Should You Use Your Rainy Day Fund for Medical Bills?


Conventional wisdom says it’s smart to save up for unexpected expenses, like covering the basics after a job loss or settling medical bills after an emergency treatment. But because the costs of medical care can be so unpredictable — and often so wildly expensive — should you even try to save up for them and tap your rainy day reserve when they occur?  

Yes and no.  

Financial planners say you should set aside money for medical expenses — expected or unexpected — so if anything happens, you will at least have a cushion. But it’s not a good idea to drain your emergency fund on hospital bills so large that your emergency fund won’t cover all of it.  

“If you were to drain all your emergency fund on that medical bill, let’s say a car breaks down,” says Juan Guevara, a certified financial planner based in Colorado. “Then the only resource at that point is getting into debt.” 

In fact, if you can come up with other strategies to pay down those medical expenses, it may be wiser to preserve your emergency fund as much as possible. Here’s what you can do when are surprised by a big medical bill: 

Ask for a payment plan 

First, you should reach out to the hospital or doctor. Many medical institutions actually provide low-interest or even no-interest payment plans for patients who cannot pay bills — particularly big hospital bills — in full.  

“Anyone whom you owe money to is a good place to start with: Is there some kind of financing they could provide?” says Catherine Hawley, a certified financial planner in California.  

“There’s not one kind of ubiquitous standard, but it’s definitely something to look into.” 

But you have to ask; this isn’t something hospitals are advertising. 

Guevara says his family got a medical bill for more than $11,000 a few years ago after his wife had an emergency surgery. The couple called the hospital, asking if they could work out a payment plan, and the hospital agreed to a one- or two-year plan with no interest after an initial $4,000 payment.  

“If there’s no interest, why not to spread it out a little bit more?” Guevara asks. He chose to pay off the hospital costs over two years. 


It’s also possible to negotiate a lower bill with hospitals and doctors.  

Guevara says some of his friends who didn’t have health insurance coverage have successfully done this. They explained their predicament while showing the willingness to pay in cash, and the hospital not only reduced the amount they needed to pay, it also provided payment plans.  

“For a hospital, it’s better to collect something than collecting nothing,” Guevara says. 

Here is a guide to getting your hospital bill reduced or even eliminated. 

It’s OK to tap your emergency fund — just don’t wipe it out 


When a huge, unexpected medical bill arrives, your emergency fund may not come close to covering it. Still, financial advisers suggest you save some money for such emergencies and tap part of your rainy-day fund when needed. 

“You are making things a little bit easier for yourself,” Guevara says. “If you start treating a lot of things as not-unexpected, when it actually happens, you already have some money there.” 

To come up with the $4,000 to cover part of his wife’s surgery costs, Guevara had to take $1,000 out of the family emergency fund, in addition to using funds from their Health Savings Account (HSA).  

Guevara suggests that, as a rule of thumb, no more than half of your emergency fund should be applied to expensive health care costs. 

For those who feel reluctant to touch their rainy-day cash for medical emergencies, Hawley recommends you learn what your out-of-pocket maximum is — the most you have to pay for health care services in a plan year — and include that amount in your fund. After you hit your out-of-pocket max, your insurance company covers your health care costs for the rest of the year. 

If you anticipate a lot of medical bills in the coming year or have a personal or family history of medical problems, you might want to set aside separate money so you can preserve your emergency fund as much as possible, Hawley advises. 

Take advantage of an HSA 

People with a high-deductible health plan (HDHP) are eligible for a tax-advantaged Health Savings Account. Pros highly recommend that those who have an HSA use it not just as a medical fund for unexpected emergencies, but also as a long-term retirement savings account. 

The money you put into an HSA is tax-deductible. The balance grows tax-free and rolls over each year. Withdrawals from your HSA for qualified medical expenses are not taxed. 

The annual maximum HSA contribution in 2018 is $3,450 for an individual and $6,900 for a family. If you are at age 55, you can contribute an additional $1,000 annually. 

“For very high medical bills, it’s not going to be the only answer, but it could be a nice piece of the puzzle,” Hawley says. 

