Medical debt is one of the leading causes of bankruptcy in the United States. Here are a few ways to lower your health care expenses:
1. Find catastrophic health coverage. Getting sick or injured without any kind of health insurance is one of the reasons that people end up with large medical debts.
If you can’t afford the rising costs of insurance and go without it you’re not alone. The premiums for catastrophic health plans can be more affordable because they're typically much lower than a standard health insurance plan.
These plans are also known as High Deductible Health Plans (HDHP) because the amount of your deductible can be several thousand dollars. This won’t be much help for checkups, but if you have a major illness or injury, HDPs can prevent you from going into tens of thousands of dollars in medical debt. When you’re searching for plans, look for one accredited by the National Committee for Quality Assurance.
2. Research your care. Insurance companies have a lot of rules about what type of care is covered and how much they'll pay towards the cost of care.
Keep your bills significantly lower by researching the rules prior to going in for a visit or procedure. For example, going to an out-of-network provider will increase your costs, so double-check that a doctor is in-network before seeing them.
Also, there are situations where a planned procedure where the doctor and hospital are in-network but providers like an anesthesiologist or radiologist are not, so stay on guard. You can ask about this ahead of time—and even bring up the costs of different treatment options when discussing care with your doctor. In some cases, there could be procedures or medicines that achieve similar results at a lower cost.
It is difficult to do research in an emergency situation, so it pays to look over your coverage ahead of time so you know which hospitals and doctors in your area are in-network.
3. Only pay what you owe. Before you make any payments, look over your Explanation of Benefits form and make sure you're not being overbilled, as billing code errors and balance billing sometimes slip in.
It will take time to dig into itemized lists of charges and compare them to your insurance coverage, but it can save you thousands of dollars. When we had our second child we were incorrectly billed for over $8,000 we didn’t owe. It took six months of phone calls, emails, and letters to get it straightened out.
If you still can’t resolve the debt after filing a formal appeal with your insurance company, you can turn to the Patient Advocate Foundation for assistance.
4. Negotiate your payments. If you can’t pay your medical bills, contact the provider directly and see if you can set up a payment plan; don’t wait until the bill is overdue and being sent to collections. Let them know right away if you don’t have the money and would like to work with them to pay off the debt.
In some hardship cases, they may be willing to reduce the amount that you owe. Even if all they’re willing to do is setup a payment plan, it’s still better than using a credit card to pay the bill to avoid risking carrying a balance and getting slapped with a high interest rate.
5. Save for health costs. Having an emergency fund can help you afford unexpected life events, such major sickness or injury. However, such a general fund can be depleted by certain emergencies.
Consider a Flexible Spending Account or a Health Savings Account (HSA) that are used only for medical expenses. Since these plans come with tax benefits, the IRS has rules about who qualifies. For example, you’ll need a high deductible health plan in order to open an HSA.
Whether use a medical savings plan or not, simply having money put away for medical expenses can help.
For more on steering clear of debt check out the book Get Out of Debt Like the Debt Heroes by Ben Edwards. A story of how 21 regular people paid off over $1.7 million in debt and how you can avoid repeating their mistakes.