Facing High Medical Debt? Here’s What You Should Do

The following is a post by MPFJ staff writer, Toi Williams, who is a professional finance blogger for MarketBeat. She has backgrounds in personal finance, sales, and real estate.

Medical debt is becoming a big problem for many in the United States. According to data from the Consumer Financial Protection Bureau, medical debt collections currently make up about 52 percent of collection accounts on credit reports, a much higher rate than other types of debt. About a quarter of adults ages 18 to 64 reported having past-due medical debt in 2015, compared with 10 percent of people over 65. An estimated 43 million consumers with a credit report at a nationwide consumer reporting agency have one or more medical accounts in collection.

Of the consumers with only medical collections accounts, 50 percent have otherwise “clean” credit reports. However, having a single collections item on a credit report can hurt a credit score severely. A person with a FICO score of 680 could see their credit score drop 45-65 points once a collections account has been added to the information. Someone with a score of 780 could see a decline of 105-125 points.

This makes it very important to act on the medical debt quickly before it is sent to collections. There is currently no set standard for when a medical debt will be sent to collections, so it could happen anywhere between 30 – 180 days past the billing date. Here are some steps to take that will make handling high medical debt a little easier.

 

Examine Medical Bills Carefully For Errors

Medical bills are complicated and are often full of codes and terms that you may not understand. Those with chronic conditions, medical emergencies, or lengthy hospital stays face even more challenges because their care often results in multiple bills from multiple providers. Requesting itemized bill from each provider will allow you to check how much you were charged for each service.

When reviewing your medical bills, make sure that you were not mistakenly charged for services you didn’t receive. If a provider listed is unfamiliar, check the date of service to see if you had a medical treatment that day. Some providers may be associated with a hospital where you were treated but chose to bill you directly for the services.

 

Review Circumstances Of Denied Coverage

Many cases of high medical debt are due to the patient’s insurer denying coverage for certain procedures. Unless it is a medical emergency, in most cases you will know what your insurance will cover before receiving treatment. If coverage is denied for something that you believe should have been covered, there are several things that you can do.

First, review your health insurance policy to see exactly what providers and procedures are covered under your plan. If the questionable items should be covered, make sure your provider has your correct insurance info and that they used the correct billing codes when submitting the claim to your insurance company. A small mistake can lead to expensive bills for procedures that your insurance should have covered.

 

Dispute Inaccurate Charges

If you have reviewed your medical bills and find that you have been charged incorrectly, it is important to dispute the bill as quickly as you can. The first step is to send a written notice to the provider detailing which portions of the bill you are disputing. Be sure to send copies of all relevant documents along with the written notice, including copies of the bills with the errors clearly indicated and copies of medical records related to your claim.

In many cases, the provider will revise the bill to correct the errors once this notification has been received. It is important to stay on top of the matter until you can confirm that the necessary changes have been made. Keep a record of contacts made with the provider in your efforts to correct the bill. This information can be valuable if the medical bill is sent to collections still containing errors.

 

Ask If Discounts, Payment Plans, Or Financial Assistance Is Available

Medical care providers know that many people have trouble paying high medical debt and many offer ways to make paying the debt easier. For example, some medical providers will offer a discount to those that can pay the discounted amount right away. Others will accept the Medicare rate for their services, which is typically lower than the rate charged by private insurers. It doesn’t hurt to ask.

Some hospitals and clinics have a financial-assistance program to help people that are unable to pay their bills, but there are typically income limitations on who can apply for these programs. The provider might also offer a monthly payment plan that enables you to pay off the debt in installments at little or no interest. You may also be able to negotiate the amount due directly with your health care provider. In many cases, they will be willing to work with you to come up with a plan that you can afford.

One of the worst things you can do is put large amounts of medical debt on your credit card. If you cannot pay off the balance right away, you will be subject to a much higher interest rate on the debt than the provider would have charged you. If the debt is sent to collections, it will look like any other credit card debt to creditors, severely harming your ability to obtain credit in the future. Explore other options for repayment first and only use your credit card if you can pay off the entire amount before the next billing cycle.

