When Health Insurance Doesn’t Cover Your Bills

Health insurance is supposed to be a way to protect yourself from financial ruin in the event of a medical emergency, but for millions of Americans, this definitely isn’t the case. In fact, 43 million Americans have one or more outstanding medical bills on their credit report, notes the Consumer Financial Protection Bureau (CFPB). Delinquent medical bills also account for 52% of collection accounts on credit reports, the article adds. 

Those who have been fortunate enough to escape the wrath of collections may nonetheless find themselves battling with a series of other financial issues because of excessive medical bills. Why are these consumers, who did their part by securing coverage, still forced to cope with costly bills for medical care? There are several reasons, but at the forefront of the list are excluded services, out-of-network providers and excessive copays.

A national poll by National Public Radio, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health revealed the following statistics about healthcare costs:   

• 26% of respondents felt healthcare costs caused a serious financial problem.
• 42% of respondents depleted their savings to cover medical expenses.
• 44%  of respondents enrolled in a payment plan to make medical bills more manageable.
• 39% of respondents were contacted by bill collectors for failure to remit timely payments.
• 27% of respondents struggled to cover food, utilities, and housing expenses because of medical bills.
• 23% of respondents resorted to credit cards to cover healthcare costs.
• 19% of respondents borrowed funds and foresee difficulty in repaying the balance.
• 7% of respondents declared bankruptcy as a result of medical expenses.

Prior to signing on the dotted line to receive services, confirm with the providers that they are in your network. For more advanced services, such as surgery, you should also speak with the head practitioner to confirm that all the providers rendering services also take your insurance. Otherwise, you could incur hefty fees, as out-of-network providers (for example, the anesthesiologist doing your operation) don’t have to abide by the negotiated rates set forth by your insurance company.    

Each time your health insurance changes, you need to pass on the updated information to your provider so that your claims are not processed using the old policy still on file. If you don’t, your claim will be rejected, and you could have to cover the cost of treatment. While it’s fairly simple for the billing staff to resubmit the claim to your new insurance company, you could end up in the hot seat with the collections department if you don’t get everything straightened out. Even worse, you might end up remitting payment for services that should have been covered under your current policy. (For that reason, it's vital to know your rights when it comes to debt collection.)

Medical billing specialists process thousands of claims, so mistakes are bound to happen. Estimates of how big the problem is range from 7.1% of paid claims containing an error, according to the American Medical Association, to reports of 75% or 80% from billing review groups, according to a CNBC report. For this reason, you should always request itemized bills and carefully review each line for duplications, services you didn’t receive, price discrepancies and any other issues. If you spot inaccuracies, immediately reach out to your provider’s billing department to resolve any issues.

Who says you can’t shop around for medical providers? Some services come at a substantially higher price tag than others, so explore your options if there are more than one available. Also, compare the out-of-pocket costs among providers. Surgical procedures performed at hospitals and treatment received in the emergency room have a reputation for being more costly than medical services rendered at outpatient centers and walk-in clinics.

If you're struggling to stay afloat in a sea of medical debt, here are a few suggestions: 

1. Make Payment Arrangements. Payment plans are always a viable option to consider if your medical bills are too costly to handle in a single transaction. However, it’s important to make timely payments and contact the medical provider immediately if your financial situation changes.
2. Inquire About Financial Assistance Programs. Some hospitals and medical providers have in-house programs or are connected with organizations that provide assistance to patients who are in dire financial straits and struggling to cover their medical expenses. Speak with the billing department to learn more.
3. Negotiate the Final Balance. As a last resort, you can meet with the billing administrator and plead your case in an attempt to negotiate the final balance.

Carrying adequate health insurance coverage isn’t always enough to keep the rising costs of medical care under control. Fortunately, being proactive can help consumers curb costs, secure financial assistance, and ultimately decrease the impact on their wallet. (For more insight, read more about how health insurance helps manage financial risk.)