Is your medical debt out of control?
Image Source: Flickr User faungg's photos
Medical debt continues to be a problem for North Carolina consumers. Medical costs are naturally higher for those that are uninsured or underinsured, but even for those with insurance, medical debt can be a harsh reality of life. When you fall behind on medical bills, it can trigger a collections action that can be noted on your credit report and, in turn, lower your credit score. But there are solutions to deal with medical debt – here’s a look at a couple of ways to reduce medical debt.
Medical Debt Still Drives Bankruptcy
Even with the Affordable Care Act and expanded Medicaid, medical debt continues to drive Chapter 7 and Chapter 13 bankruptcy. Minor medical ailments typically don’t overtax finances, but a serious accident or illness can throw your finances into chaos. If you can’t get treatment without paying upfront, that can drain your bank account resulting in the inability to meet other obligations such as paying your rent or mortgage, paying your car payment, or maxing your credit cards.
This is a slippery slope to financial ruin. If you fall behind on rent, you can be evicted. If you go delinquent on a mortgage, you can see your house foreclosed. Your credit accounts can be closed, your credit score can drop, and you might even lose a job if you are required to keep a good credit score or a security clearance – which is affected by your credit. Even if you have an emergency savings fund, you might find it’s not enough when a medical crisis hits out of the blue.
How to Lower Your Medical Debt
Many people with tight finances choose to skip doctor appointments or delay prescription refills. That’s not a good idea and not the best approach to cutting your medical expenses. However, one way to combat medical debt is to stand up for yourself, haggle, comparison shop and ask questions. When it comes to most other areas of our lives, we’re savvy with money. We clip coupons, look for deals, and compare different shopping sites before buying big-ticket items.
But with medical care, we often skip doing the homework. Just because your physician refers you to a certain lab or testing facility doesn’t mean you have to use it. When you pay coinsurance (a percentage of fees), shopping for a lower priced alternative, all other things being equal, is a smart money strategy. Aside from that, carefully reviewing your bills and statements of benefits is wise. One recent study found that 80% of medical bills contain errors ranging from minor to significant.
Mistakes Accounts for $68 Billion a Year
The same study said patients, insurers, and the government spend close to $70 billion each year due to billing errors. The group that authored the study was Medliminal Healthcare Solutions and their CEO, Jim Napoli, says he believes 90% of hospital bills contain mistakes representing excess charges. In fact, Napoli said there are usually “numerous” mistakes in hospital bills. They said that lack of experience with changing healthcare billing codes might be to blame.
With these facts in mind, it’s quite likely that you’ve been the victim of medical billing errors. When you use your insurance for medical treatments, you’ll be sent an EOB (Explanation of Benefits), and this is something, along with statements from your physicians, labs, and other medical service providers that you should scrutinize carefully. The most common errors are duplicate charges where you are charged two (or more) times for the same test or procedure and also charges for canceled procedures.
Other errors that can be costly are called “upcoding” charges where your diagnosis is coded as something more serious than you were told so that they can charge for a higher level of service. If you went in for the flu but are coded with pneumonia, for example, you’ll be overbilled. A more complex mistake is called unbundling when charges that should have been reduced in cost and billed together are coded as separate line items. It is your right to ask questions and request corrections.
If you fight back against common medical billing errors, you can usually cut your medical costs without losing any services you need to stay healthy. However, if your medical bills are overwhelming and you cannot afford them, bankruptcy might be the answer to your problem. Medical bills are unsecured debt and so can be totally discharged in Chapter 7 bankruptcy and may be deeply reduced in Chapter 13 bankruptcy.
To find out more about the benefits of bankruptcy for medical bills, contact the Law Offices of John T. Orcutt. Read reviews from satisfied clients then call +1-919-646-2654 for a free North Carolina bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
Medical billing error study