How about you all? Have you been struggling with high medical debt? How have you been coping? Tell us in the comments.

***Photo courtesy of https://www.flickr.com/photos/usarmyafrica/4567202913/sizes/l

A Talk All Couples Should Have

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

After 9/11/2001, I started sharing a written record of our finances, with our children – who are our trustees.  Each year, I try to update it to make sure it somewhat matches reality.  It is meant to be a help if both my spouse and I die together and the kids have to pick up the pieces.

This year, as I was doing my updating, I realized that was not enough.  I am the primarily financial person in our marriage at this point.  I make the investment decisions, update the financial records and file the papers.  I usually do the prep work for our taxes to send to the accountant.  My husband and I do freely discuss our finances and do split some of the financial duties.  For example, he usually pays the bills and subtracts out the check register, while I do most of the other planning and reconciling work.  I also run both of our two limited liability corporations, since he is interested in neither.

Lately I’ve come to realize that my spouse may not know what to do if I die first, and my family history is of early death while his is of longevity.

He has never had to deal with the minutiae of death, and I have minimal experience.  There is a lot to do when one of a couple dies and if no discussion has happened the decisions involved can be heart rending.

Immediate decisions as to life support withdrawal, organ donation, preferences on how the body is handled, and things like what kind of wake to hold, where the service should be, and how much to spend on a funeral are just a few of many the surviving spouse will have to handle quickly.

Becoming single after our 45 plus years of being a couple will be a dramatic change for the survivor.  While documenting financial activities and accounts is important and needed, knowing ahead of time what your partner might prefer you to do can help the surviving spouse handle those immediate and imminent decisions during a grief filled, busy and stressful period.

 

Have that death talk.

Suggested questions for discussion/decision could be as follows.

 

Do you want to donate any organs?

How does each spouse feel about it?  What do you think the relative’s reactions will be – will they make it hard on the survivor?

 

Do you want to prepare a living will and/or a medical power of attorney?

What are your wishes if you can’t speak for yourself.

When my Dad’s cancer was determined to be terminal, he and Mom had this discussion and their decision was to do everything possible to save Dad.  He was after all only 65.

 

What do you want done with your body?

Do you want to be cremated, embalmed, buried naturally?  Do you want an open casket or a closed casket?  Do you want your body preserved within concrete vaults so it doesn’t decompose or do you want your earthly remains to decompose? Does your religion approve of your wishes and if not, how will your family handle it when the survivor implements your decision.  For instance, my husband was raised Roman Catholic.  According to Church doctrine, having an intact body at the funeral is of high importance.  Does that mean cremation is out?

 

Where do you want to be interred?

Do you want a particular cemetery or type of cemetery (religious, green, local, family and etc).  Should there be a head stone, or flat to the ground grave marker?  How do you want it engraved?  If cremated, what should be done with your ashes, your urn?  Would you prefer they be placed in a mausoleum/Columbarium, scattered, kept in the family home, etc?.

 

How much do you think should be spent on your funeral?

Just discuss to get an idea of what price levels you each think are appropriate?  Do you want to go with bare bones arrangements or something more elegant (and can you afford it)?

 

What should be considered for your memorial service?

Do you have certain songs, music, passages or speakers you want to involve in the funeral service?

Do you want others to stand up and give eulogies?  Should that be done at the funeral service, during the visitation, online or some other way.

 

Are there any documents or pictures you want to make sure get distributed?

I am planning on writing my autobiography.  I’ve asked my spouse to make sure that whatever I have done at the time of my death gets distributed to my heirs.  On a similar note, it is important to me to have my side of the family genealogy and history (which I spent considerable time gathering) preserved and passed along to future generations.

 

What do you want to leave as your legacy?

