Managing Medical Debt

The major expense families dread most is the medical bills that come with an accident or serious illness. Whether you're insured or not, you know that medical debt can pile up quickly, generally when you least expect it. Insurance doesn't cover as much as it used to, and healthcare costs have been rising faster than inflation. It's not surprising, then, that medical debt is more frequently a contributing cause of personal bankruptcies. The Commonwealth Fund released a study of medical debt in August 2008 which included these disturbing statistics:

• Almost two-thirds of Americans under age 65, about 116 million people, reported medical bills or debt.
• One-third of all Americans of working age spent 10% or more of their income on out-of-pocket medical expenses and health insurance premiums.
• 39% of those with medical bill problems had used up their entire savings.
• 30% of those with medical bill problems had taken on additional credit card debt to pay for it.

Medical bills can seem overwhelming. The debt management experts at ClearPoint Credit Counseling Solutions have several suggestions:

• Don't pay medical bills with credit cards or loans - If you're charged interest on overdue medical bills, it's probably going to be much lower than credit card interest.
• Don't put your home on the line - Your home is a valuable asset. Think very carefully before you attach unsecured medical debt to it.
• Protect the nest egg - Once you dip into retirement savings, it's very difficult to restore them, and they represent your future. Make that an absolute last resort.
• Ask your doctor or hospital about payment plans - Hospitals know the economic reality today. They would prefer you're paying something regularly, even a small amount, rather than default or go into bankruptcy. It never hurts to ask.
• Get help - If you're facing large medical bills, or if you've run up credit card debt paying them, turn to the professionals at a nonprofit credit counseling agency, like ClearPoint, for objective, seasoned advice.