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Five Ways to Relieve Medical Debt

11.05.2020 by Harry //

The average American will actively do everything they can to avoid a trip to the hospital or the emergency room. The funny thing is that they are not hesitant to receive medical care…just the bill afterward.

Most Americans are so desperate to steer clear of medical debt that many people who need to go to the hospital are calling for Ubers instead of ambulances, opting to pay approximately ten dollars for a ride as opposed to spending one thousand dollars minimum (in addition to their actual hospital visit).

Such practices are not new, and these methods for reducing medical debt are often necessary to keep most Americans financially afloat.

Hospital bills for even relatively minor injuries, such as cuts that are barely deep enough to require stitches, tend to cost thousands of dollars, even if the injured person has decent health insurance. 

Fortunately, there are a few different ways to find relief for medical debt.

Keep reading to discover these methods for yourself. 

Relieving Medical Debt: Five Useful Options 

If you are struggling with medical debt, the situation may feel dire, but it is not entirely hopeless. The debt can seem staggering, but it does not necessarily have to be. Here are five helpful methods for reducing the excess expenses that come with medical bills. 

Establish a Payment Plan 

One of the simplest ways to resolve a bill that cannot be paid in a single installment is to establish a payment plan. Most medical providers can work out a scheduled payment plan that breaks down the debt over several months until the total has been covered.

If you are uncertain if the medical provider would be willing to create a payment plan, there is no harm in asking. Be sure to inquire about billing fees or any additional charges associated with establishing a payment plan, as well. This will allow you to avoid being ambushed by extra costs. 

Establish an Income-Driven Hardship Plan 

You may qualify for an income-driven hardship plan if you have both a low income and a large amount of medical debt. Like payment plans, income-driven hardship plans break medical bills into smaller payments.

Unlike regular payment plans, an income-driven hardship plan can also potentially reduce the amount you owe. You may want to ask your medical provider about both types of plans. Please note that you may have to have or apply for Medicaid to qualify for an income-driven hardship plan. 

Use a Medical Credit Card 

Your medical provider may take medical credit cards if they are not willing to accept a payment plan. Some healthcare providers will carry applications for these cards in their offices. See more information here:

https://www.aarp.org/money/credit-loans-debt/info-2019/paying-medical-debt.html

A medical credit card is designed specifically to cover medical expenses, and in some instances, they are used to pay for specific procedures, such as dental care or eye surgeries. Most of these cards have an interest-free period ranging from six to twelve months. 

However, be wary of deferred interest. If you are unable to pay off your debt within the six to twelve month “interest-free” period, all of the interest that builds up during that time will accumulate and significantly inflate the amount you owe. Most credit cards, medical or otherwise, charge an average interest rate of 20%. 

Hire a Medical Bill Advocate 

If you are feeling especially overwhelmed by your medical debt, particularly if you were in the hospital for a lengthy amount of time and are facing a mountain of bills, you may want to hire a medical bill advocate.

These advocates negotiate on your behalf, and they are experts in reducing medical debt. Medical bill advocates know how to identify overcharges or errors. Do the math to determine whether hiring a medical bill advocate will ultimately save you money before hiring anyone.

Negotiate Costs Yourself 

Lastly, if your medical debt has already gone to a collection and you feel capable of doing so, you might be able to negotiate your medical debt on your own.

Debt collectors have probably bought your debt for a ridiculously cheap amount, and this knowledge will give you leverage when you discuss reducing your bills with them. 

You may also wish to do the work of a medical bill advocate and speak directly with your provider about lowering costs.

Examine your bills closely—even if the thought of looking at them again makes you anxious—to find any charges that appear to be too high or even incorrect. Consider combining this option with a payment plan to reduce your medical debt most effectively. 

Conclusion 

While medical debt is a nightmarish concept for most Americans, for some, it is an unpleasant reality. Excessive medical bills have the potential to rob many people of their finances before even taking overcharges or errors into account (despite insurance coverage, too, in many instances). 