Is it important to you to leave assets to the kids or grand kids?  Do you want to fund certain charities or organizations (either with your assets or via donations in lieu of flowers at your service).  Are there certain accomplishments you wish to have memorialized  – such as Thomas Jefferson did when he instructed that of all his many accomplishments only 3 were to be memorialized – being the author of the Declaration of American Independence and of the statute of Virginia for religious freedom and being the father of the University of Virginia.

 

What income and expense levels can the survivor expect?

Now is the time to do some planning to make sure your partner will not be driven into the poor house when you die.

Our good friend Bill was diagnosed with terminal cancer.  He was a funny, hardworking carpenter, but he had no pension, no savings and his wife there fore would have no income.  She was handicapped and was suddenly left, not only without her life partner, but also without any economic support.

 

What tasks are done substantially by one person or the other?

Discuss how you have divided up the chores of life.  Make sure the other person is aware of all you do,  how to do it, when to do it and why to do it.

Bring the other party up to speed, especially on critical and financial tasks.  Make sure each one is aware of how to find things, who to call, and etc.  Make sure there is a common list available to both of doctors, mechanics, dentists, lawyers, accountants and etc.

 

How do you picture your life changing when I’m gone?

Help each other envision what life might be like when left behind.  By all accounts widows and widowers have a long, hard, somewhat lonely road ahead the first few years after the death of a partner.

But thinking (and talking) through possible scenarios can be helpful.   Will you keep the house?  How do you feel about  being single?  Do you think you might marry again some day (and how does the other person feel about that)?  Are there things you might want to explore that perhaps you didn’t have a chance to pursue so far?

 

What kinds of things are you going to do to get past the first couple of years alone?

Some experts say that keeping busy and socially involved can  help.  Others say you should grieve however you want.  Some say don’t make any big changes, as you are not in your best mental state while grieving.  How will you handle day to day activities that require more than one person?  Who will you call when you want or need to talk.

 

What do you want done with your ‘stuff’?

My spouse is a collector.  He fears that all of his wonderful collections will be sold off, because the heirs don’t want them.

Should there be a museum?  Is there a charity you should donate it to?  Are there certain things with special meaning you would like passed along to certain people?  My Mom requested that her jewelry be passed down the female side of the family.  I’m doing the same with all of her jewelry and with mine.

Life can and does end suddenly at times, totally unexpected.  Although not a fun topic, the above death talk is worth talking through.

How about you all? What difficulties do you foresee in initiating such a discussion with your life partner?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/halfchinese/235051813/sizes/l

Combating the “Wealth Equals Jerk” Perception

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

There’s a common perception among those struggling financially that all wealthy people are greedy, self-serving jerks who have made their fortune by trampling on others. Many of those living paycheck-to-paycheck lives gained this perspective from their parents or other authority figures in their lives. Entire books have been written on how the wealthy are responsible for all economic problems in the world.

I know our family sometimes talked this way when I was younger. In their minds, there were the haves and the have-nots and which group you fell into was simply luck of the draw. Besides, wealthy people were takers and not givers, and why would you want to be a part of such an uncharitable group of people anyway?

I believe a wrongly-held perception of the rich can have a subconscious impact on one’s ability to improve their financial situation. I know this was the case with my husband and me for many years. Because we viewed the rich as financial bullies, we were hesitant to improve our financial situation. We feared we would change if we became wealthy or financially secure and no longer be the compassionate, charitable people we were. While there are definitely rich people who step on the backs of others to pad their own pockets, studies have shown that the majority of wealthy people are in fact quite pleasant.

If you’re struggling with paying off debt and building wealth because you don’t want to become a “rich snob”, here are some tips that may help you change your perception of the wealthy.

