Medical debts are common among Americans and can be a completely overwhelming issue.  This article presents some tips, tricks, and advice to get that medical debt handled as soon as possible!
If you are one of the many Americans, who is unable to pay off your medical bills, you need to understand the reasons for incurring medical debts and its consequences. This white paper addresses the major issues of rising medical debts and offers a few possible solutions for effective medical debt management.

Medical Debts Across The Nation

You can incur exorbitant debt if you do not have enough funds to pay for your medical expenses. The upward spiral of medical debts is affecting adults across all age groups, ranging from 19 years to 65 years and beyond. Low and moderate income groups are the worst hit. However, the rising cost of medical care has increased the medical expenses of people belonging to all income groups. A study conducted by ‘The Commonwealth Fund’ across different age groups (19 years to 65 years) reveals the rising trend in medical expenses from 2005 to 2007 incurred by people belonging to different income groups. The following is a bar diagram depicting the upward trend of medical debts across all income groups.
The graph in Fig. 1 clearly shows that while the total percentage of people incurring medical debts or having problems with paying their medical bills rose from 34% in 2005 to 41% in 2007, the largest increases were in the low income (10%) and moderate income (8%) groups.
Fig. 1

A Rising Burden for the Uninsured and the Underinsured

Stagnant incomes are not able to keep up with the escalating costs of health insurance. Many people are not in a position to pay the high premiums and as a result they are either uninsured or underinsured. They are the ones who amass high medical debts. The National Coalition on Health Care disclosed that about 47 million Americans are uninsured [Source: NCHC.org] Almost half of the uninsured people have accrued an average outstanding debt balance of $9000 per person [Source: Credit.com]. The reason for the high debt balance for uninsured persons may be attributed to the fact that they have to pay for all the medical expenses incurred themselves.

On the flip side, underinsured people, who do not have adequate insurance to cover all the medical expenses, are also running into huge medical debts. Out of network doctors, deductibles for medical care, rehabilitation care and expensive prescription drugs are a few components of medical expenses not covered by the limited extent of underinsured patients. As a result, they are left with paying for these expenses out of their own pockets. The Common Wealth Fund report released statistics depicting a comparison of the percentage among uninsured, underinsured and the fully insured people troubled with medical bill payments. The figures, in the graph as shown in Fig.2 shows that lack of adequate health insurance is directly related to an increase in medical debt.

According to the information in the report:
•   Only 13% of fully insured people had problems with the payment of their medical bills as compared to 43% of underinsured people and 48% uninsured people who are not able to pay their medical bills.
•   26% of the fully insured people accrued medical debts. This figure is significantly than 61% of the uninsured and underinsured people facing medical debts.

Impact of medical debts

The effects of medical debts are overwhelming; they lead to many personal and financial problems. Many people are compelled to trade off their savings and spending priorities in an attempt to settle their medical debts. The high medical care costs coupled with increasing medical debts act as deterrents for individuals who need treatment for chronic illnesses and at times they may even discontinue their treatment halfway through. Confronted with the payment of medical bills and debt, many Americans use up all their savings and even take out money from their retirement funds to pay off the bills. In order to pay their outstanding medical bills, an estimated 21 million people took on credit card debt and about 8 million people used money from their home equity. Many are not even able to afford the basic expenses like food and rent. The following graph (see Fig.3) depicts the number of people impacted in various ways, in an effort to pay off their medical debts.
According to the Consumer Bankruptcy Project, medical debt is in fact also one of the major contributors for personal bankruptcy filings. Medical debts may also reflect on your credit reports and scores, if:
•   Your debts are passed on to a collection agency
•   Your health care provider gets a judgment from the court that you owe them an outstanding medical debt balance.
•   You incur a credit card debt to pay medical bills and are unable to make your credit card payments on time.
•   You file for bankruptcy to resolve your medical debts.

If you find yourself facing medical debts, do not panic. There are ways to shed the excessive baggage of your medical debts.

