Medical Debt: What To Do When You Cant Pay

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People often feel ashamed of their medical debt, seeing it as a personal failure. In fact, it’s more of a mass affliction.

Americans are estimated to collectively owe as much as $140 billion in outstanding medical debt. Lack of insurance and a steadily increasing cost of health care are the two main culprits behind the growing medical debt problem.

What if you can’t pay your hospital bills? What if you have accumulated medical debt and have no way of paying it on time? On both accounts, the consequences can be serious.

People may forego the care they need, including doctor appointments, tests, treatments, and prescription medications, reports the Kaiser Family Foundation, a health policy analysis nonprofit. They may struggle to pay other bills, deplete savings, damage their credit, and even declare bankruptcy.

Challenging A Denial Is Challenging

The DPRP says whats more problematic is when insurers override doctor treatment decisions and question the medical necessity of a procedure, such as using an ultrasound in conjunction with a mammogram, as Delillo discovered. In about a third of cases, insurers deny claims for procedures or screenings because they deem them not medically necessary, according to the DPRP report.

Americas Health Insurance Plans, an industry association for private health insurance companies, disputes the DPRPs charge that insurers are creating barriers for people who want to take advantage of free preventive care.

Health insurance providers want every single person to get their preventive care, Cathryn Donaldson, director of communications at AHIP, said in an email to Consumer Reports. It helps ensure they stay healthy, and if theres a problem, it helps ensure they get care and return back to health quickly.

Donaldson says when a treatment is deemed unnecessary, it is based on medical and scientific evidence and is meant to protect patients from excessive testing and treatment that is unnecessary and can cause harm. Consumers and doctors who dont agree with a claim denial can appeal and are entitled to an independent medical review, Donaldson says.

Even if the charge is eventually reversed in your favor, a healthcare provider can send the bill to collections while its being disputed, potentially hurting the patients credit, Worthy says.

Your State Insurance Department May Be Able To Help You

Each state has an Insurance Commissioner who is responsible for overseeing insurance products within the state. You can find your state’s Insurance Commissioner and Insurance Department by visiting the National Association of Insurance Commissioners website. Helping consumers with insurance issues is a big part of the insurance department’s job, so don’t be shy about reaching out for help.

Once you explain your situation to the consumer assistance representative, they’ll let you know what your next steps should be. Be aware, however, that state insurance departments don’t regulate self-insured group health insurance plans, and self-insured plans cover nearly two-thirds of workers with employer-sponsored coverage in the U.S.

Self-insured plans are instead regulated under the Employee Retirement Income Security Act of 1974, which is a federal law. So if you have coverage under a self-insured employer-sponsored plan, the insurance department in your state will be able to point you in the right direction, but will generally not be able to get directly involved on your behalf. However, the ACA’s provision for internal and external appeals does apply to self-insured plans, as long as they’re not grandfathered.

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Find Out Why The Health Insurance Claim Was Denied

The insurance company should send you an explanation of benefits form that states how much the insurer paid or why it denied the claim.

If it’s a simple error, the insurer might offer to straighten it out. But double-check to make sure your insurer follows through, Goencz says.

“Get the name of the person you spoke to, the date, the reference number for the phone call and put it on your calendar to check back with the company in 30 days,” she says.

What Is Preventive Care Anyway

Welshs experience highlights another gray area: when a screening turns from preventive to diagnostic because the test detects something, even if the finding turns out to be erroneous.

Thats what happened in 2014 to Jeff P., who asked that his full name not be used because he is still disputing the bill with his insurer and doctor.

A self-employed architect, Jeff was buying his own insurance at the time through the ACA health insurance exchanges. During the colonoscopy, his doctor found a polyp and removed it to do a biopsy, which found it wasnt cancerous. Then Jeff got a bill for $700 for removal of the polyp. Next time I have a colonoscopy, Im going to tell the doctor if he finds something, dont remove it until I find out more about what Ill be charged, he says.Other problems arise because the criteria of what counts as preventive care can be so specific. Some medical services are covered annually, such as well-woman visits. But others are periodic or depend on your age and health profile or apply only to women or children. Counterintuitively, a lung cancer screening is considered preventive only for people ages 55 to 80 who have smoked a pack a day for 30 years. A cholesterol blood test is recommended every four to six years for men starting at age 35, but for women the recommendation is to start screening at age 45 or older.

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Make Your Case To Your Employer Or Insurer

You also can ask your insurer for an exception if the drug gets dropped from coverage.

“This process requires a supporting statement from your doctor explaining that your drug is medically necessary and that any alternatives would have an adverse effect, says Marsh.

