Don't Let Your Medical Bills Bankrupt You - Financial News for the ...

Medical bankruptcy can easily happen to anyone, even fiscally responsible people. Unfortunately, medical bankruptcy is also on the rise.

According to a study by the American Journal of Medicine published on CNN.com, bankruptcy from medical bills increased 50 percent from 2001 to 2007, and most of the people who filed were middle class homeowners. Moreover, 78 percent of the people who filed had health insurance! Many had unexpected gaps in their coverage, and others lost their company insurance after being too sick to work.

Bankruptcy of any kind can be devastating, leaving you with bad credit and angry debt collectors, but when you?re coming off an illness, those problems are only compounded.

Six Strategies for Avoiding Medical Bankruptcy

If you?re having a hard time paying your medical bills, you?re not alone. If you?re worried about being able to pay medical expenses in the future, kudos to you for being proactive. No matter how dire your situation might seem, don?t consider declaring bankruptcy just yet.

1. Find out if your hospital has a financial assistance program.

Although it?s not often advertised, most hospitals have some sort of financial assistance program for patients. Stanford Medical Center, Johns Hopkins Medical Center and Parrish Medical Center in Florida even have websites for their programs to help you make sense of them.

These payment programs are more flexible than you might think; many of them can help you even if you don?t have insurance. They can also act as a supplement to your regular health insurance, Medicare or other government-subsidized program.

2. Get a healthcare advocate.

We know you?re smart, but health insurance is super complicated. If you?re having a hard time making payments, it may be time to consider a healthcare advocate. A healthcare advocate will represent you in court and negotiate for lower payments on your behalf.

You may be able to find one for free through a non-profit organization or a government program. The National Patient Advocate Foundation and Families USA are two well-known national organizations that offer this service. You can also often find government-sponsored programs at the city, county or state level.

3. Make an honest effort to pay your bills.

The worst thing you can do is ignore your situation. No matter what?s going on, talk with your doctor, your hospital billing department or debt collector and try to work out a payment plan.

Even if they don?t offer you a payment plan, ask for help anyway ? don?t assume that nothing is negotiable. The vast majority of the time, people would rather get a little bit of money out of you than none at all. Negotiating is in everyone?s best interest.

4. Don?t skimp on coverage.

Many people think that a cheaper health insurance plan will save them money. In most cases, these types of plans will only save you money if you don?t actually use them. Cheaper plans have high deductibles, and often don?t cover basic services. There?s nothing more important than your health, so if you can afford the better plan, get it. While this isn?t always true, a co-pay plan is usually a better deal than a deductible plan, because you won?t have to pay as many out-of-pocket expenses.

5. Do your best to stay healthy.

This might sound obvious, but staying healthy is actually hard work. Be mindful of your diet, get plenty of exercise, go in for your regular checkups and if you?re dealing with a recurring medical issue, go in and get help for it as soon as possible. Going to the doctor isn?t fun, but you?ll save yourself a lot of money and a lot of pain by taking care of problems early.

6. Open a Health Savings Account.

If you have to have a high-deductible health plan, be sure to open a Health Savings Account (HSA) along with it. An HSA can help you save for your healthcare-related expenses tax-free. Some insurance plans come with an HSA, but you can also open your own at your local community bank or credit union. Some major banks, like Chase, offer them as well.

Laura Edgar writes for NerdWallet, a personal finance website that most recently published a survey of the top credit cards of 2012.

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