical Debt with Your Financial Institution

Yes, medical debt can seem overwhelming, but taking proactive steps like negotiating bills, researching financial assistance programs, exploring your financial options and creating realistic repayment plans can give you some control over your finances and a plan for both the short and long term.

If you would like some help exploring your financial options or more information on managing medical debt, reach out to the specialists at your financial institution. They may have programs or products available to help you address your medical debt and get your goals back on track.

References:

https://www.nerdwallet.com/article/finance/pay-medical-debt

https://www.cnbc.com/2023/09/19/navigating-medical-bills-12-steps-for-managing-costs-minimizing-debt.html

https://www.consumerfinance.gov/ask-cfpb/is-there-financial-help-for-my-medical-bills-en-2124/

https://capturebilling.com/health-insurance-companies-process-1-in-5-claims-wrong/#:~:text=The%20American%20Medical%20Association%20(AMA,no%20reimbursements%20for%20services%20provided.

https://www.elationhealth.com/resources/blogs/tips-for-reducing-medical-billing-errors