Money Smarts Blog
Tips to Manage (or Avoid) Medical Debt
Oct 31, 2022 || Allison Anderson, Senior HR Specialist
A recent nationwide poll by the Kaiser Family Foundation found that more than 100 million Americans (including 41% of adults) are saddled with some type of medical or dental debt. And one in five of those don't ever expect to pay it off.
Yeah — my jaw dropped too. I think it’s safe to say, a lot of us have felt the pinch from an unexpected doctor’s visit or trip to the emergency room. Heck, even a planned visit to have my baby left us with bills that never seemed to stop coming. But when medical debt starts to pile up and prevents well-meaning people from doing ordinary things like saving for their child’s education or, worse, blocking them from future care — it’s time to take a long, hard look at ways to manage (and hopefully avoid) medical debt.
PRO TIP: ASK ABOUT PAYMENT OPTIONS Payment options may be available (just not advertised). Ask someone in the billing department to explain the payment options that are available to you without negatively impacting your credit or good financial standing.
1. Make sure you’re in network
When a healthcare provider has contracted with your health insurance plan, they’re known as in network and have agreed to discounted services. Oftentimes, out-of-network providers will double in cost. It’s definitely worth your while to check with your insurance to make sure your primary care physicians, dermatologists and more are in network to help keep costs down.
PRO TIP: REQUEST A SUMMARY Request a summary of your benefits and coverage from your insurance company to help you understand what your health insurance covers — and what it doesn’t. After a visit or procedure, you can also request an itemized bill to check for errors, like double billing and inaccurate insurance reimbursement.
2. Watch for open enrollment
Open enrollment usually happens once a year and is a period of time where you can sign up for health insurance or adjust your current plan. In most states (Illinois and Iowa included), the 2023 open enrollment period begins November 1, 2022, and ends January 15, 2023.
What if you miss open enrollment? It’s possible you may qualify for a special enrollment period if you’ve recently experienced a major life event, such as marriage, divorce, the birth of a baby or loss of a job.
PRO TIP: INCOME-BASED INSURANCE You may qualify to save on healthcare insurance based on your income. Visit Healthcare.gov to see if you can save on Marketplace premiums, or qualify for Medicaid or Children’s Health Insurance Program (CHIP).
3. Stay healthy
The healthier you are, the less likely you are to land yourself in the hospital — which means you won’t get a bill anytime soon. A lot of health issues can be prevented through regular exercise and a healthy diet. Of course, sickness is largely unavoidable (especially if you have kids in school … they may not be the best about bringing their homework back with them, but they’re great at bringing the latest illness). In those cases, grab your over-the-counter meds and home tests when you can and stick with your in-network physicians for regular appointments.
4. Decide how you want to manage your costs
If you’re an older adult or someone with a serious or chronic illness, a lower deductible plan might be a good fit. That means more money will be taken out of your paychecks to pay for insurance. On the flip side, a high-deductible plan could make sense for someone who doesn’t expect any major health issues in the near future. These plans may also offer a health savings account (HSA), which comes with a triple tax benefit for federal taxes:
- Contributions reduce your taxable income
- Investment growth is tax-free
- Qualified withdrawals for medical expenses are tax-free
I opened my HSA five years ago when I started working for IHMVCU. For me, the benefits outweighed the “scariness” of the costs that come with a high-deductible plan. My contributions earn interest, and the funds roll over — in other words, it’s not a use-it-or-lose-it account. I can feel good knowing my family is covered in the event of a medical emergency, and I can use it toward retirement when I get older. Also, some employers offer a contribution match. Take advantage of that free money when you can!
The best thing you can do to manage your medical debt is ask questions - the more, the better. Ask to negotiate bills. Ask if you can enroll in a repayment plan. You have options to help, but you'll never know if you don't ask.