Manage Your Medical Debts

It is essential to be patient while managing your medical debts. It requires a disciplined effort and a sound plan to organize your finances for paying off your medical debt. Keep the following things in mind while settling your medical debts.

Review Your Medical Bills

As soon as you get your medical bills, go through the contents of the bill thoroughly. Check the bills and ensure that there are no billing errors or duplicate entries in your bill. If you have any health insurance, your health insurance provider is likely to be billed directly by the hospital. In such a case follow up with your health insurance company to find out the extent of the expenses that they will settle and make arrangements to take care of the balance amount still payable to your health care provider.

Prescription for paying off your medical bills

Talk to the hospital or health care provider
If you are not insured negotiate with your health care provider and request them to offer a discount on your bill amount wherever possible. Explain to them the reasons of your difficulty in paying your bill. Ask for a hospital repayment plan and ensure that you make timely payments to avoid additional expense of paying interest charges or penalties. Arrange for automatic debit towards your hospital repayment plan from your checking account instead of auto billing it to a credit card account. This will avoid incurring another debt for paying off your medical debt. Know your options:
•  Check for charity programs run by hospitals. Hospital counselors can assist you in finding waivers in hospital costs and the available charity programs applicable to you.
• There are many support groups and local health care programs that can provide you with Information on affordable medical Services.
• Thoroughly read your health insurance policies to understand your health coverage, deductibles and coinsurance policies.
• Find out if your medical debt is eligible to get you an itemized deduction on your federal income Tax Return.
• Find out if you are covered by Medicaid, provided by the state health department to low income families with soaring medical bills. If you are 65 years or above or disabled inquire into your eligibility for Medicare coverage from the U.S. Health Department.

Avoid Using Your Credit card
Avoid paying your medical bills with a credit card. Once your medical debt is transferred to your credit card, it will no longer remain a medical debt, thereby reducing your chances of qualifying for Medicaid (the health care safety net provided by state governments). If you are unable to pay your credit card balance on time, the interest and late fee charged will only increase the debt. If you have incurred a credit card debt already, then take care to pay your credit card bills on time. Check out www.cesidebtsolutions.org to avoid a few factors that can increase your credit card debt.

If you feel that you are not able to pay your credit card bill amount on time, talk to your lender and let them know about your circumstances. Request a payment plan that will be suitable to you and your creditor. In case your debt is referred to a collection agency, respond to their calls and let them know that you intend to pay but are unable to do so in the present situation.

Seek the Help of a Certified Credit Counseling Agency
If you are unable to handle the growing debt problems, you can seek the assistance of an authorized credit counseling agency to solve your financial problems. These agencies are usually non-profit organizations and can guide you on how to mange your money and pay your debts systematically, either free of cost or for a nominal fee. However before you enlist the services of a credit counseling agency make sure that the agency is genuine and their counselors are accredited by certifying bodies like the National Foundation for Credit Counseling (NFCC) or the Association of Financial Counseling and Planning Education (AFCPE).

Medical crises may strike at any point of time in your life. You must ensure that you prepare yourself well in advance to deal with any possible financial problems. Though the cost of health insurance has increased considerably, it is still advisable to have adequate health insurance. The study by Common Wealth Fund also reveals that insured people have less medical debts. Finally exercise good money management skills and create a family budget. Encourage all the members of your family to save. Set aside a small amount from your monthly income in a savings account.

Injuries and illness create havoc on your health as well as your financial situation. The rising medical bills and the resultant medical debt can prove to be intimidating. We, at Consumer Education Services Inc. (CESI) understand your stressful situation and offer guidelines on effective debt repayment strategies. Our counselors are certified by institutes like (AFCPE) and the National Institute for Financial Education (NIFE). They are well trained and provide you with free education on money management and help you create a budget. If needed, they will help you to repay your debts systematically with a debt management plan. To know more on how a debt management plan works , visit www.cesidebtsolutions.org