Home > Personal Finance > What If You Can’t Pay Your Medical Bills?

Comments 0 Comments

If you or a loved one has ever experienced a serious illness, you know how quickly the medical bills can pile up.

One day, it’s a bill for services rendered by the anesthesiologist. The next day, the radiologist wants his cut. Wasn’t this all supposed to be included in the hospital bill?

Fortunately, limits on out-of-pocket expenses included in the Affordable Care Act for 2014 apply to many insurance policies, whether you get your insurance through your employer or purchase it on your own.

That means an individual can pay no more than $6,350 out of pocket for in-network care. The limit is $12,700 for families. That limit includes co-payments and deductibles, but doesn’t include the cost of monthly premiums.

But there are still ways to rack up big medical bills.

If your health insurance plan at work has a separate administrator for medications, your spending on prescription drugs might have a separate limit or perhaps none at all until that rule changes in 2015. So you could conceivably be facing large bills from the pharmacy.

Health care plans that were grandfathered in are exempt from the limits. “Grandfathered plans are those that were in existence on March 23, 2010, and haven’t been changed in ways that substantially cut benefits or increase costs for consumers,” says HealthCare.gov. “Insurers must notify consumers with these policies that they have a grandfathered plan.”

You might have other expenses that aren’t included in that out-of-pocket maximum. “This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for nonessential health benefits,” says HealthCare.gov.

Your health insurance plan may limit your out-of-pocket spending for non-network care or it may not.

And here’s a biggie: You ignored the federal mandate to buy health insurance.

So, if you have big medical bills, what should you do?

1. Don’t Ignore Medical Bills

Medical debt that you don’t pay can have a huge impact on your credit score. In fact, Experian says more than 64 million Americans have a medical bill in collections on their credit report.

According to The Wall Street Journal:

More than half of all debt collection activity on consumers’ credit reports comes from medical bills, according to the Federal Reserve. Such activity results in lower credit scores for consumers, meaning that lenders are more likely to be cautious in extending credit.

The Consumer Financial Protection Bureau recently called on credit-scoring companies to treat medical debt differently from other unpaid bills, saying that medical debt is often unexpected, unlike other bills that go into collections.

Since then, FICO, a major credit-scoring company, has issued a new scoring formula that reduces the impact of past-due medical bills on credit scores. But it could be some time before that score is widely adopted by lenders.

2. Examine Your Bill & Explanation of Benefits 

According to Medical Billing Advocates of America, 8 in 10 hospital bills probably contain errors. Donna Fuscaldo of FoxBusiness suggests you request itemized bills from your medical care providers and then examine them carefully to determine that you truly received the services.

Next, compare them with the explanation of benefits statement from your insurance provider, which explains what it paid for and what you owe.

If you notice inaccuracies or discrepancies, call the medical care provider to question the bill.

3. Negotiate 

If you can’t afford to pay the bill, explain your situation to the medical care provider. Perhaps they’ll be willing to accept a smaller amount of money or will entirely wipe out the bill. Many hospitals have charity care programs that cover the bills of low-income patients.

Keep in mind that if you don’t have insurance, your original bill will likely be much higher than the negotiated rates medical providers get from insurance companies, so there’s some wiggle room in that bill.

Perhaps you could benefit from the help of a paid advocate, who will charge either a percentage of the money saved or an hourly rate.

4. Set Up a Payment Plan

Another alternative is to call the billing department and set up a monthly payment plan. Whether interest will be charged depends on the medical provider’s policy. As long as you keep paying, the debt likely won’t affect your credit score.

5. Find Help with Medical Debt

You can visit Benefits.gov to learn more about federal programs you may qualify for. This government website also provides information about help with medical bills.

Some nonprofit organizations also provide help to those who can’t afford medical bills. Drug companies have programs to help people with the cost of prescription medications.

Karen Datko contributed to this article. This post originally appeared on Money Talks News.

More from Money Talks News:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team