Mention debt and you will automatically start to think about bills, credit cards, mortgages and the like. These are sources of debt, but one of the biggest forms of debt on most people’s credit reports is medical debt.
Insurance claims and medical billing can be a nightmare to navigate making the problem worse with time and pushing you further into debt. Understanding what services your insurance covers, how much money you really owe and why you were charged is the best way to manage medical debt intelligently.
Most consumers have at least one form of insurance such as a private insurance policy. This policy could be individually purchased or through your place of employment. A great number of consumers also have supplementary Medicare insurance as well, leading them to believe they won’t have anything due other than general co-pay for services rendered. This type of misconception can lead to outrageous medical debt that’s often hard to decipher, let alone manage.
If you or your family member is sick, chances are you don’t pay much attention to every line on the bill but you see it at all before it goes to the collection department. Finding out how much you are really supposed to pay is a gauntlet in itself.
Some common questions are:
Medical debt is often the hardest to understand, most of the charges on a hospital bill have very little to do with the real cost of the services provided. They are simply part of a master charge file that’s imputed without reasoning. In some cases, you can be charged $3,000 for using an operating theater for half an hour, but only $2,000 for a whole hour. The charge has neither industry standard to go by nor any relation to the real cost of the time. The rates are set by hospital administrators and billing simply enters codes.
What you are charged also doesn’t have anything to do with the last amount the hospital gets paid. If you have insurance, they will negotiate a payment with the hospital accordingly, usually around half of what they listed as charging, if you don’t have insurance, there is no one to negotiate and you have to pay full price. There are even more calculations for underinsured, Medicare recipients, out of network visits and so on.
This is what makes dealing with medical debt so difficult; there is no way to effectively shop around for the best healthcare at the best price, because there is no set rate for care in the industry. If you have to go to the hospital for emergency care, the last thing you will have in mind is how much you will have to pay for life saving medical treatment. The best way to keep your medical debt low is to go with a health insurance provider that is well known, has a lot of bargaining power and will give you full coverage in every situation.