4 Things You Need To Know About Medical Debt (So It Doesn't Bury You)

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Being sick is hard. But medical debt can make it feel completely overwhelming.

When we think about consumer debt, people tend to think of shopping bags and credit cards. But the reason a large number of Americans wind up in financial trouble isn’t self-indulgence or an inability to resist temptation. It’s medical debt.

Medical debt is the number one source of personal bankruptcy filings in the United States. In 2014, 40 percent of Americans went into debt because of a medical issue. Almost half of our entire country!


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How sad to think that people already traumatized with an illness end up worrying about how to pay for it!

And boy, do we know the pain of medical expenses!

In the last ten years, I've had eleven surgeries. One more, and I would have had an even dozen!

Head to toe, I should be a walking row of stitches. But we are thankful I am a survivor of stage three breast cancer. Through a crazy course of events before the cancer surgeries and chemo treatments, I also needed rotator cuff surgery right after we found out about the cancer. It was a rough year!

My double mastectomy alone cost over $157,000. Even though the treatment and surgeries saved my life — which made them priceless to our family of four — the bills were still overwhelming.

The illness is enough to fray your nerves, and money issues don't help. So what do we need to know about medical debt?

These are 4 very important things that you should know about medical debt:

1. Bankruptcy is on your record for many, many years.

If you're so overwhelmed with medical debt that you're considering bankruptcy, then do your research! The Motley Fool and other sources report that bankruptcies are, in fact, the number one cause of bankruptcy filings in America. Bankruptcy affects your ability to get loans on cars, houses, and even rental properties. Plus, it costs attorney fees just to file.

Talk with friends, family, multiple experts, and read up on the subject before you begin steps to file for bankruptcy.

Your illness is beyond painful, but the long-lasting effects of bankruptcy make the period of financial pain extend for a long time.

2. Not all health insurance is the same.

We were grateful to have been paying for good healthcare when I found out I had cancer. But healthcare is very expensive. Make sure you aren’t paying for too much or too little coverage considering your age, prior health, dependents, etc.

Even with good insurance, you can end up with huge deductibles and a lot of money spent.

The Bureau of Labor Statistics reports that consumer spending rose 2.4 percent but healthcare costs rose higher at 6.2 percent in 2016 alone — that’s a big jump! Forbes reports the annual healthcare cost for a family of four is now $25,826! In fact, our monthly healthcare insurance payments were inching up to the amount of a mortgage payment. That’s painful beyond the medical condition.

We all have to sharpen our pencils to figure out how to cover that rising expense.

One way to help “outsmart” some medical expenses is to consider an HSA (Health Savings Account). HSA accounts are available to all US taxpayers enrolled in a high deductible health insurance plan.

HSA money may be used to pay a health insurance deductible and certain qualified medical expenses like dental and vision care. There are also tax advantages to an HSA because funds contributed are not subject to federal income tax at the time of the deposit.

A handy way to compare a high deductible health plan with an HSA to the traditional route for health care is AARP’s HSA calculator.

We also believe that long-term care insurance is an important part of your health care plan. Long-term care insurance covers basic daily needs over an extended period of time once you’ve lost the ability to do two things on the specified list. It helps with costs not covered by health insurance, Medicare, or Medicaid.

This insurance helps families who are unfortunately dealing with a chronic illness for an undetermined period of time like Alzheimer’s. Long-term care is so much cheaper when you’re younger. Both Scott and I have it, and we have found once you hit 60 years of age, coverage gets really expensive.

Healthcare is expensive, but your loved one’s life is priceless, so do the research to see if you can find ways to save some money. Some seasons of life you just can’t adjust, but maybe it’s time for you to shop around for some other health insurance options.

3. Health issues are cheaper and easier to treat in the early stages.

The earlier you catch most conditions, the cheaper it will be to treat and it will have less aggressive treatments.

Scott admits he’s a hypochondriac and likes to go to the doctor for even small things — we’re not suggesting that — but don’t wait too long to get care when you really are ill. A hospital stay for pneumonia is so much more expensive than the round of antibiotics you can take before your illness gets too bad.

Make sure you’re staying current with preventive screenings, too. I was feeling fine when they caught my stage three cancer with a routine mammogram.

Don’t wait to take care of yourself.

4. Don’t avoid those bills. Be proactive.

Finally, don’t avoid those ugly bills. Sit down, take a deep breath, and figure out some next steps.

We would recommend you call the different providers sending the bills and discuss payment arrangements. They don’t want you to get behind on your bills. They would like their money, but maybe the monthly amount they have calculated on the statement just won’t work for you right now. Arrange a workable payment schedule and then stay on top of it.

Try not to let the envelopes pile up, unopened. Sometimes you are incorrectly billed or double billed by accident. Make sure you open every bill, then call and check on any bill you think might not be correct.

The illness is painful enough, and it’s unfortunate that it's so expensive in America. But you can get through this day by day, just walking through an illness step by step.

We wish you the best of health and happiness in the future. Hug those close to you just a little tighter today. Cancer certainly reminds our family to do that.

Hugs to you.

Scott & Bethany Palmer


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We can't wait to hear from you! What is your spouse's money personality? What is yours? Find out by taking your free Money Personality Profile. Learn more at TheMoneyCouple.com.

This article was originally published at The Money Couple. Reprinted with permission from the author.