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#Everything You Need to Know About Medical Debt

‍Medical debt can be crushing, especially if you’re just starting as an adult or have a limited income. It can also be one of the first financial challenges you face at any point in your life. If you don’t take action now, it could remain a lurking threat for years to come. Fortunately, there are many ways to reduce your risk of debt and protect yourself from future bills. The sooner you act, the more time you’ll have to put into reducing your other debts and building up a solid credit history. This guide will help you understand what causes medical debt, how to avoid getting into trouble in the first place, and the best ways to get back on track if you do end up in the red.

What Causes Medical Debt?

One of the most common causes of medical debt is a medical emergency. You might need an expensive procedure that your insurance doesn’t cover or a serious injury that requires extensive treatment. A broken leg that isn’t properly treated may result in arthritis in the future. Similarly, a serious illness can quickly require pricey treatment.

Another common cause is overspending on your insurance. You might assume that your insurance covers everything, but this is far from the truth. Your plan might have a high deductible that you have to cover with your own money before the insurance company pays anything. Some people don’t even realize that this is the case until they end up with an unexpected bill.

You might also run into medical debt if you attempt to “manage” your healthcare costs by doing unnecessary procedures or testing. If a family doctor notices that you also have a headache that comes around every three months, he may send you for an ultrasound or an MRI. These tests are often completely unnecessary, and your healthcare costs could be much higher than they need to be if you don’t require the tests.

Avoiding Medical Debt: Tips to Stay Healthy Financially

Health care is a significant part of most people’s finances, but it doesn’t have to be. The government has made it easier than ever to stay healthy and save money. Health care can be one of the most expensive expenses in your budget. Not only does it cost a significant amount in premiums and co-pays, but you also have to pay for it yourself if you don’t have insurance.

Depending on your income, you may also be eligible for various government programs that help you cover some of the cost. However, there are a few things you can do to keep your medical expenses low while still staying as healthy as possible. First, get a good health plan. The cheapest plan might cover only a small portion of your medical costs. The best plan might cover a higher portion but comes with cheaper premiums and lower co-pays and deductibles. Next, take advantage of the discounts offered by your pharmacy. Many large chains offer discounts to their members, and many pharmacies offer their own discounts as well. You can also join a health care sharing group and ask your friends to share their medications with you. This can drastically cut down on the amount you have to pay for medications.

Strategies for Paying off Your Medical Debt

  • Keep track of your expenses: Before you know it, you could end up with medical debt. Try to avoid this by keeping track of all your expenses. This will help you identify any areas where you’re spending more than you need to. It will also give you a better idea of how much you earn each month, which can help you work toward paying off your debts.
  • Shop around: You might be surprised at how much different insurance companies will charge you for premiums, out-of-pocket costs, and other aspects of your plan. This will help you find the plan that’s best suited to your needs.
  • Embrace the sharing economy: Sharing services like carpooling and public transit have become increasingly popular in recent years. For medical expenses, you can also use this model to help you save money.
  • Get a flexible job: Many people assume that only full-time jobs offer health insurance coverage. However, many employers offer the option of part-time employment, which can help you reduce your debt while remaining financially stable.
  • Ask your parents for help: If you can’t afford insurance on your own, you may be able to get help from family members. Some families even commit to helping each other pay off their medical debts.
  • Get a consolidation loan: If you have multiple credit cards with high-interest rates, a consolidation loan might be a better option. This type of loan acts much like a loan and requires you to pay it off quickly.
  • Find medical debt relief: If you’re struggling to find a way to deal with your debt, you can look to get medical debt relief to minimize or completely wipe your debt.
  • Apply for a tax refund: The IRS may offer you a tax refund if you qualify. This money can be used toward medical debt or even put toward saving for a down payment on a house.

What Happens to Medical Debt in Bankruptcy?

If you end up with medical debt, there are a few things you should know. First, it should be noted that the vast majority of people with medical debt do not end up in bankruptcy. Most credit counselors and financial experts recommend that you should try to pay off your medical bills before you get into trouble. The reason for this is that the bankruptcy code treats medical debt differently from other types of debt. Medical debt is treated as “prior work.” This means that you can’t get into bankruptcy for medical debt unless you have already tried to pay it off.

Protecting Your Credit While Paying off Medical Debt

Once you have a payment plan in place to pay off your medical debt, it’s important to protect your credit score. This is especially true if you have one large payment coming up, such as a major insurance bill. When you make a single large payment, it will count as a payment on your account and damage your credit score. This is why it’s important to make sure that you spread out any medical payments over multiple months, or even years depending on the size of the bill. You can also protect your credit score by making sure that the payments are as small as possible. If you pay a $3,000 bill with $500 payments each month, it will damage your credit score more than if you pay $500 with a single payment.

Conclusion

Medical debt is a real threat that can potentially ruin your credit score and trap you in a cycle of debt. The best way to protect yourself is to make sure that you stay healthy and are not overspending on unnecessary items such as prescriptions and unnecessary testing. If you do end up in medical debt, make sure to make regular payments without letting your debt grow. This will help to protect your credit score while also helping you to stay out of trouble.

by Rayanne Morriss

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