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Medical debt: how to prepare

You likely have many different bills you plan for every month. You may even have a budget where you calculate where each paycheck you receive will go. But what happens when you have an unexpected and expensive medical emergency?

A study by the American Journal of Public Health found that medical debt contributed to 66.5% of bankruptcies in the US. High medical bills partly contributed to that percentage. These people struggled to pay the high costs of care. Others had to take large amounts of time off from work. This left them without a steady paycheck to pay their bills.

While you can't control when medical emergencies happen, you can prepare for the unexpected. Here are a few tips for dealing with a medical emergency:

  • Plan ahead - Stretching your paycheck beyond monthly bills and groceries can be difficult. But setting money aside for savings helps prepare you for unexpected medical care. Depending on your plan, your insurance provider may even offer a health savings account (HSA). These accounts often have tax-free contribution options. Your employer might also match your contributions.
  • Look over the bill - You should know what you are paying for in a hospital stay. Make sure your bill is correct. Sometimes billing departments can make mistakes. Some doctors may even add tests that aren't necessary to increase your bill. Request a copy for review.
  • Negotiate - Your hospital wants to get paid. Talk with them about your options for payment plans. Some hospitals may offer an interest free payment plan. They may even reduce your bill if you're willing to negotiate.
  • Avoid credit cards - While you may feel you need to pay the hospital right away, avoid using a credit card. A hospital or healthcare provider may even pressure you into signing up for a card through them. But using a card changes your debt from medical to consumer debt. Landlords, lenders and others who check your credit usually consider consumer debt worse than medical debt. You also lose the ability to negotiate your bill.

Medical debt can come out of nowhere. Being prepared can help protect you from a sudden shock to your finances.

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Paul Urich
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Law Office of Paul L. Urich, P.A.
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