Key Issues in the Avoidance of Medical Debt

Leslie H. Tayne, Esq

Medical debt occurs when you’re unable to pay your healthcare bills. This can be due to insurance lapse, limitation, or simply a medical debt that isn’t covered. This type of debt can be particularly burdensome for low-income and struggling Americans and those without health insurance. Medical debt is prevalent in the United States.

Credit Karma analyzed nearly 20 million members in the U.S. and found that they have a total of $45 billion of medical debt in collections, which averages to about $2,200 of debt per person.

A 2019 study showed that approximately 56 percent of all Americans had experienced financial challenges due to medical bills. On top of this, over half of all medical debt ends up in collections. Having this type of debt hanging over your shoulder can be stressful, but you can utilize methods to avoid this type of debt and work to remove medical debt from your life altogether.

The simplest way to avoid medical debt is to plan ahead. Even if you have insurance, it’s still possible to find yourself over your head in medical bills if you have a high deductible or if a procedure is not covered.

Placing money into a savings account to cover any medical expenses is a great way to reduce your chances of not being able to pay an unexpected medical bill. You’ll want to establish a routine for contributing to this savings account, whether it’s every payday, weekly, or monthly.

If you’re eligible for an HSA (health savings account) or FSA (flexible spending account), these are two excellent options to save for medical expenses. Since these are offered through an employer, checking in with the human resources department about your options would be the best way to know what is available.

You can also open an HSA outside of your employer if your company does not provide a healthcare savings plan option. If neither medical savings plan is available to you, open a high-yield savings account to contribute and save for these potential issues regularly.

Planning for the future is important, but life doesn’t always go according to plan, and medical bills will inevitably come up. If you find yourself with a medical bill you cannot pay, first speak to the provider to discuss payment options. The resolution could be as simple as an insurance coding error. You can also reach out to your insurance company to find ways to get the bill covered and paid.

It’s not uncommon for hospitals and other providers to offer interest-free and low repayment options, even sometimes as little as $5 or $10 a month to repay medical debt, so be sure to communicate and attempt to work out any bill. Don’t ignore the bill, as doing so could escalate the claim to collections.

Suppose you know you’re going to encounter a bill beforehand. In that case, you can negotiate the bill to pay out of pocket and work out a payment plan that will allow you to comfortably pay down your debt without the worry of financial ruin. Keep in mind that when going into a doctor’s office or hospital for a procedure that you ensure all providers take your insurance.

It’s not uncommon to find out that one aspect was not covered by insurance which could be anesthesia or other services. Be sure to verify this before you begin and notate in writing that your insurance must cover all aspects of the service.

If your medical debt goes to collections, there are things you can still do. You have the right to discuss the matter and ask for a repayment plan.

Note that most providers don’t report debt on your credit report, but it can eventually show up on your credit once it goes to collections. As of September 15, (Continued on page 31) LeslieH.Tayne,Esq.

Founder , Managining Director Tayne Law Group, P.C. Leslie is an award-winning financial attorney and author of Life & Debt, with 20+ years of experience in financial debt solutions.