Ease the pain of medical debt

WASHINGTON (8/25/08)--A whopping 79 million Americans are struggling to pay off hospital and doctor bills, with adults in more income groups than ever before affected by excessive health-care costs, according to a report released last week (Reuters Aug. 20).

The 2007 Biennial Health Insurance Survey, released by the Commonwealth Fund, a New York-based foundation that tracks trends in health coverage and quality, revealed that 41% of working-age Americans--72 million people--have medical bill problems or are paying off medical debt, compared with 34% in 2005. Another seven million adults older than age 65 also struggle with medical debt.

Surprisingly, more than half of those struggling to pay medical bills carry some form of insurance. If you are in this category and don't make arrangements to pay the bill, it may be sent to collections, which could affect your credit rating.

Take steps to ease the financial burden:

Check for duplicate charges. According to Medical Billing Advocates of America, Salem, Va., the majority of hospital bills contain costly mistakes. For example, an operating room charge already includes the cost of routine services, equipment and supplies, but some facilities double-bill for the services (The Wall Street Journal Aug. 12).

Question a rejection. If your claim was denied, or the insurer informs you it's only covering a portion of the cost, speak up. Sometimes it's a simple fix, such as a wrong billing code. Follow the plan's internal appeals process, or contact your state health department or attorney general's office (U.S. News & World Report Aug. 21). Find contact information for resources in your state in the Consumer Resource Handbook at consumeraction.gov.

Pay now, save big. Some providers give hefty discounts if you can pay the discounted amount in full at the time the service is provided. Don't use a credit card, though, or interest charges might eat up all the savings.

Negotiate with the health-care provider and hospital. Ask about repayment plans and discounts, because medical care is negotiable--particularly if you don't have insurance or if you have a high-deductible plan. Ask for the rate that Medicare pays, which often is half the full price. You're more likely to cut a deal if you're facing bills for expensive treatment. Work with the hospital's financial counselor if possible, and remember that hospitals typically don't charge interest.

Negotiate with collections. If your bill is sent to a collection agency, stay calm. Contact the agency immediately and negotiate; it may settle for 25 cents to 50 cents on the dollar just to get your debt off its books. Don't assume you must pay the entire amount. And know your rights; visit ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm for more information.

Use government programs. Check if you qualify for Medicaid or whether your children qualify for your state's Children's Health Insurance Program. Some states cover children if the family has income up to 300% of the poverty level--that can be more than $63,000 for a family of four.

For more information, read "Medical Bills: Don't Overpay" in Plan It: Retire Ready Toolkit.

courtesy of cuna.org