No matter which side of the healthcare debate one falls on, they’d be remiss to say the industry is succeeding in providing quality care at reasonable prices. Whether we have a private plan or insurance through the marketplace, we’re paying more thanks to higher deductibles and increased patient responsibility.
Let’s look at five things Americans need to know about medical debt.
Two in Three Patients Can’t Pay Their Hospital Bills
A developed country with ample resources shouldn’t have a substantial part of its populace struggling to pay for medical care. However, that’s the exact state of U.S. healthcare. After all, 20 percent of Americans under 65 experienced difficulty paying their medical bills despite having insurance. Of that group, 63 percent had to exhaust their savings to cover their healthcare costs. Another 42 percent had to take extra work to keep pace with their medical spending.
But the medical debt dilemma is a problem for Americans of all ages. A TransUnion study estimates that the two-thirds of patients currently unable to pay their hospital bills will jump to 95 percent by 2020!
Medical Debt is the #1 Reason Americans Declare Bankruptcy
The thought of declaring bankruptcy feels like rock bottom for many people. But given how excessive medical costs can be, perhaps it’s no surprise that it’s the number one reason Americans file for bankruptcy.
Chapter 7 bankruptcy has the potential to eliminate all your medical debt, in turn liquidating some personal possessions to pay back the debt. Chapter 13 requires court-ordered payments to be made for three-to-five years but allows debtors to keep their possessions. Chapter 7 will stay on credit reports for up to 10 years and chapter 13 for seven years. They both also carry plenty of expenses via lawyer fees, court costs, and mandatory financial management courses.
Billing Mistakes Are More Common Than You Think 115
The healthcare industry is a non-stop, complex ecosystem; billing mistakes aren’t unusual. Though these mistakes are almost never the fault of the patient, it’ll be their burden if they don’t discover the error.
Be vigilant with every piece of medical mail you receive. Know the difference between a preliminary bill and a final, adjusted one. Check that all your information is correct, that the summary work is accurate, and that the insurance coverage aligns with your explanation of benefits. Don’t settle for vague descriptions of work performed. If a detail looks off, don’t hesitate to call the hospital’s billing department ASAP. Nothing good comes of waiting when it comes to disputing medical bills.
Medical Debt Is Unsecured Debt
The two types of debt people usually refer to are good debt and bad debt. However, the more important terms to know in terms of what can be settled and what cannot, are secured debt and unsecured debt. Secured debt is debt that is tied to physical objects, such as a mortgage to a home, or an auto loan to a vehicle. If debt isn’t being repaid, the collateral gets taken. Unsecured debt, however, is debt that isn’t attached to any physical collateral. Credit cards, personal loans, student loans and medical debt are all examples of unsecured debt.
For credit cards and medical bills, bankruptcy isn’t the only way out. You may be able to reduce some of your medical bill through negotiating with the hospital on your own. You could consolidate your medical debts by rolling them into one consolidated personal loan or balance transfer card with an introductory zero-percent period.
You could even seek a company to settle the debt on your behalf. Despite the popular association with credit debt and settlement companies, Freedom Debt Relief reviews show that debtors reeling from medical debt are routine customers as well.
Medical Debt Affects Everyone
Over 91 percent of Americans had health insurance at the start of 2017 thanks to the Affordable Care Act. Yet, a collective $3.3 trillion was spent on healthcare, averaging to around $10,348 per person. U.S. healthcare spending has increased nearly 19 percent over the last five years, and makes up almost 18 percent of the GDP.
Such increased spending means less favorable policy guidelines and high deductibles. There are far fewer “adequate” healthcare policies floating around today. Even those with private insurance through their workplace might find that their benefits aren’t covering all the care they need.
The future of healthcare in the United States is uncertain. And as bad as the things we do know are, we can still use them to our advantage. Keep these five things about medical debt in mind as you think about your healthcare situation and develop a plan to be better prepared moving forward.