In the United States, we pay more per person for medical care than any other country – over $10,000 each.
Only, not everybody can pay.
Even if you have insurance, Obamacare or Medicare, the expenses you’re responsible for can pile up higher than your income.
137 million Americans face financial hardship because of their medical bills. That’s more than one of three people.
According to TD Ameritrade, medical bills are the main reason people remove money from their retirement accounts before they’re old enough to stop working.
66.5% of bankruptcies are caused by medical debts.
Medical providers refer $80 billion in unpaid bills to debt collectors every year. After all, doctors, clinics, and hospitals have bills to pay too.
It’s frustrating for people, especially those who have worked hard, kept their expenses low and tried to save money. Everyone can stop charging luxuries to their credit cards, but if ill health strikes, controlling what you must pay is more difficult.
According to a survey by the National Council on Aging, over half of social service professionals said that medical debt was the biggest problem older Americans had.
25% of credit card debt comes from paying medical bills.
However, you do have options.
Shop Around
When you’re able to, compare prices. According to Dr. Marty Makary, the author of The Price We Pay: What Broke American Health Care — and How to Fix It, prices for many medical procedures vary a lot.
Example: Dr. Makarty says a kind of heart surgery that costs $500,000 at one hospital may cost just $44,000 at another hospital.
That $456,000 price difference is enough to drive many Americans into bankruptcy. And yet the quality of care is the same for both hospitals.
MDSave.com and Sesame.com allow you to find out which hospitals are less expensive for what you need.
Fortunately, Medical Providers are Not Financial Institutions
They do want to be paid and will bill you.
However, unlike credit card companies and other financial institutions, medical providers usually don’t charge interest. Or stringent late fees.
Plus, medical debt not as likely to affect your credit record. The three major credit reporting agencies don’t show medical debt that’s less than six months overdue. And if it’s later paid by insurance, they remove it from your record.
Negotiate
First, talk your bill over with an administrator. Make sure you do owe as much as they say. Make sure you received every service on your bill.
Discuss your income, other expenses and how much you can pay. If it’s a nonprofit hospital, it’s required by the IRS to provide charity care and to give financial assistance to people with low incomes.
The definition of “low” income can vary, up to 400% of the federal poverty line (that’d be $50,000 for one person and $68,000 for a couple).
If you don’t qualify for that, discuss making regular payments to them.
According to Jenifer Bosco, an attorney with the National Consumer Law Center, many hospitals will work with you as long as you show good faith and make the payments you can. And, because hospitals don’t charge interest, you can make headway paying off your debt even with low payments – as long as you do make them.
You want to keep the hospital from selling your bill to a collection agency, and most will keep it in-house if you are making good-faith payments.
Don’t Go Deeper Into Debt
Don’t take out a reverse mortgage or pay off medical bills with a credit card.
You could lose your home. Credit card companies will charge you high rates of interest, making it hard to get ahead.
If you borrow against a retirement account and can’t pay it back, you lose your retirement savings – and may incur a penalty if you’re under age 59 1/2.
If a Credit Collection Agency Does Own Your Medical Debt
If they contact you, you have 30 days under the Fair Debt Collection Practices Act to request proof you owe it. Until they prove what you owe, they must stop going after you.
And mistakes are common.
They may eventually go to court to collect. If they win, they can garnish your wages.
However, they cannot garnish Social Security, federal employee pensions or VA benefits. Generally, they cannot touch private pensions either.
However, they may be able to seize money in your bank account that came from a private pension (but not any federal money).
They could also levy your brokerage or other financial accounts if they can find them.
Therefore, it’s best to make good faith payments so the debt never winds up in court.
RIP Medical Debt
This is a charity founded by two former debt collectors.
Like debt collection agencies, they use donations to buy unpaid bills from medical providers for pennies on the dollar – they say $1 buys $100 in debt.
However, instead of collecting it, they forgive it.
Over the past five or so years, they’ve wiped out $1.396 billion in medical debt.
Qualifications for Approval
Generally, they look for people whose incomes are less than two times the federal poverty level – or whose medical debt is at least 5% of their income.
They’ve helped many older people and veterans.
Local Churches and Charities
If you’re suffering financial hardship because of medical debt, check with local churches and charitable organizations. Some of them are raising money for RIP Medical Debt. Some may prefer to help local people themselves by paying off your debt.
If You’re Doing Well . . .
Consider donating to RIP Medical Debt yourself. You can choose which kind of people you’d like to help (veterans, seniors, cancer victims etc.)
Just go to ripmedicaldebt.org and check them out.