When a surprising hospital bill arrives, instead of paying for it in cash, Guevara suggests you take the money out of savings account and deposit it into your HSA first. Paying the medical bill with an HSA helps you save money, because then you can deduct that contribution on your income tax return. 

An FSA (Flexible Spending Account) can be similarly helpful, though it can be tricky to decide how much to put in such an account: FSA funds must be used by the end of the year. 

Enlist help from family and friends 

Before resorting to credit cards or other types of loans, look for ways to pay bills without having to take on interest-bearing debt. You may not like the idea of asking for help, but a loan from a family member or friend may be your most affordable option. 

“You gotta push yourself out of your comfort zone and ask for people to help you,” says Dan Andrews, a financial planner based in Colorado. “And put yourself in their position like, ‘If i was the loved one of the person that comes to me for help, I would want to help them.’” 

What to do if after you dip into your fund 

Replenish your fund after withdrawals so you’re prepared for future unexpected costs. 

A drastic lifestyle change may also be needed so that you could redirect more of your money to pay down the medical debt. If you “don’t need a car as much as they used to, sell that, or maybe find other ways to increase your earnings,” Andrews says. 

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Should You Use CareCredit to Pay for Medical Expenses?

Source: iStock

It’s no secret that medical expenses can be very costly in the United States. Since 2011, average family insurance premiums, even for people with employer-provided plans, have increased by 20 percent.

With out-of-pocket health care costs and insurance premiums skyrocketing, many people are turning to credit cards designated for medical expenses like CareCredit to help them pay for health care expenses over time.

But before you sign up for CareCredit to cover your next medical bill, here’s what you need to know.

A warning about those 0% financing offers

CareCredit is a credit card you can use at any of more than 200,000 health and wellness providers in the United States — from doctor’s offices to drugstores like Rite Aid.

Why turn to CareCredit instead of a regular credit card for medical expenses?

The biggest draw is the company’s frequent 0% financing specials for six to 24 months on qualifying purchases $200 or more, when you make the minimum monthly payments and pay the full amount due by the end of the promotional period.

The opportunity to put approved medical expenses on a 0% credit card and breathe easy for up to two years has huge appeal. But there’s one big caveat everyone should understand when it comes to CareCredit — deferred interest.

When you sign up for the CareCredit financing on a purchase of $200 to $999, deferred interest rate applies. This means that if you don’t have the full purchase paid off by the end of the promotional period, you will be charged retroactive interest at an APR of 26.99% from the date of your original purchase on the card. (We give an example of how the math works out below.)

Unfortunately, this is something customers could easily forget about, and it doesn’t help that the minimum monthly payment shown on your statement isn’t necessarily enough to get the entire balance paid off on or before the end of the special financing period. You should do the math yourself to make sure you’re paying enough each month to make the most of interest-free financing.

How CareCredit works

Now that you understand the risk that comes with a CareCredit account, let’s cover some of the details of what the company offers.

For larger purchases of $1,000 or more, CareCredit offers terms of up to 60 months with a reduced APR and fixed monthly payments until paid in full.

$200 to $999: Borrow at 0% for 6, 12, 18, and 24 months. Variable rate of 26.99% applies after promotional period ends.

$1,000 to $2,499: Borrow at 0% for 24, 36, or 48 months with an APR of 14.9%.

$2,500 and up: Borrow at 0% for 24, 36, 48, or 60 months with an APR of 16.9%.

How to apply

You can apply online on the CareCredit website or by phone at 1-800-677-0718. You can also apply at most health care providers’ offices if they are part of the network that accepts CareCredit to pay for services.

Like most credit card applications, you will need to supply your name, address, date of birth, Social Security number, net income and housing information. But unlike most credit card applications, you will also need to specify your doctor’s name and how you plan to use your CareCredit credit card if you aren’t applying in a doctor’s office. Once approved, you can use your CareCredit credit card again and again at participating health care providers.

CareCredit approvals are usually immediate, so you can find out right away if you can pay for your medical services with CareCredit. Synchrony, the bank that issues CareCredit, did not respond to phone and email requests for information on the credit standing needed to qualify for CareCredit.

What can CareCredit be used for?

