The Dos and Don’ts of Planning for Medical Payments

Even with medical insurance, a severe injury or illness can wreak havoc on a family’s finances. Deductibles and co-pays may end up costing thousands of dollars out of pocket. So how can you prepare for the unexpected and avoid worrying about making medical payments?

DO: Negotiate Expenses With Your Medical Provider

If an expense is not covered by insurance, try to negotiate with your health care provider for a lower fee or longer payment timeframe. If you can come up with a lump-sum payment, some providers will settle the debt for less than you owe. If not, many providers will work with you to set up an interest-free payment plan on a schedule you can manage. If you have difficulties with the billing department or don’t understand your charges or payment options, a hospital ombudsman can assist you.

DON’T: Turn Medical Debt Into Credit Card Debt

As much as you want to stanch the flow of incoming bills, you should avoid paying them with a credit card if you won’t be able to pay off the credit card in full in the near future, says Planting Money Seeds blogger Miranda Marquit.

If you do decide to roll the debt into a credit card, be aware that FICO, which developed the credit scoring model used by most lenders, has announced a new scoring model that differentiates medical from nonmedical collection agency accounts and “downgrades the importance and impact that some medical debt has on your credit score,” Marquit says. Of course, there is always the potential for negative effects on your credit if you don’t pay any debt on time.

DO: Check Your Medical Bills for Errors

Check your medical bill for errors or overcharges before you start paying. Ask for an itemized bill and look for words that raise red flags, including “kit,” “tray,” and “room fees” or “room and board.” These terms cover charges for several items, which you may see listed separately.

For example, the hospital may charge for a surgical kit and tray, and then wrongfully charge for surgical instruments. Finding and disputing errors can potentially save you hundreds of dollars.

DON’T: Think You’re Alone With Your Medical Expenses

Remember that you’re not the first person or family to experience steep out-of-pocket medical bills. The U.S. Census Bureau’s National Health Interview Survey found that one in five people are in a family having problems paying medical bills; one in 10 are in a family with medical bills that they are unable to pay at all.

DO: Consider Seeking Help from Organizations to Pay Medical Expenses

Many cash-strapped consumers have turned to organizations for help with medical expenses, so that’s an option in the event of a cataclysmic illness or injury. For example, United Way, through its 2-1-1TM program, offers 24/7 information and referral assistance to individuals and families who are eligible for medical assistance.

Medical problems and medical expenses can seem overwhelming, but don’t simply ignore the onslaught of bills. With all the changes in the health care industry, doctors might be quicker than you expect to turn unpaid accounts over to collections agencies.

And losing sleep over unpaid bills and bad credit can further compromise your health.