Thankfully, many tactics for avoiding or relieving medical debt are readily available via the internet and word of mouth these days. These methods make it so that getting strapped with medical bills for both planned and unplanned visits to medical providers does not have to be so overwhelming and financially destructive.

Image by camilo jimenez

Categories // Debt, Insurance

The Nuts and Bolts of Obamacare

09.05.2012 by Kevin Mercadante //

The Patient Protection and Affordable Care Act (PPACA) – known as “Obamacare” – was passed into law on March 23, 2010, and its main provisions were recently upheld by the Supreme Court.

The act is the largest and most sweeping healthcare reform ever enacted in the United States and will affect almost every aspect of the industry.

The act contains thousands of provisions that began to be implemented when the bill was passed and will continue to come into law between now and 2020. There are more provisions than can be covered in one article, but here is a summary of the most significant ones, and only those that relate directly to the general public. These provisions are complicated so the descriptions below will be brief.

Healthcare Coverage Provisions

These changes have the most effect on benefits, beneficiaries, exclusions and limitations as they exist in typical modern health plans.

Lifetime benefits. Effective this year, and applying only to new policies, insurance companies can no longer impose lifetime limits on “essential benefits”, like hospital stays.

Dependent coverage. Your children can stay on your health insurance plan up until they turn 26, even if they don’t live with you, aren’t in school, or might be married. This provision is in effect right now.

Dropping coverage. Insurance companies can no longer terminate coverage on patients when they get sick. This is also already in effect.

Preventative care services. Beginning August 1, 2012, all new plans are required to cover certain preventive services like mammograms and colonoscopies that won’t be subject to co-payments, deductibles and co-insurance provisions. Beginning in 2018 this requirement will extend to all existing insurance plans, and will also require check-ups without co-payments.

Pre-existing conditions. As of January 1, 2014, insurance companies will not only be prohibited from turning down customers with pre-existing medical conditions, but they won’t be able to charge higher premiums either. Gender based premium differences will also disappear. The only listed exception to the rule are smokers.

Deductibles. Beginning January 1, 2014, and only on employer sponsored plans, there will be a maximum deductible of $2,000 for single coverage, and $4,000 for other plans.

Subsidies

There are actually several subsidy provisions, but this one is the most sweeping.

Health insurance exchanges. As of January 1, 2014, health insurance exchanges will be set up by the individual states to subsidize insurance premiums for millions of people based on household income as a percentage of the federal poverty level. Insurance premiums will be capped at certain levels based on income relative to the poverty level, with the highest subsidies going to those households earning less than 133% of the poverty level, and the lowest going to those earning up to 400% of it. This is a complex provision, but it appears that the subsidy will come in the form of a refundable tax credit, which means the recipient will get the credit even if they pay no income taxes.

New Taxes

There are many tax changes pursuant to the act, but here are the ones that are most relevant to the largest number of people.

Payroll reporting. For 2012 and beyond, employers must report on your W2 the value of health insurance benefits they provided during the year. There are no apparent tax consequences to this – yet!

Medical deductions for income tax purposes. Currently, there’s a limitation applied to the deductibility of medical costs for income taxes; you must first reduce the amount of your medical expenses by 7.5% of your adjusted gross income and deduct the difference. Beginning January 1, 2014 the 7.5% reduction will rise to 10% of adjusted gross income.

Translation: fewer people will be able to deduct medical expenses in the near future.

Direct taxes. As of January 1, 2013 there will be an additional tax of .9% on earned incomes above $250,000 for married couples filing joint, and $200,000 for singles. The Medicare tax is also being increased. An additional 3.8% Medicare tax will apply on “unearned income, specifically the lesser of net investment income or the amount by which adjusted gross income exceeds $250,000 for married filing joint, or $200,000 for singles.”

“Cadillac insurance plans”. High cost insurance plans—defined as those costing in excess of $27,500 for families and $10,200 for individuals—will have an excise tax imposed on them beginning in 2018. The tax rate: 40%.

Penalties

In addition to new taxes, the bill imposes penalties.

