How to Manage a Big Medical Bill
Medical debt keeps far too many people up at night, worrying because health care costs and insurance policies are so complicated. Whether you have Medicare Advantage, Original Medicare (with or without a Medicare Supplement/Medigap plan) or a Part D prescription drug plan, you're afraid your fears will come true.
Why is medical debt such a problem?
Credit scores have never been as vital as they are today, and any unpaid bills can devastate the score you've worked so hard to achieve. In addition, low scores affect your access to credit and the price you have to pay in higher interest rates. They also affect what insurance companies quote you and how potential employers and landlords see you. Most important, medical debt has led to too many bankruptcies.
Among Baby Boomers, in 2021, 49% said they have been in medical debt, and 23% are today. Among Gen Xers (who don't have the protection that Medicare provides), the numbers are higher: 68% have been in medical debt, and 42% are today. Millennials report similar numbers, with 66% and 48%, respectively.
So you're not alone if an accident or illness has triggered a flurry of medical bills that have blown right through that high deductible you chose and are creeping toward the maximum out-of-pocket you hoped you'd never reach.
Let's look at some steps to lessen the burden of a significant medical expense.
How can you lessen the pain of a large medical bill?
You may only become aware of a hefty bill one month or more after the charges were incurred – when it shows up on your Medicare Summary Notice or your insurer's Explanation of Benefits. Tossing those envelopes aside or filing the contents without reading is tempting. Don't do that. Your appeal window is not unlimited, and you want the most time to act.
Review your bill line-by-line. Up to 80% of medical bills could contain one or more errors, usually due to miscoding. So if you don't have an itemized bill, get one. Check for duplicate items, services you don't recognize or didn't receive, and charges your insurance should have covered.
Takeaway action step. While it's not an exciting exercise, review each line item on the bill to ensure it is valid. Question everything. Be sure you recognize each supplier's name and check the service dates. Mark anything you cannot explain.
Contact the supplier or provider. Set aside telephone time to review the charges with someone at the hospital, doctor's office or insurance company. Be polite but firm until you are either satisfied with the explanation or the other party has accepted the mistake.
Takeaway action step. Once you have identified anything that has to be changed, contact Medicare at 1-800-633-4227 or your Medicare Advantage insurer to discuss how the correction can be made. If you have a Medicare Supplement plan, notify them as they will have paid based on an incorrect bill from Medicare.
Be sure you're not being scammed. Medicare fraud is just part of the growing identity theft issue, and Medicare cards are trafficked like any other. Take note if you don't recognize the service provider's name on your statement and know you didn't receive the service or product.
Takeaway action step. Don't call the provider. Instead, report the fraud to Medicare at 1-800-633-4227, your Medigap insurer if you have one, or your Medicare Advantage insurer. They will connect you to their fraud investigations department, and the charge will be removed from your records following their internal procedures.
Request a payment plan. After all your efforts, you may find you do owe all or part of the money. Check if Medicare already paid the bill and you owe them the uncovered portion of your medical charges – or if you owe the actual service provider.
Takeaway action step. If you owe a doctor, hospital or lab, contact their medical billing manager and explain your situation before the bill is delinquent or in collections. Then, request a payment plan or hardship assistance. Given a choice between receiving nothing and receiving something, companies prefer something. You may be able to negotiate a zero-interest payment plan or a discounted settlement.
Change your situation for the future. Think about how to avoid this happening again. Seriously consider how to build an emergency fund for such events. And look to see if you need to change your insurance coverage.
Takeaway action step: If you didn't get a Medigap plan when you first signed up for Medicare, it isn't easy to qualify for one now. So, if you don't have one, consider moving to a Medicare Advantage plan that does not leave you exposed to Medicare's 20% coinsurance. And if your Medicare Advantage plan exposes you to high out-of-pocket maximums, change plans when the next enrollment comes around.