Medical Debt: Tips and Tricks to Become Debt Free

IN A NUTSHELL:

• 137 million Americans in debt due to medical expenses before Pandemic
• Patients avoiding healthcare due to fear of more debt
• Healthcare providers can help their patients realize how to overcome medical debt

Americans are drowning in medical debt and the problem isn’t getting better anytime soon.

According to one recent survey, 137 million Americans were in debt due to medical expenses before the coronavirus pandemic hit the United States. Another recent analysis by Freedom Debt Relief found that the problem is only getting worse. According to the report, medical debt has increased since March 2020.

If patients express concerns to you about their medical debt threatening to affect their family’s financial security, they do have options. While the cost of healthcare is inevitable, it is important for patients to not let a big bill prevent them from taking care of their health. In doing so, they can prevent more serious and more costly medical conditions.

Here are some strategies for patients to alleviate their medical debt burden:

1. Opt for medical aid from hospitals

Patients can qualify for medical bill elimination if their income is below the federal poverty level. If they do not qualify, reduced financial aid is another option. High-income earners can also qualify for substantial medical debt aid. If a medical disaster results in a bill that exceeds a certain percentage of a patient’s income, other options should be explored. Health issues strain quality of life, and overwhelming medical expenses can add to the stress. In many circumstances, hospital bills can be reduced to some extent. Contacting your hospital’s billing department is the easiest way to request debt forgiveness for medical bills. You’ll be able to find out if you qualify for any debt-reduction options, such as financial aid programs or medical bill discounts, from there.

2. Set up a payment plan

You can set up a medical payment plan with your hospital or doctor, helping you pay your medical bills at your convenience. You can ask for an interest-free short-term payment plan, but make sure the goal is realistic. Otherwise, the hospital may not accept it. Also, keep all negotiations in written documents. Send a letter with the payment terms that you want and receive a confirmation letter in return.

3. Pay off small debts first

If you have enough money in your checking account, pay off the small medical debts first. It will decrease your debt burden by taking some bills off of the list.

4. Pay in small increments

Try to repay your bill in small increments. You may have other loans or debts to repay, or your financial condition might not let you make large payments every month. But pay as much as possible. You’ll see that this will gradually help you pay off your medical debts.

5. Consolidate your debts

There are various ways you can consolidate your medical bills. Medical bills are unsecured debt. To consolidate debt, you can pay your medical fees with a balance transfer credit card.

You can also tap your home equity or take out a medical bill consolidation loan. To do this, you’ll need to find a lender who issues loans to consumers in medical debt. Medical consolidation loans act as any other consolidation loan by offering a low interest to repay medical bills. If you have multiple medical debts, you can consolidate all of them into one payment with a single loan. As all of your accounts are consolidated into a single debt with a low interest rate, it becomes easier for you to make a single monthly payment.

6. Take out a personal loan

Personal loans created exclusively for medical expenses are available from third-party lenders. You might also apply for a medical loan on your own or through your doctor’s office. These loans are usually unsecured, which means you won’t have to worry about losing your home or car if you can’t make payments. Look for a loan that has a low interest rate and fee. If you have a good credit score, this is the best option. If your credit score is low, it may be difficult to get an affordable loan.

7. File bankruptcy

If you have huge medical debt along with other debts, bankruptcy may be your only option. But, if the medical debt is your only obligation, then avoid filing bankruptcy. Remember, healthcare providers, are more flexible than other creditors.

If you have to file for Chapter 13 or Chapter 7 bankruptcy, don’t feel like you’ve failed. Bankruptcy laws are designed to help those drowning in debt, particularly following a significant calamity.

8. Avoid putting medical costs on a credit card

Avoid putting medical bills on a high-interest credit card or one that requires an upfront cash advance fee. Payments to a medical care provider are always preferable to payments to a bank or other financial institution.

9. Seek help from a charitable organization

Several organizations offer financial aid to those with medical debt in the form of grants. Ask your hospital or doctor if they are involved with these programs. These groups typically help those who earn less than a specific amount. However, this is not always the case. Each one is unique. Find charitable organizations in your area. See if any assistance is available for your particular medical situation.

It will help if you try to repay your medical bills as soon as possible. Hospitals can send unpaid statements to a collection agency to get the payment from you. It is better to avoid such an extreme situation and coordinate with the hospital and doctors to pay off your medical bill.

What is the best course of action?

Determining the best alternatives can be difficult. It’s better to call your doctor’s office or hospital first to see if they can arrange a medical payment plan or medical debt forgiveness.

If these options aren’t available, applying for medical debt consolidation can be a reasonable next step. You may also consider getting support from a charitable organization or filing for bankruptcy. If you’re having trouble, paying your bills and don’t know what to do, it’s always a good idea to contact an NFCC counselor for reasonable assistance.

Final thoughts

Medical debt is a nightmare. However, using some of these strategies, your patients may be able to eliminate them. Everyone’s path is different, and some may be more difficult or less complicated than others, but patients can overcome it and move on to more extraordinary accomplishments for health and finances.

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