How to Manage Unexpected Health Expenses

The stress and burden of paying a large, unexpected bill is exasperated when a patient’s health is also at stake. In past years, lapsed health care bills were the leading cause of bankruptcy in America.

For those who do not currently face an unexpected insurance claim, there are ways to prepare for these unplanned expenses. Opening a savings account and investing your money wisely will help you cope with any surprise health care costs later in life. If you are facing payments that need to be addressed now, there are tools available to help reduce your bill and avoid plummeting further into debt.

Read Your Medical Bill Thoroughly

It may come as a shock, but insurance companies can sometimes get it wrong. Read your bill in full and check that all of the procedures and costs are correct. Go through the benefits of your plan and check if the items on your bill should in fact be covered. Take time to really understand the plan itself. Keep track of the medications and paperwork you receive at each facility and match them up with the items listed on the bill. Learn what you are and what you are not responsible for.

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Procedures may also be coded wrong by the hospital or insurance company. For example, a procedure or visit that was considered preventative may be free on your policy but was not filed as preventative by the insurance company, leaving you with an unnecessary cost. It is important to note that some states have laws that protect patients from being charged out-of-network fees when being seen at an in-network facility.

Strike a Bargain

Discounts are sometimes awarded to customers who pay with cash. Call your insurance provider and ask about available discounts. Contacting your provider quickly will open you up to more options and avoid having to negotiate late fees in addition to existing bills.

In some cases, the price that Medicare pays for services is considerably lower than what insurance companies pay. This indicates that there is a flexibility in the cost of treatments. An insurance company does not want to have to pay a doctor large amounts and the doctor ultimately wants to be paid. Therefore, if an agreement is possible, it will be reached.

Use a Medical Credit Card

Credit cards are not always a great way to manage debt as they can create even more debt in the process. However, some financial institutions offer medical-based credit cards. These cards have little to no interest for a set period of time. This allows patients to pay for medical costs without having to worry about increasing charges. However, as with any credit card, the payments need to be managed carefully.

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Once the interest-free period is finished, any remaining balance will be subject to fees. Failure to pay the interest will cause you to slip further into debt. It is advised to use these cards to pay for bills that you can realistically pay-off during the interest-free period. Any spare money that you have should be paid onto the card each month.

Act Quickly

An ignored bill will not disappear. Part of managing your expenses is paying them quickly. Large, unpaid medical bills will soon be sent to collection agencies. Large bills do not always have to be paid off in-full at once. Some medical providers may offer a payment plan for its customers. If initiated quickly, these plans can be setup and rolled into your monthly living costs until they are paid off. In all cases, being proactive and communicating with your insurance provider will benefit you in the long run.

Crowdfund Your Expenses

Unexpected health care costs may be so large that they ruin a family’s finances. Failure to pay these bills may lead to bankruptcy. If you are faced with mounting health care costs that you were not prepared for, credit cards and savings accounts may not be enough. Crowdfunding websites have opened up the possibility to reach beyond your community for financial help. These websites allow participants to create a profile page detailing their financial predicament and setting a monetary goal.

Those who wish to contribute can do so until the goal is reached. There are downsides to using this method. The money collected via a crowdfunding website is typically taxed as income. This can significantly lower the amount you are able to use towards your bills. In addition, it is not guaranteed that you will raise any money. These websites rely on the contributions of strangers. If you are unable to raise the money required, you will need a back-up plan to avoid collection agencies and being forced further into debt.

Prepare for Unexpected Costs in Advance

Preparing for unplanned financial events is a part of every savvy investor’s strategy. There are a few ways to arrange your investments so that unplanned health care costs do not need to be feared. Even if your deductible is low, out-of-pocket expenses and out-of-network costs can lead to expensive bills. Below are a few ways to manage unexpected health care costs that may pop up in the future.

  • Open a Health Savings Account (HSA) – These accounts are built specifically for health-related incidents and apply to those who have particularly high deductibles. You or your employer can pay into the account over time and the investments can be used towards medical bills. There are tax benefits to these plans, however, only eligible participants may apply.
  • Start a personal savings or investment account – If you are not eligible for an HSA, you can simply transfer money each month into a savings account or start an investment portfolio. Personal accounts have little to no restriction on how much you can withdraw and when making it easy to pull out money when you need it. If you have extra money each month, have it automatically deposited into a savings account. This money can be used for more than just direct health care costs, such as housing and items not covered by your insurance.
  • Get the right insurance plan for you – Choose wisely. As you get older and your circumstances change, choose a plan that reflects your needs. If you are starting a family, you may want to focus on childbirth coverage and office visit costs over other benefits.

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