As mentioned earlier, there are more than 200,000 enrolled providers that accept CareCredit in the United States. These include many different types of medical and health care providers and procedures, such as:

  • Chiropractic
  • Cosmetic
  • Dentistry
  • Hearing
  • LASIK and Vision
  • Primary and Urgent Care
  • Weight Loss
  • Health Care Specialists

You might even be able to use CareCredit to pay for veterinary care for your four-legged family members, if your veterinarian participates and accepts CareCredit in their office.

Fine print alert

While there’s no application fee or fee for using the special financing offered by CareCredit, there are still some things you need to watch out for.

The first, which we covered previously, is the high interest rate charged if you don’t pay your balance off in full by the end of the promotional period. The interest rate of 26.99% is very high, and as mentioned, it will be charged in arrears from the time you made your purchase.

For example, if you charge $1,200 to your CareCredit at 0% for six months and only pay the minimum payment each month (between $39 and $33), your balance will be $982 at the end of the six-month period, plus accrued interest of $152, totaling $1,134. If you continue making only the minimum payment, it will take you 96 months (eight years) to pay off your balance and cost you $2,693. However, if you paid $200 a month, you’d pay off the $1,200 bill within six months at no extra cost.

Source: CareCredit

The late payment fee for CareCredit can be up to $38. Plus, paying late even once may result in you losing your promotional 0% interest rate.

Who is CareCredit best for?

Because of the fact that CareCredit will charge interest from the time of your purchase if your balance is not paid in full by the end of a promotional period, the only time you should use CareCredit to finance your medical costs is if you are 100 percent certain you can pay it off within or before the end of that time frame.

This might be a good idea if you have already saved up the cash for a medical procedure and you can continue earning interest on it in your savings account. By earning interest on your savings and paying 0% interest with CareCredit, you can actually save money on your medical bill. This could still be risky: You never know if something might happen that could cause you to no longer be able to afford to pay off your CareCredit balance as you had planned.

Alternatives to CareCredit

Ask the billing department for a payment plan

Many health care providers offer patients no-interest payment plans, but you may not know about it unless you ask. Tell the billing department what you can afford to pay monthly and see what your options are for spreading out the cost of your treatment.

Use your emergency fund

If you know you incur a lot of medical bills or don’t want to rely on credit when they come around, make saving for medical expenses or adding to your emergency fund part of your regular budget. That way, if an emergency happens, you’re much less likely to go into debt paying for it.

Open a credit card with 0% financing for purchases or balance transfers

There are many credit cards available with 0% interest rates from six months to 21 months that don’t require you to pay off your purchase in full to avoid interest from back when you first made the purchase. Even if you can’t pay off the entire purchase before the end of the 0% interest period, you could try doing a balance transfer to keep your interest rate low, but even if you leave your balance on that credit card, it probably has a lower interest rate than the 26.99% offered by CareCredit. Here are some of your best options for a 0% credit card.

Take out a personal loan

If you can qualify for a personal loan with a low interest rate, you’ll have fixed monthly payments, and you may be able to extend them longer than the terms offered by CareCredit. We’ve rounded up some of the places you can get the best personal loan rates online, and you can read about them here.

Don’t get caught at the checkout counter at your doctor’s office and end up making the wrong decision. Make sure you’ve carefully considered your options before you decide if you want to sign up for CareCredit to pay for your medical costs.

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This Man’s 2-Mile Ambulance Ride Cost $2,700. Is That Normal?

Ever wonder why ambulance rides are so expensive? This man's frustrating story will enlighten you.

Ideally, you’ll never need to ride in the back of an ambulance. But if it happens, here’s what you should know: Ambulance services are extremely expensive.

Rick Santoro learned that the hard way.

After receiving a two-mile transport in February, Santoro experienced sticker shock: His ride added up to $2,691.50. Though insurance covered most of it, Santoro had to pay $770.30 out of pocket, and he wondered if that was right. The bulk of the bill resulted from the fact he hadn’t yet hit his annual deductible, but it still seemed pricey, he said, given the brief care he received.

“I just want an answer,” Santoro said. “If I gotta pay the 700 bucks, I gotta pay … It will be a lesson learned for me.”