Penalty for non-coverage. As of January 1, 2014 the act will impose an annual penalty on those who don’t have health insurance plans. The penalty will start out as the higher of $95 or 1% of gross income, but rising in 2016 to a minimum of $695 for indivduals and $2,085 for married filing joint, or 2.5% of income. This penalty was a major part of the recent Supreme Court case on the act, and was upheld with the logic that Congress has the authority to “levy the penalty as a tax”, rather than an attempt to force people to get insurance coverage.

Employer penalties. Beginning January 1, 2014, employers with more than 50 employees will be subject to a penalty of $2,000 per employee if the employer does not provide health insurance coverage for full-time employees.

Other provisions

Health insurance for Congress. Beginning in 2014, not only members of Congress but also their employees will be moved out of the Federal Employees Health Benefits Program, and into a plan provided under the act. In effect, Congress will be subject to the same health care plans the rest of us are.

Medicare Part D. By 2020 Medicare Part D for prescription drug coverage will be ended.

There are numerous other provisions that will affect both Medicare and Medicaid that are too complex to discuss here. Due to their complex nature, these provisions has been simplified – this is a summary presentation of the act, not a line-by-line breakdown.

Also keep in mind that the bill is still moving through the system and will be amended as it does. Any of these provisions could be modified, reduced, expanded or even canceled before, during or after implementation.

What are your thoughts about Obamacare?

*******

Categories // Insurance, Taxes Tags // healthcare

How Insurance Protects Against Debt

09.16.2011 by Guest Author //

If there are two topics within the financial world that many struggle to fully understand, they are Insurance and Debt.  What’s even more difficult for many to understand is how exactly they relate to one another. Can insurance keep you out of debt, and how do you go about finding the best life insurance types and rates for your specific situation?

Many people are so confused by the entire process of insurance and how it can affect debt that they simply never address it.  This is obviously not the best answer, spending a little time to truly understand your debt as well as the scope of your insurance coverage can save you or your loved ones a lot of future headaches.

How insurance can affect debt

Though it’s an unpleasant topic, planning for the injury of death of a spouse is a responsible and necessary thing to do. Without a death benefit from a term life insurance policy you’ll be left paying for their funeral expenses out of pocket but and will also be responsible for all shared debit. This is a situation in which no one wants to find themselves, particularly during an already stressful time such as the death or disability of a spouse.

Let’s take some time to define exactly what term life insurance is, and what it can do for us.

“Term life insurance” refers to a policy with a fixed payment rate for an agreed-upon “term,” or period of time.  During that time, the payments you’re responsible for will neither increase nor decrease.  It is essentially a guarantee that locks you, as a customer, into a commonly low payment for an extended period of time – the term.

Term life insurance is frequently chosen over permanent life insurance because it is usually much less expensive, depending upon the conditions of the policy.  Variations of the term life policy can allow for renewals under the same terms if certain conditions are met, or allow for similarly beneficial renegotiations.

So far so good, right?  But what does this actually mean for you?

Benefits of term life insurance

Many types of life insurance are expensive, which leads a lot of people to assume no decent policy is affordable for them.  Term life insurance changes that by locking you into a rate you’re able to meet  for the length of the “term,” after which you may be in a better financial situation and may then have greater options.  For example, those who have retirement benefits coming their way eventually may wish to take out a term life insurance policy in the meantime, since by the time it expires their family will be provided for other ways.

Term life insurance policies are very affordable and something anyone with debt is wise to consider. With a little research and some shopping around online, you’ll easily be able to find a customized policy that can help keep your family out of debt in the event of unexpected death.

Insurance ties directly into managing your debt by keeping your assets and your loved ones protected. Life is truly unpredictable, and knowing that you have taken the necessary steps to make sure your family is looked after can be a very comforting thought.

It’s not as confusing as it may first appear and there are certainly many resources at your disposal to help navigate the way. It is well worth your time – and peace of mind – to understand and consider term life insurance.

Protecting what is yours is not mandatory, but if you can, why wouldn’t you want to?

****

Article by Philip J Reed on behalf of Intelliquote.

Categories // Debt, Insurance Tags // Debt, family, Insurance

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