6 Ways to Prevent Medical Debt & Bankruptcy
Medical bills are the number one source of debt among Americans, according to a study by NerdWallet. It’s easy to underestimate how much medical care is going to cost you — especially if you don’t have insurance — which means you could be at risk for acquiring medical debt and even declaring bankruptcy.
The Affordable Care Act has prompted many Americans to buy a high-deductible health care plan which means more households are paying significant many Americans will run into financial problems. Here are six smart ways you can prevent medical debt and bankruptcy:
#1: Review Your Health Insurance Plan Closely
Are you really covered for most or all of your necessary healthcare expenses? While Obamacare mandates are in place to ensure Americans have comprehensive coverage, you may have chosen a plan that will leave you paying a significant amount in co-pays or other costs that aren’t covered medical expenses. Review your plan closely and consider switching during open enrollment period if you aren’t confident you’re covered.
#2: Avoid Lapses in Coverage
All it takes is one accident or trip to the emergency room to take a few thousand dollars out of your savings account. Make sure you’re adequately covered by keeping an eye on coverage dates. If you're changing jobs, going through a divorce or losing employer-paid health insurance coverage for any reason, avoid a lapse in coverage with a short term health insurance plan. You can purchase these plans for short periods of time so you’re covered for basic expenses.
#3: Check for Billing Errors
Billing mistakes such as transposed figures or incorrect classifications can end up adding a few hundred dollars to your final bill. In 2013, Medicare investigations by the Office of the Inspector General revealed 49 percent of Medicare claims had billing errors — that’s almost half of all claims. If you don’t take the time to review your bills in detail, you may end up being responsible for costs that aren’t technically yours.
#4: Ask About Payment Plans
Some doctors and hospitals will be willing to set up a payment plan if you promise to pay off the entire bill by a certain date. This can prevent your debt going straight to collections but you do need to reach out to the billing department as soon as you receive your bill to prevent that from happening. Talk to your healthcare provider about all available options and explore the idea of in-house financing if you have good credit.
#5: Get Supplemental Coverage
If you want some peace of mind that you won’t struggle with medical debt in the near future, consider Medical Cash Benefits plans that pay you a lump sum payment for any expenses incurred after an incident. You can choose a critical illness plan, hospital indemnity plan or even an accident and also take care of your deductible. One of the biggest benefits of these plans is you can use that money for anything you need — it doesn’t have to be medical-related. This makes it easier to take care of your financial situation with less stress when you’re sick, injured, or in the hospital.
#6: Get Authorization for All Procedures
Even if you find yourself in desperate need of medical care, make an effort to reach out to your insurance provider to get authorization or a pre-treatment estimate for all procedures, including major surgeries and medications. Knowing what you would be expected to pay out of pocket well beforehand can help you save money and organize your finances. This can prevent a high debt load and also reduce your risk of bankruptcy. Take the time to shop around for the best fees and options so you don’t set yourself up for a medical bill-related financial disaster.