‘I Didn’t Feel Well’

In early February, Santoro, 60, was at an orthopedist’s office for a small procedure, an injection in his knee. Afterward, he passed out, but once he regained consciousness, he continued to feel ill.

His doctor suggested he go to the emergency room, and Santoro, uncertain why he was having issues, agreed. An ambulance took him two miles to the nearest hospital, and a few weeks later, the bill arrived. The short ride cost more than the subsequent emergency room visit, which he estimates lasted about two and a half hours. That bill was $200.

Why Are Ambulance Services So Expensive?

Santoro’s inquiry isn’t the first has received about a pricey ambulance ride. As we’ve previously reported, there are many reasons medical transport services cost hundreds or thousands of dollars. It’s difficult to pin down an average amount for an ambulance bill, because costs vary so widely by location, services and contracts between providers and insurers. But the core expenses generally result from the same things.

“Labor, training, readiness, equipment — all these things factor into the equation,” said Alan Schwalberg, vice president of emergency medical services at Northwell Health Center in Syosset, New York, which provided the ambulance that transported Santoro. (Schwalberg said he couldn’t comment on a specific patient’s case but could speak generally about the cost of ambulance services at Northwell.)

“[Patients] can’t fathom how it’s so expensive,” he said. “They compare it to Uber, but it’s not Uber.”

People who receive ambulance transportation pay not only for the services they receive but also for what it costs for ambulances to be readily available in the service area, in addition to the cost of training people who provide medical services in the vehicle.

“There’s two people for every one patient, minimum,” which is a different standard of healthcare than you’d find in an emergency room, Schwalberg said. “It’s labor intensive.”

Equipment and staff must also meet local and state regulatory requirements, and the cost of such maintenance adds up. All that factors into the base charge, or what Schwalberg referred to as “loaded miles.”

On top of that, there’s a mileage charge, but that generally makes up a much smaller portion of the final bill. In Santoro’s case, the base charge was $2,480 and the mileage was $84. (The remaining $127.50 was a surcharge imposed by New York state.)

Part of what shocked Santoro is the fact that he received what he considered very little care: An EMT took his vitals and gave him oxygen, he said. But Schwalberg said Northwell doesn’t itemize medications and other care a patient may receive in an ambulance. Patients are charged for one of two types of care: basic life support or advanced life support.

Why Ambulance Costs Vary

While Schwalberg’s explanation gives insight into the high costs of ambulance transport, it’s really only applicable to Northwell Health Center on Long Island. As with many aspects of health care costs, base charges vary by provider, insurance coverage and location.

In Northwell’s case, ambulance rates were set after working with an outside consulting firm a few years ago, Schwalberg said. They compared prices throughout the region, determined the final rates, and then negotiated with insurance carriers what they would pay. They determined a patient’s final responsibility would rely not only on the type of insurance coverage they have but also on the terms their insurance carrier set with the provider.

For these reasons, it can be really difficult to know how much a health care service will end up costing you, unless you price it out with the provider and your insurer in advance. That’s something medical billing experts like Adria Goldman Gross recommend, but obviously that’s not an option in an emergency situation. In that case, Gross said you should be prepared to negotiate. (You can read more about how to avoid a high medical bill here.)

How to Handle a Massive Medical Bill

Gross said the first thing to do when you get a bill is check the medical billing codes to see if they match the services you received. (She recommends doing this with any bill, no matter the size, because errors are common.) If it’s wrong, that’s the first thing to challenge with the health care provider, but if it’s right, the next thing to do is research costs for similar procedures in your area. She said she uses the Medicare fee schedule as a benchmark.

Fair warning: While the fee schedule is publicly available, it’s not the easiest thing to read. If, based on those figures or other research, you feel like you’ve been overcharged, you can try to negotiate a lower bill. Again, this is easier said than done.

“Sometimes it could be one phone call, other times it could be 15 phone calls or it could be 20 phone calls, it depends,” Gross said. You’re in for a lot of work, she added, but if you really believe you’re being overcharged, it can be worth the fight.

