Whether we want them or not, visits to the hospital or doctor’s are almost inevitable. Be it a broken bone, surgery, or a simple checkup; there is always a reason for us to seek health care. So when that unexpected accident or injury comes up, you see a medical professional, get a diagnosis, and receive the appropriate treatment.
But what happens when you get that unexpectedly large bill in the mail months later? You think it may have contained errors, or perhaps you just don’t have the resources to pay it off. What do you do? When faced with a bill that you won’t or can’t pay, the easiest thing to do is ignore it; however, doing that can lead to nasty consequences.
Another solution is trying to negotiate the bill with your healthcare or insurance provider. According to Andrew Cohen, medical debt resolution program manager at The Access Project, most don’t view negotiating as a viable option. He says, “People often don’t realize medical bills tend to be eminently negotiable.” Here are three reasons why negotiating is not just an option, but your best option for dealing with big medical bills.
You Can Avoid Medical Collections.
About one-third of Americans have some debt in collections according to The Urban Institute, a Washington DC-based think tank known for economic and social policy research. It turns out that medical debt contributes to much more of our nation’s collections supply than any other category of debt. A report provided by Anthony Sprauve, public relations director for Fair Isaac Corp. (our country’s most widely used credit score), indicates that unpaid medical bills make up over 50% of all collection debt.
Medical bills reach collections when they remain unpaid for a long enough time. Once a bill reaches collections, it can be reported by the debt collector to credit bureaus, negatively impacting your credit score and making it harder to get credit from potential lenders. The credit bureau Experian confirmed that as of last year, over 64 million consumers had a medical collection on their credit report. Because the primary factor in determining credit scores is payment history, these tarnished credit reports lower people’s scores by a significant margin. Even if the debt is eventually paid, it can take up to seven years for the collection to be dropped from one’s credit report. During that time, it will still be difficult for the person to attract lenders, making something like buying a home all the more challenging.
While FICO has implemented a new scoring model to reduce the impact of medical debt, credit scores can still be ruined by unpaid medical bills. The best method for not having to deal with life-altering repercussions is to keep the bills from reaching collections, which requires paying them up front or negotiating them down first.
You Can Avoid Bankruptcy.
People will file for bankruptcy when they have amassed more debt than they can pay back. An article published by Forbes cites that medical bills are the leading reason people file for bankruptcy. Another Bloomberg Businessweek article reports that a study conducted by Harvard researchers in 2007 showed a staggering 62% of personal bankruptcy filings being linked to medical problems, with a whopping 90% of these medical related bankruptcies being caused by significant costs of bills.
Declaring oneself bankrupt can eliminate at least some of your medical debt; however, there are grave consequences for going down this route. Bankruptcy will not only obliterate your credit score (once again, making it almost impossible to get a mortgage or secure other loans) but may lead to the loss of individual property and possessions, in addition to all of your credit cards. Filing for bankruptcy is a “last resort” strategy for dealing with financial debt, yet many are forced to file each year due to the substantial costs of their medical bills.
By negotiating your bills, you can lower the amount owed and steer clear of the pitfalls associated with bankruptcy.
You Can Usually Win!
Should you choose to haggle over your medical bills, the odds are in your favor. Stacy Johnson, president of Money Talks News, confirmed this by quoting a Consumer Reports survey in his story, Confessions of a Serial Haggler. This survey revealed that 93%of people who tried negotiating a lower medical bill were successful at least once. Greg Voelm, the owner of a health care testing company in Sacramento, California and a 35-year veteran of the healthcare industry, expresses a belief that negotiating can lead to reductions of as much as 80%. In a story featured on CBS Money Watch, Voelm claims that despite indications of its success, “haggling is just not something that Americans are trained to do.” Are you unable to negotiate a bill alone? Enjoy a risk-free consultation and benefit from the services provided by the medical billing advocates at Dispute.