Navigating the Differences Between Medical Bill Advocates and Personal Loans
When faced with mounting medical debt, many individuals find themselves in a seemingly hopeless situation. Even with the increase in insured individuals due to recent legislation, a study by The Commonwealth Fund found that a staggering 64 million Americans still struggle to pay medical bills. When it seems as if no options are left, personal loans may appear to be the only option. Yet before you commit to lofty payments, skyrocketing interest rates and years of structured payments, learn about the options available and why working with a medical bill advocate before taking out a loan may be your best option.
What are the differences between personal medical loans and medical bill advocates?
For starters, let’s define both options. Personal loans are taken out by the patient to help pay for medical expenses. Personal loans usually are taken out before the loans go into collection, and are taken at a rate defined by the individual’s credit record. While some websites offer rates as low as 5.99% for a 1-5 year fixed rate term, medical debt rates can skyrocket above 10% based on your credit history. Alternatively, a medical bill advocate does not actually provide funding for your bills, instead, they take your bill before payments are due, analyze the charges and identify any instances where coding errors, insurance mishaps or other situations resulted in an inaccurate bill. Companies like Dispute Bills often see medical bill reductions as high as 60 percent, leaving a much smaller bucket of funds to finance.
When should each solution be implemented?
While there are advantages and disadvantages to both options, the important detail to consider is the timeline of implementation. For example, personal loans may be a great option to help consolidate and pay off your loans long-term without going into bankruptcy. However, without seeking the advice of a medical bill advocate prior to obtaining a personal loan, you many end up financing a larger bucket of debt than truly needed.
What is required?
Following the logical process of first consulting a medical bill advocate and then seeking a personal medical loan, the following information will be needed:
To consult with a medical bill advocate, you will need:
- A copy of your current bill
- Any relevant explanation of benefits that can help explain the services you received
To obtain a personal medical loan, you will need:
- Your social security number, home address and other identifying information
- An understanding of what you realistically can afford each month
What are my payment options?
With personal medical loans, payment options vary based on the lending institution you select. While some healthcare organizations will offer no interest financing for small debts that are paid off in a short period of time, say a year or less, most large-sum medical debt requires the use of an outside vendor. That said, traditional medical debt payoff terms are between one and five years. Interest rates vary based on factors like credit score and total balance, but often start as low as 5.99% and can raise above 10%.
When seeking the advice of a medical bill advocate, payment plans depend on the amount of money you save. Take, for example, a $10,000 medical bill. At Dispute Bill, we’ve saved some of our clients as much as 60 percent, turning that $10,000 medical bill into a mere $4,000 bill. Before interest and assuming a five-year payment term, the initial $10,000 balance with monthly payments of $166 per month turns into payments of $66 per month with an initial balance of $4,000.
When medical bills seem unmanageable, weigh your options and identify a solution that best meets your financial situation. And remember more times than not, starting the process with a medical bill advocate can help save you money in the long-run.