Gross suggested arranging a monthly payment plan so your bill won’t be sent to collections while you pursue negotiations. (A collection account can seriously hurt your credit standing, though some newer credit scoring models won’t ding you for medical-bill collections. You can keep tabs on such things by getting your free credit report summary right here on

“Say, ‘Look, I really feel that you’ve been paid the reasonable amount, and I really only owe you this much for the allowed amounts for your location,'” she said. Gross suggested working your way up the ladder and even calling the CEO of the hospital or an equivalent authority figure to make your case. If you truly can’t afford your bills, ask about repayment assistance. Schwalberg said Northwell offers such a program.

Having made several phone calls to the hospital to verify his bill, Santoro said he is on track to pay the full $770.30 in small monthly installments. He said he wishes he hadn’t taken the ambulance or at least knew how expensive it was going to be. Reflecting on the situation, he said he should have waited to see if he felt better or taken a car service instead of an ambulance, then acknowledged he isn’t sure how knowing the cost would have affected his decision at the time.

“Why can’t the guy that picks you up say to you, ‘This is going to be an expensive ride?'” Santoro said, seeming to replay the episode in his head. He added: “I don’t know what I would say. I just wanted to feel better.”

Image: FangXiaNuo

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5 Ways to Avoid a Ridiculously High Medical Bill


Of all the things that are stressful about personal finance, medical bills might be the worst.

The events leading up to medical bills are difficult if not impossible to predict. On top of that, healthcare pricing is inconsistent, medical bills are often inaccurate and a lot of people have trouble understanding their health insurance coverage. And if you think it’s something you don’t need to worry about, consider this: About a quarter (26%) of people ages 18 to 64 said they or someone in their home had trouble paying medical bills in the last 12 months, according to a nationally representative survey conducted by the Kaiser Family Foundation and the New York Times from Aug. 28 through Sept. 28, 2015.

Medical expenses are undeniably burdensome and difficult to plan for, but that’s exactly why it’s important to try. We asked some medical billing experts to share their top tips for consumers who want to be prepared for whatever their healthcare providers send them in the mail.

1. Know Your Coverage — & Prioritize Health Savings

Managing medical expenses starts before you get sick or injured. The first place to direct your attention is your health insurance.

“Know your insurance policy inside and out,” said Sarah O’Leary, founder and CEO of ExHale Healthcare Advocates. “The best way to avoid getting overcharged is to know your coverage! Demand 100% of the coverage you’ve paid for – nothing less.”

Even with insurance, you’re likely to have some responsibility for the bills. You can work healthcare costs into your monthly budget, allocate some of your savings for unexpected medical bills or use a tax-advantaged tool like a flexible spending account (FSA) or health savings account (HSA) to cover such bills. (You can find a everything you need to know about HSAs right here.) 

Remember to re-evaluate your coverage and review your health insurance contributions (noted in your paycheck) during open enrollment to make sure your policy suits your needs and your budget. A thorough understanding of your insurance coverage and what you need to save to cover the gaps can make it much easier to absorb the costs of any future medical bills.

2. Get Everything in Writing

When it comes time to actually go to the doctor, ask a lot of questions and get as many details as possible before receiving any treatment. Just like anything else you spend your money on, getting quality, affordable healthcare requires some legwork on the part of the consumer.

“Shop around the cost of your care,” O’Leary said. “An MRI on one side of Main Street might be $3,000, and on the other $300. You can save thousands by shopping around all aspects of your care – doctor visits, lab work, tests, and the costs of non-emergency procedures. Even shopping prescription drug costs can save you money. Negotiate the price with your healthcare provider(s) and get the agreed upon amount in writing.”

Adria Goldman Gross, who runs MedWise Insurance Advocacy in Monroe, New York, also emphasized the importance of written estimates: “Whatever agreed fee amount you have with your medical provider, make sure you have it in writing.”

And as important as it is to get as much information as possible from potential providers, don’t forget to run things by your insurance company. “Make certain you have all necessary pre-approvals from your insurer prior to the test/procedure,” O’Leary said. “If you don’t get proper approvals, the insurer may refuse to pay the claim.”

3. Double Check the Bill

Once you’ve gotten treatment, pay close attention to the paperwork.

“About 80% of all medical bills have errors,” Gross said. (O’Leary said about 60% to 80% of bills have errors.) “I recommend people examine them thoroughly and make sure that they’re not overcharged. On the internet, with some research, people can find usual, reasonable and customary charges for the procedure codes of which they are being billed.”

