Finance
February 2, 2024
Surprise medical bills feel like they come out of nowhere. You can find yourself faced with a bill from a doctor’s appointment, urgent care visit, or hospital stay, months or even years after the event. Unexpected medical bills are becoming problematic for many Americans. In fact, According to Forbes, 50% of Americans currently carry medical debt — a new take on the idea of “chronic medical conditions.”
Sometimes your unexpected medical bills show up because insurance denies a claim, and other times an overlooked bill makes its way to collections. Additionally, you may find that their bills are much higher than you expect, even for routine procedures or those partially covered by insurance. Of the formerly mentioned percentage of people carrying medical debt, more than half of them owe $1000 or more.
But there are solutions to handling your debt due to unexpected medical bills, making this a less stressful situation.
Unexpected Medical Bills Happen for a Reason
While it’s normal to expect bills for medical treatments, even when you have insurance, the dollar amount and number of those bills can be staggering. In many cases, your surprise bills come from additional providers that you didn’t realize played a part in your treatment, such as anesthesiologists and radiologists. If your insurance company considers these providers out-of-network, the charges for their services may be far more than what you expect.
Common reasons for unexpected medical bills include:
- Balance billing: Out-of-network providers bill you what your insurance company does not pay.
- False charges and fraud: Medical bills can contain unintentional but unnoticed mistakes. However, you could also be billed for procedures that you did not receive or for physician services when you actually saw a technician.
- Out-of-pocket expenses: This includes deductibles, copays, and coinsurance.
- Identity Theft: Someone steals your medical information and uses it to see doctors or get prescriptions. Perhaps you get a notice from your insurance carrier that you’ve reached your benefits limit when you know for sure you haven’t.
Fortunately, there are ways to avoid unexpected medical bills, which sometimes can reduce the overall number of bills you receive. You may not be able to eliminate surprise bills forever, but you can take steps to handle them with less stress and hassle, providing you with more peace of mind regarding your finances.
6 Steps to Handling Your Unexpected Medical Bills
Do not ignore your unexpected medical bills. Take them seriously and be diligent about them. With the right decisions and some effort, you may lower your chances of receiving these bills in the future.
1. Negotiate with Your Provider and Insurance Company
You have the option to negotiate medical bills, and therefore you should avoid paying bills as soon as they arrive. For instance, negotiating to pay the full balance in cash will often get you anywhere from 10% to 30% off your bill.
There’s no harm in asking your provider for a discount, and the same stands true with your insurance company. You can ask for a one-time exception, or appeal the amount if you believe your insurance should cover more of it.
2. Check for Accuracy
Is your medical bill accurate? Hospitals, doctors, and insurance companies can all make mistakes. If you see something on your bill that doesn’t seem right, or you’re wondering why particular charges are so high, ask!
Request an itemized bill and ask your doctor’s office to help you understand everything that was part of your medical treatment. If you’re charged for something that wasn’t part of your medical visit, you should dispute it.
3. Prepare Accordingly
Unexpected bills don’t have to be a surprise, either. You can prepare for these expenses before they happen by creating an emergency fund and saving a portion of each paycheck.
Those surprise bills aren’t fun, but paying them can provide you with more peace of mind and better financial security. A few thousand dollars is typically enough for most emergency funds, but it ultimately depends on your specific situation.
Additionally, contact your insurance company and get the facts about a procedure ahead of time. Ask for the list of providers involved with your procedure, and make sure every one of them is on your in-network list. You may have the option to choose a different provider for a specific part of your procedure if you want to reduce the chances of surprise medical bills from out-of-network charges.
4. Stay Within Your Network
Stay vigilant on keeping your medical visits and procedures within network. Communicate with your doctor about your desire to stay in-network when referring you to other specialists or labs. Additionally, many medical facilities have satellite campuses that may not be in-network. So, it’s in your best interest to verify which offices are the right ones you want to use.
Seeking care outside the network may be inevitable in a true emergency. But for scheduled and planned procedures where you have some flexibility, make sure you’re using providers in your network to keep your costs down and those surprise bills at bay.
5. Prepay for Procedures
Did you know you can prepay for some types of medical procedures? Medical offices may offer discounts for prepaying, potentially eliminating a bill. It doesn’t hurt to ask about prepayment options, but know that not all procedures are eligible, and not all providers offer this.
6. Convert Equity in Your Home
If you’re a homeowner who needs to pay off a significant amount of surprise medical debt, having equity in your home can provide you with some additional options at hand. For instance, you may qualify for a home equity loan, which would allow you to access some of the home equity built up in your home. However, loans like these can be difficult to obtain for those with lower credit scores. Another solution that can allow homeowners to convert their home’s equity is through a sale-leaseback. This can help you to pay off your medical debt, getting you back to a more solid financial footing.
How does a sale-leaseback work? You can simply sell your home, converting the equity into cash, while staying in the home as a renter for as long as you need. Some solutions even allow you to repurchase later on.
Other alternatives to home equity loans include:
- Applying for a home equity line of credit
- Cash out refinance
- Reverse mortgage
The No Surprises Act of 2022
The No Surprises Act took effect on January 1, 2022. This Act bans most unexpected medical charges, including those from out-of-network providers. For example, if you have an emergency and an ambulance takes you to an out-of-network hospital, the Act requires your insurance to charge you as if the ambulance took you to an in-network hospital. Planned procedures also qualify, but they are not retroactive under the Act.
Getting caught off guard by a medical bill is more than stressful, but it doesn’t have to remain that way. You have many options at your fingertips to get back on track. Preparing for the unexpected, doing your research ahead of time, being diligent about the accuracy of your current bills, looking into other financial options to help pay bills, and understanding the No Surprises Act are considerable ways to keep your debt under control and possibly eliminate it.
The new and innovative sale-leaseback solution can offer many homeowners an alternative solution that get the cash they need to pay off medical bills. If you think this may be the right option for you, reach out to an expert to learn more.
Key Takeaways
While it’s normal to expect bills for medical treatments, even when you have insurance, the dollar amount and number of those bills can be staggering. But there are solutions to handling your debt due to unexpected medical bills, making this a less stressful situation. If you are still unsure of alternative, stress-free options to handling your debt after reading this article, consult a financial advisor to discuss your options.
