Priscilla Thomas Keith has extensive experience in government, pharmaceutical research and clinical trials, health care, and public health law and policy, and academia. Ms. Keith currently serves as RIP Medical Debt’s Director of Program Management, a position in which she ensures smooth coordination between RIP’s functional departments in delivering program results. A primary focus is leading cross-functional teams from the time of medical debt procurement to its abolishment. Her areas of focus are Public Health and Health Equity, Health Care Law and Policy, and Corporate Governance and Risk.
Medical debt is real. Here’s how you steer clear.
Get insurance. That’s the advice most personal finance experts will tell you if you want to prevent medical bills from obliterating your finances. They are right. Medical insurance provides financial relief, i.e., not having to pay out of pocket for treatment. While this is excellent advice, having a health insurance cover is not the end-all solution to financial problems arising from illness. In a study conducted by The Commonwealth Fund, it was established that as many as 79 million Americans have medical debt issues. The Bureau of Labour Statistics also found out that the average American spends about $5,000 annually on out-of-pocket health charges.
Another survey by Salary Finance also established that 45% of the respondents were worried by the prospects of healthcare costs. Given that these respondents were employed at relatively large companies, you get the idea that a large chunk of the populace is petrified by the prospect of medical bills.
As with many financial problems, the most affected by the medical debt issues are racial minorities. This is evidenced in a study by the Census Bureau, which established that 27.9% of Black households and 21.7% of Hispanic households face medical debts compared to 17.2% of Caucasian households. Based on the study, income level wasn’t a huge determinant of medical debt, suggesting that 19% of households both above and below the poverty line reported having medical debt. However, other factors such as region, educational attainment, and family composition did dictate the prevalence of medical debt.
That said, medical bills are not a new concept. Yet, it would appear as irresponsibility or ignorance on the part of one in five people estimated to have medical debt, according to a Kaiser Family Foundation survey. Is it really? There are many mitigating factors as to why such a large proportion of people have this problem. Some of the explanations put forward include:
Cutting corners with treatments and skipping check-ups which prevent people from sticking to prescribed treatment regimens. Further worsening the condition being treated.
Charging medical bills to credit cards expose them to card interest rates which further inflate the amount of medical debt payable.
Getting a serious diagnosis that requires further treatment from out-of-pocket funds
Opaque Pricing strategies employed by providers. E.g., demands that you agree to treatment without fully disclosing the hidden costs or not giving a cost estimate for procedures upfront.
While these maybe some of the reasons, the fact of the matter is that the final responsibility of a medical debt falls on the individual. Thus, a more proactive approach remains the best way to reduce or entirely avoid medical debt.
Here are some tips you can use to stay out of or reduce your medical debt burden.
Understand how your health insurance plan works
Most of the time, medical debts arise from ignorance which leaves the individual exposed to associated bills and uncovered items. Each individual’s risk profiles are different; hence the policies drawn out for different people will vary. Likewise, knowing the insurance plans stipulations on other matters like out-of-network providers can help you save off your medical bill.
Get the cost estimates of an upcoming treatment beforehand
Knowing the cost of a procedure and beforehand will help you plan out or select a facility that will do it affordably. While there is no standard of care you don’t deserve, it is important to understand that treatment, just like any other service, you will have to pay for it eventually. This will help you remain objective and true to yourself on what you can realistically afford and remove any other unnecessary treatments from your plan.
Negotiate medical bills
Following up on the point above, medical costs, like anything else, can be negotiated. Working with your doctor may help you shave off procedures that will help you stay within coverage and, most importantly, prevent you from taking on unnecessary debt.
Appeal/dispute claims denied by your insurance
Your insurance company’s decision not to cover some procedures is not the final word on what you should pay. If there are claims you feel have been unjustly denied, you are within your rights to contest and protect your interest, just like the insurance company is.
Negotiate payments plans with providers
Whipping out your credit card should not be the first instinct when it comes to medical bills. For one, paying with a card exposes you to interest rate issues on the card and can result in a lower credit score if you carry the debt for a long time. Try and work out a favorable payment plan that will allow you to pay the bill over time without interest charges. You will be surprised how many providers are set up and receptive to this.
Resource from RIP Medical Debt: