How to Prevent Medical Debt

Medical debt is one of the biggest problems facing American families today. The average amount owed following treatment for diabetes and neurological disorders was $26,971 and $34,167, respectively.

Medical Debt Statistics

- According to the Common Wealth Fund, 116 million U.S. citizens have experienced personal debt as a result of being unable to pay medical bills.

- Research by the American Journal of Medicine showed that 62.1% of all insolvencies were considered to be a medical bankruptcy.

Pre-Existing Medical Conditions Lead to Unpaid Medical Bills

Taking out health coverage is not a panacea. It is important to check through the T&C's of a policy in order to understand precisely what it covers should the worst happen. If you have a heart condition and your policy excludes pre-existing medical conditions, coverage isn't going to prevent debt.

- The median amount of healthcare-related debt was $17,749 for those filing for medical bankruptcy.

- Individuals that didn't have health insurance owed an average of $26,971.

The earlier coverage is taken out the more affordable premiums will be. Not only that, there is less time in which to develop a medical condition and wind up with unpaid medical bills.

Reduce Insurance Deductible to Prevent Medical Debt

Whilst increasing your insurance deductible may reduce monthly premium, having to pay $10,000 before a policy will pay-out is a sure-fire way to accrue unpaid medical bills. If you don't have $10,000 in savings, reduce your deductibles to prevent problems further down-the-line. It may cost more each month, but it is better than the alternative.

Incorrect Hospital Bills

The majority of hospital bills contain errors. Whist it is possible to identify errors yourself, it is usually better to get an expert to check for mistakes. These errors can lead to additional medical debt amounting to thousands of dollars. Whilst there is normally a 10% fee charged, the savings accrued are more than worth the expense.

Reduce Medical Debt with Low Cost Treatments

According to the Center for Health System Change and University of Chicago survey of physicians, 80% of doctors offer generic drugs and medication. However, this number drops to just 51% with respect to diagnostic treatments and 40% for hospitalization and outpatient treatment. In order to avoid unpaid medical bills, ask your doctor if he is able to provide any cheaper alternatives.

Negotiate a Better Price to Avoid Unpaid Medical Bills

The Consumer Reports National Research Center found that only 31% of Americans had attempted to negotiate the cost of medical treatment. According to Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, "If you go into the hospital and ask the chief financial officer, you may get a 30 percent discount, but you have to ask for it." Any discounts are completely at the discretion of the CFO, but it is well worth asking.

Charitable Assistance

Whilst rarely advertised, check to see if charitable assistance is available. Low income families that would otherwise be unable to pay medical bills may be eligible for financial aid. It is important that you ask about assistance as soon as possible.

Medical debt doesn't just affect those on low incomes, it can affect anyone at any time. Health insurance with a high deductible that doesn't cover a pre-existing medical condition is of little more assistance than having no coverage at all.

Relevant Articles:
Medical Debt or Credit Card Debt? How to avoid Medical Bankruptcy
Ways to Clear Clear Medical Debt

Sources

Commonwealthfund.org - August 2008

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.