 

Do Your Research

Thomas Corley, author of the book Rich Habits, found in his extensive research of the wealthy that they weren’t at all the horrible people that much of society makes them out to be. Contrary to popular perception, Corley found out some surprising statistics about the wealthy such as:

  • Seventy-six percent of the millionaires in his study were self-made. In fact, thirty-one percent came from poor households and forty-five percent came from middle class households
  • The wealthy in Corley’s study worked more hours, watched less television and spent more time networking than those struggling financially
  • The top one percent of the wealthy are carrying forty-six percent of the tax burden in the U.S.
  • Sixty-two percent of the wealthy gave 5-10% of their income to charity and seventy-two percent volunteered five hours or more per month at some type of charity

Often times the wealth-equals-jerk perception comes from a one-time experience a financially struggling person has with a wealthy person or from random media reports, but statistics show otherwise.

 

Remember that Money Doesn’t Change a Person

There’s an old saying that goes “Money doesn’t change one’s personality; it simply magnifies it.” In other words, if a rich person is a jerk, it’s likely that they were a jerk before they had money.

Pride, anger, low self-esteem and bitterness often come from years of self-centeredness, and those qualities can be adapted by people in all financial situations. If you look at the “jerks” you know, I’m willing to bet that they have a range of financial situations and aren’t limited to the wealthy only.

 

The Truly Wealthy vs the Appearance of Wealthy

One wealthy person I knew when I worked in the banking industry said that in her experience she had learned that while those pretending they had wealth were often angry, unhappy people, those who were truly wealthy were kind and charitable.

Often it’s the case that people appear to be wealthy due to the assets they own, when in reality they might just be highly indebted people who are extremely stressed by their financial situation. What comes off as “pompous jerk” might in reality be “I’ve been living this lie of having it all but I am being crushed under the weight of the monthly payments.”

I saw this regularly when I worked in banking. Nicely dressed people who owned fancy homes and drove fine cars would come into the bank, desperate for a consolidation loan or a plan to help them get out from the burden of heavy debt loads.

I also dealt with many wealthy people during my fifteen years in mortgage and traditional banking, and the majority of the truly wealthy people I worked with were indeed kind and compassionate.

 

Being a Jerk is a Choice

Don’t let false perceptions of wealth make you hesitant to build wealth for yourself and your family. Simply make a commitment that when you do become wealthy, you’ll use your fortune to make the world a better place. Being a jerk – or not being a jerk – is a choice.

How about you all? What has been your perception of wealthy people? Has it impacted how you’ve handled your money?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/conskeptical/3319490592/sizes/l

Cost of Education

The following is a guest post. Enjoy!

In Bob Dylan’s memorable song Mr. Tambourine Man there are some interesting verses such as, ‘How many roads must a man walk down before you can call him a man…’. The path to growth and enlightenment, and certainly to financial independence is education. Wisdom is the sum total of our life experiences – both theoretical and practical, while success comes from a clearly formulated plan. Very little comes from haphazard behavior, unless of course it’s a windfall payday off a lucky lottery ticket.

For most of us, achievement is the result of working intelligently towards an objective. With this in mind, it’s important to formulate a blueprint for academic excellence. In the United States, tertiary education is a major expense item. By the time a young adult enters high school it is important to start planning for college. Unbeknownst to many students, the federal government offers many programs to assist students in paying for their schooling. These include grants, work-study initiatives, and loans. This federal aid is often what makes the difference between being able to pay for college education or not.

Understanding What Options Are Available for FAFSA

Depending on what type of education a student is looking for, costs can vary from a couple of thousand dollars a year to tens of thousands of dollars per year. Community colleges offer an alternative path to regular college, after completing 2 years before credits can be transferred over. This is an affordable option for many folks, and a workaround to the high costs associated with traditional colleges. There are several ways that students can enjoy federal aid, including the Free Application for Federal Student Aid. Otherwise known as FAFSA, this determines your personal eligibility for different types of student aid. The form can easily be completed online and can translate into free money for a college education. Students who apply for these forms of government aid may be enrolled in work/study programs or approved for different types of loans.

