One of the most costly unanticipated expenses you could experience is a medical bill. Accidents happen, as do illnesses and other maladies, so don’t feel bad if it happened to you. According to a Henry J. Kaiser Family Foundation study, one-in-five working Americans has trouble paying medical bills.
What’s more, having insurance doesn’t guarantee these costs won’t have a significant impact on your family’s finances. If this has already happened in your life and you’re looking for some wise advice for dealing with medical debt, consider the following suggestions from the National Consumer Law Center (NCLC).
Ask for Financial Assistance
Under Federal law, nonprofit hospitals must offer financial assistance, including free and discounted services for patients who are deemed eligible. The organization’s exact requirements for eligibility must appear on its website.
However, even for-profit hospitals sometimes agree to lower bills if you inform them of your inability to pay. Figure out a plan with which you can comfortably compensate them. Contact their accounting office and tell them what’s happening after making sure you can hold up your end when they agree to your proposal.
Don’t Prioritize It or Borrow to Satisfy It
Always pay your mortgage, car note and credit card bills before paying medical debt. Still, do not take on loans to pay it off. Placing a second mortgage on your home to satisfy medical bills is a very bad move. You’ll trade unsecured debt for secured debt — and put your home at risk for foreclosure.
Further, do not allow yourself to be talked into opening a charge account to pay it; nor should you put it on an existing credit card. The interest and fees hospitals charge are far lower than you’ll encounter from a card issuer.
Now before you get it twisted, the NCLC is not saying to ignore it altogether; they’re saying treat it as a low priority.
Dealing with Debt Collectors
Most hospitals aren’t equipped to deal with delinquent accounts on their own, so they farm the task out to collection agencies. This can take anywhere from 30 days to 180 days to happen. In other words, you’ll have between one month and six months to work something out directly with the hospital.
After that, you’ll get calls, emails and text messages from professional bill collectors. However, under federal law, collection agencies must stop contacting you if you send them a letter telling them to do so.
Answer the first call, tell them what your situation is and that you will pay what you can, when you can. Do not allow them to talk you into opening a new credit account, putting the debt on one of your credit cards, or taking out a loan against your home.
Next, ask for the mailing address and the name of the person to whom you should send a cease and desist letter. They are also required to provide this information. Send the letter and you should be done with collections calls.
In most cases, you don’t have to worry about medical debt appearing on your credit record for approximately 180 days after it is conveyed to a reporting agency. This could give you as much as a year to deal with it before it affects your credit rating.
Consider Debt Settlement
While not mentioned by the NCLC, If a medical debt lands on top of an already steep mountain of unsecured debt with which you’re unable to deal, a company like Freedom Debt Relief can help you develop strategies for the complete eradication of all of those debts — including the medical bills.
Handled carefully, these nuggets of wise advice for addressing medical debt will help you come out on the other side of it with your finances intact.