Medical debt is a significant issue in the United States, affecting millions of individuals and families each year. It’s one of the leading causes of personal bankruptcy in the United States.
It’s one of the leading causes of personal bankruptcy in the United States. In fact, many bankruptcy filers cite medical bills as a primary reason for their financial distress.
Healthcare costs in the USA are among the highest in the world, and even individuals with health insurance coverage may face substantial out-of-pocket expenses, including deductibles, copayments, coinsurance, and non-covered services. Additionally, individuals without health insurance are particularly vulnerable to accruing significant medical debt.
Accruing Medical Debt
Despite efforts to expand access to health insurance through programs like the Affordable Care Act (ACA), millions of Americans remain uninsured or underinsured, meaning they have inadequate coverage to protect them from high medical expenses. For these individuals, even routine medical care can result in financial hardship.
Patients may incur unexpected medical bills when they receive care from out-of-network providers, even if treated at an in-network facility. Surprise medical bills can result in significant, unforeseen expenses that contribute to medical debt.
Medical debt can have serious financial consequences for individuals and families, including damage to credit scores, difficulty obtaining loans or mortgages, wage garnishment, and even bankruptcy. Medical debt can also exacerbate existing socioeconomic disparities and contribute to financial instability.
Medical debt collectors may employ aggressive tactics to recover unpaid bills, including repeated phone calls, letters, and threats of legal action.
While there have been efforts made to address medical debt in the USA (including policy proposals to expand access to affordable health insurance coverage, increasing transparency in healthcare pricing, capping out-of-pocket expenses, and implementing regulations to protect consumers from surprise medical bills) medical debt remains a challenge.
Here are a few steps you can take to help alleviate or protect yourself from unexpected medical debt:
- Maintain your health insurance coverage.
- Familiarize yourself with the details of your health insurance plan so you understand what is covered and what you’re responsible for — including deductibles, copayments, coinsurance, coverage limits, and out-of-network benefits.
- Get from healthcare providers who are in-network with your insurance plan whenever possible so you can take advantage of their negotiated rates.
- Always ask about costs — including physician fees, facility fees, diagnostic tests, and medications — before undergoing a treatment or procedure. You can also request an estimate of costs and verify coverage with your insurance company to avoid surprises.
- Discuss options for negotiating a bill or setting up a payment plan if you receive a bill you can’t afford to pay in full. Some providers may work with patients to arrange payment schedules or offer discounts for prompt payment.
- Look into providers who offer financial assistance programs for patients who are uninsured or underinsured and unable to afford their medical bills.
- Take advantage of HSA and FSA plans through your employer or health insurance plan if they are available and make sense for you and your family. These can help you budget for healthcare costs and reduce your taxable income.
Taking proactive steps to understand your healthcare coverage and communicating with healthcare providers can help avoid and reduce medical debt and protect your financial well-being.
Source:
https://www.kff.org/health-costs/issue-brief/the-burden-of-medical-debt-in-the-united-states/
https://www.debt.org/bankruptcy/medical/
https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/11/fact-sheet-the-biden-administration-announces-new-actions-to-lessen-the-burden-of-medical-debt-and-increase-consumer-protection/
https://www.npr.org/sections/health-shots/2024/03/01/1234998635/why-a-financial-regulator-is-going-after-health-care-debt
https://www.investopedia.com/personal-finance/medical-debt-what-do-when-you-cant-pay/
https://www.consumerfinance.gov/about-us/blog/know-your-rights-and-protections-when-it-comes-to-medical-bills-and-collections/