New research released by the Washington D.C. think tank Urban Institute claims one in four Americans are struggling to pay past due medical bills – even those with health insurance. According to data from the study, people struggling to pay back these bills increase their reliance on credit cards and do not save for other emergencies. The Urban Institute study is a reminder that medical bills are still a problem for Americans, even though more than ever now have health insurance.
How Can People with Insurance Accumulate Unaffordable Medical Debt?
There are several reasons why people with health insurance can accumulate medical debt. You may have experienced one of the five following examples.
- High-deductible plans: Many health insurance policies have high deductibles. A deductible is the amount that must be paid before health insurance coverage pays for medical services. The IRS considers individual policies with deductibles of $1,300 or more to be “high-deductible plans.” For families, these plans have deductibles of $2,600 or more. However, many plans have deductibles that exceed these numbers. A high-deductible policy can save people money on their monthly premiums, but it can lead to unaffordable medical bills.
- Out-of-network care: Patients who receive out-of-network services may be hit with thousands of dollars in surprise medical bills. Balance billing occurs when patients are billed by out-of-network providers for services not covered by their insurance companies. In some cases, patients report being billed for more than their out-of-pocket maximums. People do not always have the choice of selecting hospitals or doctors. For example, if someone experiences a medical emergency and is rushed to the hospital while unconscious.
- Chronic health conditions: Health conditions like diabetes, hepatitis C, high cholesterol, hypertension, cancer and mental illnesses require expensive drugs for treatment. Depending on the condition, patients may pay hundreds or thousands for these drugs each month before their deductibles are paid.
- Putting off care: Even when people have health insurance, they may want to avoid out-of-pocket costs if they have not paid their deductibles. This may lead to serious conditions that require more expensive treatments.
- Medical emergencies: Patients who are rushed to hospitals during medical emergencies have no way of knowing what they will pay for services. In many cases, they end up owing multiple specialists and services – some of whom are not covered under their policies. Emergency medical services, emergency room doctors and nurses, and other specialists may bill separately.
Are There Solutions for Reducing Medical Bills?
If you have past due medical bills, you may have experienced nagging phone calls from collection agencies or wage garnishments. The latter can make you default on other debts you may have, such as your car payments, mortgage or student loans. Your credit scores can also take a significant hit.
There are ways to reduce your medical bills. You can request an itemized bill from the hospital to look for errors or haggle on the price for services. If you are able, select a federally qualified health center for future checkups, vaccinations or other basic services. These hospitals offer some services on a sliding scale tied to your income. Depending on your situation, hospitals may offer monthly payment plans or charity to cover the remaining balance.
Avoid taking on more credit card debt to cope with medical bill payments. It may be tempting to take on more debt to make ends meet, but it can make your situation much worse. Raiding your retirement fund to pay medical bills is another common mistake.
Can Bankruptcy Discharge Past Due Medical Bills?
If medical bills are threatening your mortgage, vehicle or retirement savings, bankruptcy may help your situation. Medical bills are nonpriority unsecured debt that can be discharged in Chapter 7 bankruptcy. They may also be discharged upon completing a three to five-year Chapter 13 repayment plan. Exemptions and other mechanisms may protect your home and vehicle. Federal laws may protect some or all of your retirement savings. At The Sader Law Firm, we tell our clients bankruptcy is for people who have assets they want to protect.
You may have multiple options for resolving past due medical bills. However, it may be difficult to assess your available options without the help of a professional, like a bankruptcy attorney. The Kansas City bankruptcy attorneys at The Sader Law Firm can help you discover which solutions best suit your needs.