If that doesn’t work, you can file an appeal.

“The exact process will depend on your insurer, but it often requires that you work with your doctor to submit an application or letter of appeal,” she says.

If the appeal is denied, you can file for an independent review through your state’s insurance regulator, which can take two months to process.

Many large employers self-fund their insurance plans, even though an insurance company administers them. In this case, you can contact your company’s human resources department and ask if they’ll cover the drug.

When Colburn worked for a previous employer a few years ago, his daughter needed a medication that wasn’t covered by his employer’s plan. He went to the HR department and explained why she needed the medication, and they ended up covering it.

“Not every employer is going to be like that, and it depends on the medication and whether you feel comfortable talking with them,” says Colburn.

Reasons Your Health Insurance Wont Pay For The Care Your Healthcare Provider Says You Need

1. What you need isnt a covered benefit of your health plan.

When your health plan denies your claim or refuses your pre-authorization request for this reason, its basically saying that your policy doesnt cover that test, treatment, or drug no matter what the circumstances are.

Your insurer should know exactly what benefits your policy provides and what isnt covered, but sometimes your insurer is wrong. Check your policy carefully. If your health insurance is through your job, check with your employee benefits office to see if you actually do have coverage for the service your health insurance says isnt covered.

In the United States, small group and individual health plans with effective dates of January 2014 or later have to cover the Affordable Care Act’s essential health benefits. But large group employer-based plans and grandfathered/grandmothered plans dont have to provide this same coverage.

If you feel youre being denied the benefits of coverage your policy says you actually have, follow the appeals procedure your health plan booklet outlines. Also, enlist the help of your employee benefits office if your coverage is job-based, or your states insurance commissioner .

2. You got the care from an out-of-network provider when your health plan coverage is limited to in-network providers.

However, if youve already gotten the care and your health plan won’t pay your claim because you went out-of-network, youre going to have a more difficult fight on your hands.

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Take Advantage Of The State Regulator

Taking an insurance company to court should be used as a last resort as it can tie up a claim in court for many years and seriously delay receiving needed funds to replace a home or pay medical bills. The first steps are to attempt to work directly with your insurance agent or insurance firm provider in a calm, patient mannerdocumenting the entire process all the while. If they end up proving difficult to work with, utilizing the services of a state insurance regulator can help move the process forward.

What Is A Prior Authorization

An insurer may decline you even before a test or procedure through the prior authorization process. Health insurers created the prior authorization process as a way to limit care that it deems unnecessary.

With prior authorization, your healthcare provider must get the insurer’s approval. For example, your doctor may want to perform an MRI if she spots a mass on one of your organs. However, your health plan may want to review your medical records before it approves the request. They do this to make sure an MRI is necessary for your specific case.

Some studies and surveys have indicated that prior authorization may affect patient care. In one survey, 93% of radiation oncologists said PAs delay patient care. One-third of them also said they decided on different treatment for 10% of patients because of these delays. However, health plans argue differently. They point to studies that indicate up to 30% of medical care is unnecessary and that physicians sometimes prescribe the wrong treatment.

Cathryn Donaldson, a spokesperson for America’s Health Insurance Plans, says prior authorization isn’t meant to hinder patient care.

“Just like doctors use scientific evidence to determine the safest, most-effective treatments, health insurance providers rely on data and evidence to understand what tools, treatments and technologies best improve patient health,” Donaldson says.

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Can I Enroll Again During Open Enrollment If My Old Plan Terminated For Non

Open enrollment has generally allowed people a chance to start over each year with new coverage, regardless of whether the prior years coverage was terminated during the year due to non-payment. The that were finalized by HHS in 2017 made some changes that allow insurers to recoup past-due premiums when people try to re-enroll during open enrollment. But HHS has finalized a reversal of those rules as of 2023.

The 2017 rule is described in more detail here, but essentially, if your coverage was terminated for non-payment of premium and you then enrolled in a plan offered by that same insurer within 12 months of your prior plan being terminated, the insurer could require you to pay your past-due premium before effectuating your new policy, and could refuse to effectuate your new policy if you didnt pay the past-due premium. But again, that rule will no longer apply as of 2023.

If your coverage was already terminated for non-payment of premiums, the most you would owe in past-due premiums is one month of premiums, as your plan termination date would have been the end of the first month of the grace period. If you werent getting a premium subsidy, you wouldnt have any past-due premiums, because your plan would have been terminated to the last date that you had paid for the coverage .

But if youre still in the grace period when youre re-enrolling , you could owe up to three months of past-due premiums if youre re-enrolling with the same insurer.