4. Ask for a Payment Plan

The minute you get an accurate medical bill and realize you can’t afford it, reach out to the healthcare provider.

“In most cases, the healthcare provider will be open to setting up a monthly payment plan with the patient,” O’Leary said. “It doesn’t do them any good to have a patient file for bankruptcy, nor is it to their advantage to hand it over to a debt collections agency.”

5. Make a Backup Plan

If for some reason you can’t work out a payment plan or your budget or emergency savings aren’t enough to help you cover a medical expense, you could consider using a balance-transfer credit card to cover the bill. These cards tout 0% introductory annual percentage rates (APRs) that let you skip the interest for a set period of time. Another emergency funding option? A low-interest personal loan. You can learn more about their pros and cons in our loan learning center

Image: didesign021

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Remedy: A Startup Trying to Solve Your Medical Bill Problems


With 1-in-5 working-age Americans reporting they had trouble paying their medical bills in the past year, according to a Kaiser/Times survey released in January, it’s no wonder some entrepreneurs want to offer solutions.

Among them, a Bay Area startup called Remedy launched its website last week in hopes of helping consumers fight medical billing errors and overcharges. In some cases, said chief executive and co-founder Victor Echevarria, the company will even negotiate down balances.

How Remedy Works 

After providing login credentials to your insurance portal, Remedy’s team of medical billing contractors begin reviewing the claims you’ve paid over the last year and automatically detect new ones as they become available. All customers must sign a release-of-information form that allows Remedy to review their medical bills and negotiate on their behalf. The startup is not covered by the Health Insurance Portability and Accountability Act (HIPAA), which aims to protect the confidentiality and security of healthcare information. As Echevarria put it, “we’re a personal representative that’s allowed to act on your behalf.” Remedy faxes a release to providers saying the patient gave them permission.

For Remedy customers, this means the company will raise any red flags to providers about overcharges or, at times, even hop on the phone with a provider’s billing department to correct an error or negotiate a balance (at the customer’s request). It focuses on bills broadly, not individual payments, and customers can continue to use the service for as long as they like. Be aware: Remedy takes a 20% cut of any extra money it’s able to save you, with a maximum fee of $99 per bill.

Customers can log in to Remedy’s desktop or mobile site to view any progress on bills; they also receive weekly email updates. When customers leave the service, Echevarria said Remedy deletes its access to all providers and sends them a notice of termination that Remedy is no longer working on the customer’s behalf.

Data Issues to Consider 

As with any online service that accesses your personal data, it’s important to read the fine print carefully before you sign up. For its part, Echevarria said Remedy runs a background check on all the medical billing contractors it works with, and though it is not a HIPAA-covered entity, “we treat your data as if we were.” He added, “all of your data is encrypted,” and “nothing can be downloaded to local machines.” In other words, Remedy contractors “can only access data while they’re working on a case,” he explained.

While it’s good to know Remedy takes safety precautions, medical fraud is a real risk to consumers and not something to be taken lightly. You can learn more about the risks of identity theft here and read up on what to do if you fall victim. Your credit report, which can indicate signs of fraud — such as drops in your credit score and unexplained account openings — is a good place to start your research if you’re concerned. You can view two of your free credit scores, updated every two weeks, on

Image: opolja

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Insured Woman Gets $18K Bill for Using an In-Network Doctor


“I’ve always paid my bills. I had excellent credit.”

That’s Nancy Gomez speaking with CBS Los Angeles about her ordeal. She’s a Californian with PPO insurance — and thousands of dollars in medical debt.

Though Gomez is fully insured, she says she received an $18,000 bill for a treatment with an Encino pain specialist in her network, CBS reports. Gomez, who went in for an epidural nerve block, received the bill a few weeks later.

Despite its shocking price tag, the bill was perfectly legal, CBS reports. Though the doctor was in-network during her initial visit, when Gomez went back to get the injection she was directed to a surgical suite, which took the physician out-of-network, the station said.

