Bankruptcy

How to handle medical bills

By Attorney Goldstein

There are many forms of unsecured debt, including credit cards, personal loans and essentially, any debt that is not secured by an actual asset or collateral. However, the one form of unsecured debt that does not get much treatment or conversation is medical bills. Incurring significant medical bills could happen to you as a consumer at anytime. If you are injured or become sick and require a trip to the emergency room or surgical room, it could result in thousands of dollars in medical bills. Even with health care insurance, you may end up facing appalling debt due to your medical situation. More specifically, many health care providers have unfair billing practices that only add to the consumer debt you may confront. The problem is that many patients simply do not think about this and what happens if the insurance declines to pay, or there is a large co-payment required.

Medical bills are viewed in the same way as credit card debt, it is unsecured. However, if you don?t pay your bills you can be sued for the balance. Health care providers can send medical debts to collections, file judgments, garnish wages and obtain home liens over medical bills that you can?t afford to pay.

Let?s take a quick look at exactly how medical insurance works. Typically, you have an insurance policy that will require you to pay the first part of a bill, say $25 - $500. The heath care insurance picks up the balance, so long as the treatment is determined to be medically necessary. In some case, after you are admitted to a hospital, a doctor must determine if it is medically necessary for you to stay. Each day a decision is made for the following day.  If you are able to transition on, and you want to stay, then a Nurse Case Manager will discuss your situation with the insurance company, and if the insurance company decides they will not pay, the financial burden shifts to you as the patient.

If the insurer decides they will not pay, you do have many options. First, you should look into the decision to determine if a denial was proper. In many states just as there are consumer protection laws, there are also laws specific to the regulation of insurance and fraudulent and deceptive denials of coverage. 

If it is determined that the denial was proper, or you simply did not have coverage, you still have many viable options to deal with the medical debt. There is a well established system to discharge all legitimate unsecured debt, more specifically, filing a Chapter 7 bankruptcy, or reorganizing your debt though a Chapter 13 bankruptcy. You also can of course pay the health care bill with third party funds or a credit card. The problem is that you are going to incur interest on the debt that in most likelihood, higher then the bill itself. You can also negotiate with the creditor and enter into a payment plan or settle the debt with the medical provider for less then full amount, and then negotiate a release of liability.

The bottom line is that even if you have a massive medical bill, do not panic, there are solutions and opportunities out there for you. Your first step is to get all the facts, and then speak to a consumer debt advocate who may be able to direct appropriately.

Full post as published by Bankruptcy Articles & Blog on May 19, 2010 (boomark / email).