The bureaucratic red tape surrounding many federal aid programs is a disincentive to many folks. Fortunately, there are services out there that make it relatively easy to determine qualification for student aid, given specific criteria. The application process is 100% free, since there is an official federal government site available. Even universities and colleges across the United States use FAFSA applications to determine a student’s eligibility for non-federal student aid. Once the low-interest loans have been approved, students can use that as a tool to build their credit scores. The competition to enter US colleges is fierce. Students who show initiative by actively applying for student aid often fare better in admissions than others. Since the application process can typically be completed in under 30 minutes, it is an easy way to begin taking meaningful steps towards a college education.

Facts and figures:

  • Students can apply early for FAFSA loans – as early as 1 October
  • The deadline for students is 30 June
  • Corrections must be made by 15 September
  • Early applications do not guarantee early loans
  • Tax forms from the previous 2 years must be presented
  • Every year $150 billion is dispersed in federal student aid
  • You don’t need to apply to a college before you apply for Federal student aid loans

There are many benefits to receiving one of these loans, including no payment until graduation. It is also possible to temporarily postpone payments, or even lower payments accordingly. If a graduate works in public service, a significant chunk of the loan may be foregone. In an era of rising interest rates, such as the present, FAFSA loans are offered at a much lower rate than credit cards and personal loans.

Personal Finance To-Do’s in a Good Economy

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

According to recent reports, the economy is in a state of thriving optimism. Check out this recent news article snippet:

“Upbeat economic data continue to emerge from the U.S. economy despite the turbulent political atmosphere. Leading indicators suggest that activity is firming in the first quarter of 2017 after GDP growth slipped in the final quarter of last year. The ISM manufacturing index rose to an over-two-year high in January, retail sales grew healthy and employers added jobs at the quickest pace in four months.”  (Source: http://www.focus-economics.com/countries/united-states)

After many years of digging out of trouble since the 2007-2008 housing bust, things might actually be starting to seriously improve for America’s citizens, at least from a financial standpoint. So what can you do to take advantage of a good economy and use the opportunity to improve your personal financial situation? Consider these options.

 

Assess Your Financial Situation

How have the last nine or ten years affected your finances? Have you gotten into debt? Depleted your savings? Ignored your retirement accounts as you work to be able to pay the bills? Make an assessment of your current financial situation and set some goals for where you want to be financially. Then make a plan for how you’ll get there and start moving forward with your plan today.

 

Make More Money

Jobs are being added at a quick pace, which means you have more opportunities to increase your income. Consider taking on a second job if necessary or getting overtime hours at work if they are available in order to help you reach your financial goals. Take advantage of the chance to increase your income while things are good and business owners and consumers are in a spending mood.

 

Don’t Get Too Comfortable With the Boom

In the years prior to the Great Depression, Americans had a “What could possibly go wrong?” attitude about their money. The stock market was thriving and the Roaring Twenties had people buying houses on credit, cars on credit and living a life of financial reckless abandon.

When the crash hit, many people lost everything and the foreclosure rate skyrocketed to over twenty-five percent.

History shows that every boom is followed by a bust – eventually. In a thriving economy that bust may come years down the line, or it may come in an instant due to a terrorist attack or other major widespread issue like a major drought that causes an increase in food prices.

In order to protect yourself and your finances, stay reserved about the immediate economic success and continue to plan for future economies as opposed to simply taking comfort in the current good one.

 

Beware of Potentially Rising Interest Rates

We’ve lived with super low interest rates for the last several years as the government worked to make it possible for people to keep spending in spite of the housing bust and its after effects. Now that things are looking up we can expect rising interest rates which will affect mortgage loan rates and credit card rates as well, so borrow carefully.

A good economy is a great thing, but it’s also a great time to keep in mind that economic booms don’t last forever and to prepare to be financially stable no matter what the economy may be doing. Ditch your debt, increase your savings and work your way to a healthier financial situation while the getting is good.

How about you all? What steps are you taking to improve your current financial situation?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/koalazymonkey/3596829214/in/