Explanation Of Benefits Do I Pay For This

Let’s say you recently visited your doctor, and you’re wondering how much that visit is going to cost. Then one day you get something in the mail that sort of looks like a bill it even says “amount you owe” at the bottom. But it’s missing the usual tear-off portion and return envelope. Confused? You’re not the only one.

Most likely it’s an Explanation of Benefits from your health insurance plan. We get a lot of questions about EOBs from our members. Here’s a little primer on why you got that EOB and what you’re supposed to do when you get it.

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If All Else Fails Contact The Mediaor An Attorney

If you’re certain that your claim should have been covered and it’s still being denied, contacting the media sometimes works. There have been cases in recent years of claim denials being reversed once reporters got involved.

You can also contact an attorney, although the attorney’s fees may make this cost-ineffective for smaller claims.

Health Insurance Subrogation Letters

During a personal injury settlement, health insurance companies consistently put attorneys on notice of their subrogation claims through a subrogation lien or claim letter. These letters outline the paying partys rights to entitlement, which medical payments the health insurance company is claiming a subrogation interest in, and the specific amounts. While your claim is being handled, your attorney should be aware of how much subrogation your health insurance company is claiming, and if the entire claimed subrogation is related to your personal injury case.

Once your case resolves, your attorney can effectively negotiate a reduction of your health insurance companys subrogation claim.

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Drug And Health Care Claims

Approximately 29 million Canadians have supplementary health insurance policies, either privately or through their employers, CLHIA reports. Its no surprise, then, that the bulk of insurance claims made are to a health insurer, whether its for braces for your nine-year old or a prescription for an unfortunately-timed UTI.

Generally, these claims are pretty simple: the drug is coveredyes or noand for a certain percentage . The claim is processed, the money shows up in your account a few days later and youre done! If this process doesnt go as smooth as clockwork, though, what stopped the clock?

Before you press that send button to submit your health claim to your provider, first do your homework. If its a large expense, particularly if you havent submitted a claim for a certain medication, medical supply or dental device to your insurance company before, check with them before you buy.

You may think that a product or service will be covered because something similar was covered before, but this isnt always the case. Your plan may specify you need a prescription or doctor’s note. Some procedures may require preauthorization from the insurer.

New drugs and medical equipment can hit the market and be available for purchase, but it may take your insurance company more time to consider whether or not it will be covered than you realized when you decided to buy that spiffy new glucose sensor system or the latest medication to help you stop smoking.

Read Your Health Insurance Policy

Understand exactly whats covered under your policy and how co-pays are handled. Health insurance plans differ.

For example, find out if you have an HMO or a PPO. Usually, the health insurer includes a summary of benefits online, but you should read the policy itself, says Rebecca Stephenson, president and CEO of VersaClaim, a claims assistance and patient advocacy business in Austin, Texas.

“This is not a document you store in the attic with your old tax records,” she says. “It needs to be close at hand.”

Can’t find it? Ask your employers benefits department, health insurance company or your broker, depending on how you get insurance, for a copy.

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What’s The Difference Between Denied Claims Vs Rejected Claims

The phrases are similar, but there is a difference between denied health claims and rejected claims.

A denied claim is often a claim with an error or one that violates the health plans fine print. For instance, a denied claim may happen if the provider didnt get the required prior authorization for a treatment or the plan doesnt cover the service. The insurance payer may reverse the denial if the provider offers the needed paperwork and documentation.

A rejected claim is usually connected to a providers office entering incorrect billing codes in the claim. Billing errors are a fairly common reason for rejected claims. A provider can resubmit with the correct information to rectify the issue.

How Does Insurance And Paying For My Medical Services Work

There are volumes and volumes of books on how insurance and medical billing works. While there are nuances, heres the basic outline of how it works.

Your health insurance plan offers coverage of certain healthcare services and treatments, and it outlines how much itll pay for each service and how much youll be responsible for. Provided that you have a managed care plan, which most Americans with health insurance do, your plan will also provide information as to which healthcare providers and facilities are in-network. Always ask to understand what insurance will and will not pay for, and how much theyll pay for, before visiting a healthcare provider.

After you visit a healthcare provider that accepts your insurance, theyll typically file a claim on your behalf. Your insurance company already has set rates that theyll pay out for each type of service, and theyll pay your provider that amount regardless of how much the provider has listed in their claim.

If your healthcare provider is in-network with your insurance plan, then theyll simply zero out the balance. If theyre out-of-network, however, whatever the insurance company does not pay for will be billed to you. This is why you may still receive medical bills after insurance pays its portion of your costs.

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