Receiving medical attention for an illness or ailment can be a stressful time in anyone’s life. The healthcare system in the United States provides quality care, but it certainly comes at a price. Medical debt has been the number one reason Americans are filing for bankruptcy for several years. Medical bills can add up quickly and will end up causing lots of financial burden and stress if not handled properly. One of the most eye-opening medical debt statistics is that a $500 unexpected medical bill is too much to pay for 45% of Americans.
If you don’t take care of your medical bills on time, medical providers will report your debts to a collection agency. This can lead to hits on your credit score if you aren’t careful. The last thing you want while recovering from a serious illness or injury is having to deal with debt collectors and worrying about your credit score. Additionally, a hospital or health care provider can eventually decide to turn you away if you leave your medical debt unpaid for an extended period of time. This can be a big problem if you are in dire need of medical attention.
Here are four pieces of practical advice for dealing with medical bills.
All Debts Aren’t Created Equally
If you are struggling with how to clear medical debt, it’s important to understand that not all debts are equal. Families that have financial difficulties and are unable to pay medical debts tend to have debts in other areas as well. Medical debt should be treated as a low priority debt when compared to other debts like a mortgage or car loan. This is due to the generally low interest rates and lower risk of financial penalties that come with medical debt. Other types of debt can significantly affect your credit score and end up costing thousands if not handled with priority.
It’s also important to note that a hospital or health care provider is less likely to sue you to make a collection on an overdue medical bill than other types of creditors. Getting sued by a hospital for unpaid bills is a possibility, but if your medical bills are relatively small it is an unlikely scenario.
Avoid Paying Medical Bills with Credit Cards
If you have medical bills that have not been paid for an extended period of time, hospitals and health care providers will eventually turn them over to a debt collection agency. It’s important to understand that these debt collectors are not your friends. They simply want to do everything in their power to get you to pay your bill. You will receive a constant barrage of calls from these agencies. This can actually be stopped under Federal Law by simply sending the agency a letter asking them to stop contacting you.
Its common for debt collectors to suggest that you pay off your medical debt with a credit card. They will also recommend that you pay your medical debt ahead of your existing credit card or mortgage debts. You should avoid doing that at all costs. Credit cards will have much higher interest rates than the medical debt. Additionally, missing a credit card or mortgage payment will be a lot worse for your credit score than delaying a medical bill payment.
Ask for Help
Before receiving any medical procedure or treatment, it’s crucial to look into any financial assistance that may be available for you or your family. Federal law requires nonprofit hospitals to establish financial assistance policies and provide instruction, in writing, both at the hospital and on the hospital’s website. You’d be surprised at how many people who are struggling with medical debt don’t understand the financial assistance options available to them. Financial aid is commonly offered at hospitals, its up to you to ask for it. Medicaid is also an option if you are eligible. After you apply and are found eligible, Medicaid can even retroactively help with medical bills incurred over the last three months. Do your research and ask for financial assistance when it’s available.
Filing for Bankruptcy Can Provide a Fresh Start
Sometimes, the burden of paying for medical bills combined with other financial obligations can be too much to bear. When you run out of other solutions for how to clear medical debt, filing for bankruptcy is an option that can help you start fresh. When you file for Chapter 7 bankruptcy, medical debt can be completely discharged. With Chapter 7 bankruptcy, you have the opportunity to keep a lot of your property and assets while getting rid of medical and unsecured debts. A Chapter 13 bankruptcy will typically allow you to set up a 3 to 5 year payment plan for your medical debts. Bankruptcy is a word that has a very negative connotation, but it can actually be a good thing for those struggling with medical debt and extreme financial burdens.
Don’t Let Medical Bills Dictate Your Life
As you can see, medical bills don’t have to dictate your life. Keep the advice mentioned above in mind when making decisions on how to deal with your medical debt and you will be well on your way to becoming debt free.