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Medical Debt

By Matthew Rodrigues


Medical debt is quite different from other forms of debt. Medical debt is slowly debilitating, continuing to reap money, especially if not tended to earlier on. This is why it is essential to be able to pay off your medical debt and be able to resume your life without the looming threat of medical debt. Keep in mind that the debt discussed in this article can be a medical debt of any size, whether it is a $600 debt from an MRI or a $402,000 debt from surgery and a two-week stay in a hospital, but we are mostly referring to debts that would be greatly damaging to a person or family’s livelihood if the bill can not be paid off and only accumulates interest. With this out of the way, let us look at some viable options that can be taken up to reduce medical debt.

Health Insurance:

While not usually cheap, quality health insurance is a great investment (either given as a benefit at work or as a monthly, out-of-pocket expense) as it can greatly help in times of medical debt. Health insurance allows you to negotiate the terms of payment for your medical debt, meaning you can reduce the amount of debt that you have to pay. You can negotiate how much of the debt you can pay with your provider, while your insurance provider may also shoulder the remaining debt as well. Depending on the quality of your healthcare provider, the insurance plan you have, and the amount of debt on your balance: in an ideal scenario where you may have a massive debt that could be in the 6 figure range but you have one of the best providers and one of their best plans, you could owe little to 0 dollars out of your own pocket for the debt. Health insurance is certainly a necessary asset to have; a must for an American to use the healthcare system.

Medical Credit Cards:

When in medical debt health care providers may provide you with these. While they are not as beneficial as 0% interest credit cards, due to a decreased amount of months with less interest and deferred interest. With medical credit cards, you typically have an interest-free period of 6-12 months. An issue with this is deferred interest hitting you once the interest-free period is up. Deferred interest is when you have to pay the total amount of interest owed over a period of time, but all at once. This can be extremely detrimental if you have enough money to pay back the principal on the debt, but don’t have the money to pay back the massive interest that gets tacked on as your grace period ends. Another issue with these Credit Cards is that missed or late payments can lower your credit score. Though, a massive converse positive to the negatives mentioned is that payments made on these cards can increase credit scores over time.

0% Interest Credit Cards

0% Interest Credit Cards are one of the best ways to combat debt. The only issue with them is that you will need a high credit score to qualify to use them. With 0% interest credit cards, you usually get 15-18 months of interest-free time to pay back the debt. You won’t be hit with deferred interest either. Missing or making late payments on these cards will still be detrimental to your credit score, though you won’t receive any credit score increase for making your payments either. As long as you don’t miss your payments, and you can pay back your entire debt within the grace period given by the 0% interest card before you have to pay interest again, you may be able to pay off your entire debt interest-free!

Medical Bill Advocate:

If you have an extended stay at the hospital and find yourself in a colossal amount of debt, another option would be to consult a Medical Bill Advocate. A Medical Bill Advocate is someone who can audit a medical debt bill and detect whether there has been an unfair amount charged for a certain procedure, lowering the overall cost of your bill. Though it is not advisable to consult a Medical Bill Advocate if the costs don’t outweigh the benefits. Another issue with Medical Bill Advocates is that all of them aren’t trying to improve your debt balance, some of them would much rather con you for your money or identity. If you choose to work with a Medical Bill Advocate, be cautious of their policies and how they operate before giving them your money or information.

Personal Loan:

While this may be the more conventional way, taking out a personal loan and consolidating your debts to pay them off at once is an effective way to eliminate interest on your debt. The issue with this is that you are now left with interest on the loan you took out to pay off the debt. When using this strategy, make sure to spend time and due diligence looking at different bank/credit union/financial lenders' fees, rates, and terms of repayment on the loan before coming to a final decision.

Personal Finance:

When comparing the different options to combat medical debt, consider the benefits and disadvantages of each option and pursue one that best fits you and your family’s financial goals and your financial plan/situation. Each of these options can be best for any individual at any time so make sure you take the time to evaluate each option and make the best decision. While medical debt can be a difficult endeavor to manage, it’s certainly possible to manage, especially with some of these options.

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