Did you know that medical debt is the most frequently cited reason why Americans file for bankruptcy? And those who go into debt are not simply the ones without insurance. Even with health insurance, a single medical emergency or serious diagnosis can generate unaffordable medical bills. It is scary to think how close each of us is to financial peril.
The reassuring news is that you have several options when it comes to managing and resolving medical debt, which we discuss below.
Negotiating bills and contesting coverage
You often can’t shop around to find the best price on medical care – especially in an emergency. But you may have more power than you realize when it comes to addressing the bill after receiving care. Here are just a few of the ways you might lower your out-of-pocket costs and manage medical debt:
Contest suspicious hospital charges: Get an itemized hospital bill and carefully look through it. There are sometimes mistakes on it or things that you should not have been charged for. You can contest these charges with the hospital and they may be willing to remove them.
Contest problems with insurance coverage: Hospitals usually begin by billing your insurance company first, and whatever the insurer won’t pay gets passed on to you. Insurance companies will try to maximize their own profits by minimizing payouts on any given claim. If you see something on your bill that should have been covered under your policy, you can contest those charges with your insurance company and petition to have them covered.
Make a payment plan with the hospital: After you’ve done as much as you can to lower your bill, contact the hospital again to set up a payment plan. Hospitals are usually willing to work with you because their only alternatives are to send a bill to collections or sell it to a debt collection agency. By setting up a payment plan, the hospital gets the money it is owed (over time) and you avoid the credit damage that results when bills go into collections.
Bankruptcy can wipe out medical debt
Filing for bankruptcy is an extreme option, so it shouldn’t be used if you have other ways to resolve medical debt. But if the bills are simply too high to ever be affordable, filing for bankruptcy can be a lifeline. If you qualify for Chapter 7, you can have all (or nearly all) of your medical debts discharged, because these are considered “unsecured” debts, meaning debts without collateral.
Chapter 13 bankruptcy is also an option that could allow you restructure medical debt into an affordable repayment plan and pay it off over three to five years.
To better understand which debt relief option is right for you, please contact an experienced bankruptcy attorney in your area.