Three Smart Strategies to Deal with Unexpected Medicare Advantage Bills
Updated: Jun 26, 2022
When it comes to Medicare healthcare coverage, many people choose Medicare Advantage plans because of the low premiums and the bundling of other insurance needs like prescription drugs, vision and dental. An appealing one-stop plan. (And that’s how the insurers market their plans.)
Even after looking over your plan’s Summary of Benefits, the costs seem reasonable. You can handle the deductible amount – what you pay before the insurance plan kicks in. As for the copayments, $10 or $20 for a doctor’s visit is nothing. And the annual out-of-pocket maximum, after which the insurer picks up all costs? It sounds like a nice guarantee, but who ever needs that much care?
You’re in pretty good health, so you can’t imagine having an accident and being hospitalized. Or developing a chronic illness that requires specialists and ongoing outpatient treatments.
But that’s where unexpected medical bills can come from.
So how can you deal with unexpected healthcare bills? Let’s look at three smart strategies.
Emergency Savings Account – Find a way to set some money aside as you are nearing retirement. It could be the balance left in your Health Savings Account from your pre-Medicare insurance plan. Or you might earmark some funds growing in a Roth IRA account.
If the emergency account holds the amount of your Medicare Advantage plan’s annual out-of-pocket maximum, you will always be prepared to cover the costs of your healthcare needs. By leaving the funds in a liquid, easily accessible account (ideally one that earns at least some interest), in years when you have to tap into them, you can pay your bills without stress and then budget to replenish the account for the following year.
Medical Debt Negotiations – First, scrutinize your bills to ensure all the charges belong to you and there is no duplicate billing. Then, within the expected payment window, directly contact the medical provider’s billing department to see if they can offer discounts or reductions.
If you still cannot pay the negotiated balance, ask about a payment plan that lets you pay off the debt in installments. Most providers prefer to get as much of the payment as possible over time than risk having to turn an account over to a collections agency and receive even less – or nothing.
Unsecured Personal Loan – An unsecured personal loan may offer lower interest rates and greater flexibility than using existing or new credit cards. Today, loans are readily available online that can be in place in very little time.
If your credit history and financial health can stand up well to the scrutiny, you can take out a medical loan that consolidates your payments to multiple providers. As a result, your stress will be gone, and you will have one predictable monthly payment to make.
Takeaway Action Step – When reviewing a new or renewed Medicare Advantage plan, consider your financial exposure in the worst-case situation: your annual out-of-pocket maximum. Then think through how you would handle unexpected medical bills of up to that amount – so you are already mentally prepared if you ever have to face them during a health crisis.