How to Reduce Medical Debt

By the Society of Certified Senior Advisors

Medical debt is the most common form of debt affecting seniors, according to Financial Web’s article on Personal Debt for Seniors. With financial demands including limited “retirement income, rising health care costs and the expense of long-term housing,” seniors are finding it challenging to pay not only medical bills but all bills. This can be especially difficult if medical debt had already been building up prior to retirement and before the senior had Medicare coverage.

An individual facing illness or disease acquires bills related to those conditions that can quickly become overwhelming and unmanageable because of the number of doctor visits, tests, prescription drugs and possible hospital stays. Health insurance policies have coverage limits, leaving the individual to pay the remaining balance.

The Ohio Department of Aging recommends, “Avoid using credit cards and do not mortgage your house to pay medical bills. Charging expenses to a credit card means you lose the ability to negotiate with a provider. Obtaining a second mortgage to pay medical bills could result in foreclosure if you fall behind.”

Even though Medicare and Medicaid will cover some medical costs, they may not provide full coverage for each doctor visit or event. Therefore, the senior is fully responsible for the difference including premiums, deductibles, copays, coinsurance, prescription drugs and long-term care costs.

AARP’s description of general coverage provided by Medicare Parts A and B explains this point:

Medicare Part A (hospital coverage):

• Premium – For most people, the Part A monthly premium is free.
• Deductible – You must pay a deductible before Part A begins paying a share of your costs. If you have multiple hospital stays in one year, you may pay this deductible for each stay.
• Copays – You pay a daily copay after you’ve stayed a certain number of days in a facility. This includes hospital stays, skilled nursing care and some parts of hospice care.
• Coinsurance – You pay a small coinsurance payment if you use inpatient respite care for hospice patients.

Medicare Part B (medical coverage):

• Premium – You have to pay a monthly premium. Your monthly premium is determined by your yearly income.
• Deductible – You must pay a deductible before Part B begins paying a share of your costs.
• Copays – Outpatient hospital services have copays that range in price.
• Coinsurance – For example, after you pay your deductible, Part B may pay 80% and you would pay the remaining 20% as coinsurance for the cost of your care.

Additionally, a senior’s medical costs are determined by the level of coverage he or she has for prescription drugs and long-term care.

It is easy to see how medical costs can escalate. Having a payment plan for medical bills will help decrease the level of debt and help avoid added interest rates or penalty fees. Rather than charging expenses to a credit card, taking out a reverse mortgage or avoiding payment all together (resulting in a collection agency taking over your account), consider some more proactive ways of dealing with short- and long-term medical debt.

Doctors and hospitals do provide options to help patients address the medical debt they may be feeling overwhelmed to pay. Individuals may also qualify for financial assistance through various hospital, charity or government programs.

Here are some suggestions for paying medical bills, which at the same time will help alleviate some out-of-pocket costs:

1. Talk with your physician’s office or the hospital’s billing department about a discount. In a doctor’s office, while you are there for your appointment, ask the person who is in charge of billing if they would allow you a discount for services, such as matching the Usual and Customary Fee allowed by health care plans. Another approach is this: If you are able to pay a portion of the bill at the time of your visit, see if you can negotiate immediate payment for a certain percentage discount. A hospital bill is often received some time after your hospital stay, but you can still approach the billing office for a discount.

Finally, work out a payment plan with your doctor or the hospital for a low monthly amount. Make it something you can afford. As long as a patient regularly makes payments, a doctor and/or hospital is likely to accept this arrangement. Hospitals have debt programs that assist patients in coming up with a plan for payment, as well as the possibility of a reduction in the total bill.

2. Review the bill. This is especially true for hospitals because the bills can often be complicated and long, and hospitals can make mistakes in their billing. For example, bills may include unused products or services that were never provided. When the bill comes to you, look over it carefully for errors before paying it. If the hospital only provided you with a summary, ask for a copy of the itemized list of charges. If you have trouble understanding your bill, ask the hospital’s billing department to go over it with you. Hiring a Claims Assistant Professional can be helpful with large, complicated bills. They do charge a fee, but it may be worth it if they end up saving you a significant amount of money.

3. Find financial assistance with your bills and prescription drugs. Quite a few options are available in this category and most are not well known.