Debt-Fighting Strategies

CURE, Spring 2008, Volume 7, Issue 1

Advice from advocates on how to avoid debt and get help with bills.

Healthcare advocates say one crucial thing to do before entering the hospital is to check whether labs, doctors and tests are “in network” for your plan. Just because the hospital is part of your insurance network does not mean that the other services you receive are. Use hospital social workers as a resource early in the process if you suspect financial problems will arise.

Also, it’s important to shop around for care if you have time before your procedure and ask for an estimate upfront. Look for state or county-run hospitals, or not-for-profit providers, which tend to offer more free care and provide payment plans for patients. Also look for free clinical trials through the National Cancer Institute’s website at www.cancer.gov.

If your treatment causes unmanageable medical bills, there are also a number of strategies you can use:

First, be sure hospital charges are accurate. Errors in medical accounts can often be caught if you call them to the attention of the hospital’s billing department. Also, check that your insurance is covering everything it’s supposed to cover, and don’t be afraid to file an appeal if necessary. Request one case manager at your insurance company to handle your needs.

Access public and private programs. You may qualify for government programs such as Medicaid, the state Children’s Health Insurance Program or Social Security Disability. In some cases, coverage can be retroactive. Also, grants of private assistance to cover medical bills may be available through a local hospital or charity group or national organizations. (See “Resources” sidebar.)

Talk to providers directly and ask for discounts and extended payment plans. They often will not offer unless you ask. For ongoing costs, see whether your doctor can write prescriptions for extended periods to cut down co-payments, and ask about other cost-saving strategies. Many doctors will work something out as long as you pay consistently. Also, see whether the clinic has drug samples or other discount coupons.

It’s important to shop around for care if you have time before your procedure and ask for an estimate upfront.

Avoid medical credit cards. Advocates say these cards are increasingly being pushed on patients upfront as healthcare providers partner with credit card companies. While the cards have an appealing start-up with no fees and zero interest rate, the cards often go to much high interest rates and fees after the grace period. Putting the medical expenses on a card also eliminates your ability to negotiate with your provider for discounts or extended payment plans.

If you own your home, call your mortgage lender early and try to work out new payment arrangements. Some people might consider downsizing their home or taking a second mortgage, reverse mortgage or home equity loan to cover medical expenses. However, experts warn this should be a last resort and done cautiously, because you are trading secured for unsecured debt.

Deduct medical expenses from taxes. Don’t forget, you can deduct the part of medical and dental expenses that are more than 7.5 percent of your adjusted gross income from your federal taxes. For a list of acceptable medical and dental expenses, go to the IRS website at www.irs.gov and search for Publication 502.

Consider more drastic options. Creative fundraising efforts are often successful. Go to local media for publicity. In addition, filing for personal bankruptcy can discharge expenses owed a provider, as well as credit card debt.