By Shelby Smoak, Ph.D.
Almost 137 million Americans have medical debt, and it is the leading cause of bankruptcy.1 Since the cost of treatment is high and is forever, persons with a chronic illness like a bleeding disorder are certainly at risk of accruing unwanted debt. One study estimated the current cost of factor therapy alone at between $460,000 and $600,000, and with insurance and high deductible plans, year in/year out, the financial burden on patients and families can overwhelm.2
Moreover, even if a person’s bleeding disorder is “managed,” one bad bleed can create a tsunami of costs, especially if it impedes one’s ability to work; thus, while costs go up, income goes down. What can one do when faced with seemingly insurmountable medical costs?
What can you do if you have unpaid medical debt?
Obtain copies of medical bills, and review them for any errors.
Negotiate the bill with your provider. Be honest, and let them know your financial situation. Many providers have programs to assist patients.
Assure that some amount is being paid on the bill. Do not leave the bill unpaid.
Get an estimate of medical costs beforehand if you are able.
What can you do if you receive a high medical bill that you cannot pay?
Ask the hospital or provider if you qualify for their financial assistance policy, sometimes known as charity care.
Ask if you were charged the “chargemaster rate,” and if so, request the lower rate given for insurers and Medicare.
Have the provider go through and explain all charges to avoid mistakes.
Work out a payment plan.
File an appeal with your insurance company if a service was denied, and you think it should have been covered.
How will medical debt impact my credit score?
Beginning July 1, 2022, medical debt that has been paid will no longer be included on consumer credit reports according to a recent agreement between the three top credit reporting agencies—Equifax, TransUnion, and Experian.
Medical debt will not be reported on consumer credit reports until it has remained unpaid for a year. Currently, medical debt is reported at six months and is reported whether paid or unpaid.
Medical debt under $500 will not be reported.
Should I consider bankruptcy?
The legal term “medical bankruptcy” does not exist. There is only “bankruptcy.”
Depending on income and other factors, Chapter 7 or Chapter 13 would need to be filed.
In Chapter 7, a liquidation bankruptcy, assets are used to repay debts, and debt is discharged after an asset liquidation. It is often less expensive and faster but can result in property loss. Chapter 7 impacts a credit score for ten years.
In Chapter 13, debt is restructured and a 3–5-year repayment plan is established. Chapter 13 impacts a credit score for seven years.
Consider alternatives as many creditors are more willing to work with medical debt.
As difficult as medical debt can be, emotionally and financially, there are services and programs available to help patients navigate those crushing expenses. The move by the three credit agencies is expected to remove approximately 70% of medical debt from consumer credit reports. The key takeaway is that if you do have unpaid medical debt, work with the provider to begin paying some amount towards it to keep your credit score in good standing.
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References
“Medical Debts and Collections.” Debt.org
“The High Price of Hemophilia.” ASH Clinical News. 1 Feb. 2020. https://www.ashclinicalnews.org/spotlight/feature-articles/high-price-hemophilia/
