Everyone has some sort of requirement for medical care, regardless of their history or financial standing. Regrettably, it is still possible to rack up a large medical cost that might lead to very significant debt even if one has decent health insurance.
I was recently admitted to the hospital after being seen in the emergency room, and I stayed there for six nights. Over $150,000 was added to the overall bill. It was fortunate for me that the majority of it was covered by my insurance, and I was also fortunate that I had adequate coverage; however, this is not the case for everyone. Even if the situation isn’t urgent, elective procedures like orthodontics or fertility treatments can easily go into the tens of thousands of dollars in a short amount of time.
According to findings from a recent survey conducted by LendingClub and Pymnts, almost half of rural Americans who live paycheck to paycheck would be unable to meet an unexpected bill of $400 if it arose. In times of financial difficulty, many people turn to their credit cards for help; but, if you do not pay off your balance in a timely manner, you may still be required to make payments on your medical debt years or even decades later. This is especially concerning in light of the fact that medical debt in the United States has reportedly reached over $88 billion. Consumers may find it challenging to obtain various loans if their credit reports are negatively impacted by such debt.
The burden of medical debt continues to weigh on consumers, despite the fact that recent efforts are beginning to address the problem. According to a report that was released not so long ago by the Consumer Financial Protection Bureau, some people in the Hawaii location are getting medical invoices for treatments that they never even had. However, in order to avoid having a bad influence on their credit, many people continue to make payments.
If you have a significant amount of debt, paying it off could seem like an impossible task. Regardless of the size of your medical debt, the following advice can assist you in better managing your finances and the potential impact they may have on your credit.
Investigate your options and ask for help if necessary
Keep yourself abreast of the most recent information concerning the legislation and programs for the cancellation of debt, if at all possible. After the first of July, several of the largest institutions that compile credit reports will no longer include paid medical debt in consumers’ files. Additionally, beginning in 2023, any unpaid medical debt that is less than $500 will not have an effect on a person’s credit score. If you are aware of and make use of these technological improvements, you may help reduce the negative influence that medical debt can have on your credit report.
If you qualify, there are programs that offer financial aid for medical care that can assist you in paying down your debts. For instance, such programs can be found in certain hospitals. In addition, there are a number of organizations such as the HealthWell Foundation and the PAN Foundation that are devoted to assisting people with the payment of their medical bills. Always keep in mind that it is not only acceptable but encouraged to ask for help and direction when necessary.
Consider your options carefully before deciding how to pay your medical bills
According to the findings of a study conducted by LendingClub and Pymnts, roughly one-quarter of people who live paycheck to paycheck and struggle to pay their monthly bills would use a credit card to pay a $400 unexpected expense if they had to. When you pay for your medical care directly through a hospital or your medical provider, the interest rate you are charged may be different and could be lower. If at all possible, you should stay away from using credit cards to pay for medical expenses. It’s even possible that if you talk to your health care provider about it, they might be able to lessen your payment.
Think about setting up a payment plan.
There are situations when your healthcare provider may offer payment plan options that could assist you with a reduced interest rate and/or monthly payment amount. If you have no choice but to utilize credit to pay off your medical bills, you should seriously consider using a strategy to pay them off, such as a debt management plan. The following are some additional strategies:
- Patient financing loan: If you need assistance paying off your medical bills, consider obtaining a patient financing loan from a lending institution. You will want to check that you are eligible for the loan and that you can acquire a reasonable interest rate. There is a good chance that your doctor can assist you.
- Transferring your credit card balance: This allows you to move debt from one account to another and is offered by most credit card companies. If you transfer your debt to an account that has a cheaper interest rate, such as a credit card that has a promotion where the interest rate is 0% for a certain period of time, you will be able to save more money on interest costs.
- Snowball or avalanche methods: For the snowball method, pay down, and eventually pay off, debt using motivational momentum by starting with your smallest debt, then moving on to the larger debts. The avalanche method involves paying down debt in an avalanche-like fashion by starting with your smallest debt, then moving on to the larger debts If you want to use the avalanche technique, you should prioritize paying off the debts with the highest interest rates first while keeping up with the minimum payments on your other bills.
Keep in mind that you are not the only one dealing with this issue; there are millions of other Americans in the same boat as you. You should seek advice, make use of outside resources, and formulate a strategy if you are having trouble determining where to begin.
This information is not intended to serve as an investment, tax, or financial advice and should not be treated as such. It is highly recommended that you get the guidance of a certified expert regarding the specific circumstances of your case.