Also legal: The $9,000 bill she received for a surgery after the epidural didn’t work. Gomez says she checked that the hospital and surgeon were in her network. But an assistant surgeon and anesthesiologist who helped with the procedure did not belong to her in-network provider list.

Now Gomez is shouldering “incredible debt,” she says. And she isn’t alone.

According to CBS, one in four Americans have been hit with medical bills from out-of-network providers who offered care without disclosing their fees.

What You Can Do 

It’s important to know what you’re liable for long before the bill is in your hands. That means understanding the difference between terms like “in-network” and “out-of-network” on your insurer’s website and in your plan description, says, a consumer site dedicated to sharing information about healthcare prices. That also means knowing which specialists, hospitals, labs, radiology facilities and more may fall under your “network” umbrella.

While many plans cover “out-of-network” care, chances are if you go out-of-network, you’ll end up paying more, says FAIR Health. Therefore, the onus is on you to find out whether providers outside your network may charge more and whether your plan may require higher co-pays, deductibles and co-insurance for this type of care. If your plan doesn’t cover out-of-network care at all, you may be left holding the money bag.

Remember, medical debt isn’t unheard of but does require research and action. If you fail to pay what you owe, your bill could could wind up in collections, which in turn can leave a negative mark on your credit report. The last thing you want to do is to lower your credit score at this uncertain time. If medical debt is weighing you down, you can see how it’s impacting your finances by pulling your credit reports for free each year at and signing up for a free credit report summary on Working to pay the debt off? Try this handy lifetime cost of debt calculator to see how long it will take.

Image: Dutko

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The Baby Bump Bummer: How the Cost of Giving Birth Shocked One Couple


You can do a lot of fun stuff with a quarter of a million dollars. That kind of money would buy a ridiculously fancy car. You could pamper yourself for years by taking lavish vacations. Or, you could raise a child.

It costs $245,340 to raise a child born in 2013 through the age of 18, according to the most recent estimate from the U.S. Department of Agriculture. Factor in projected inflation, and that figure climbs to $304,480.

But that figure doesn’t include a pretty crucial aspect of the whole “having a kid” thing — the cost of giving birth.

Newlyweds Michael and Aileen Andello are expecting their first child in September, and when they started researching the medical expenses associated with childbirth, they were shocked.

“They are literally charging for every little thing,” Aileen said. After a few months of routine visits to the doctor, the Andellos started to see how much they’d have to pay before they even had a child. As new parents, they’re eager to make sure everything is going well, but they’re also learning that each test and extra ultrasounds add to the bill. For many reasons, they’re thrilled to be expecting a healthy baby. They recently found out they’re having a little girl.

“If you aren’t having the perfect pregnancy, it’s going to cost so much more,” Aileen said.

Preparing for the Unpredictable

cost of childbirth 001

Michael and Aileen Andello
Image courtesy of Michael and Aileen Andello

Figuring out exactly how much child birth will cost is incredibly difficult. Not only is every pregnancy different, but so is every insurance policy. That’s what really caught the Andellos off guard.

Aileen, 25, is still on her dad’s insurance. They didn’t realize he has a high-deductible plan.

“He’s like, ‘I think our insurances are $5,000, maybe $10,000 deductible,'” Michael said, recalling a casual conversation they had with her father right after she found out she was pregnant. “That was my initial ‘Oh s—, this is going to cost more than I thought.'”

The insurance has a $6,450 deductible, and the patient is responsible for 30% of the bills covered by insurance.

The Andellos aren’t strangers to the costs of adult life — they just bought a house in November.

“I think I was more prepared for the homeownership, cost-wise,” Michael said. “I knew that a kid costs a bunch, when it comes to diapers and formula and stuff, not that it’s going to cost me $7,000 just for the birth.”

For the Andellos, the deductible will mostly be met by the time their daughter is born. (Unfortunately, that financial break comes because one of Aileen’s family members needs surgery.) Still, they’re trying to figure out how to budget for the out-of-pocket expenses, which can be difficult to predict.

How to Estimate the Costs of Childbirth

Like the Andellos have learned, every little medical service has a price. When you’re in the middle of having a baby, it can be hard to think about finances when you’re confronted with so many choices, like if you want a certain test or an extra pair of socks.

But pregnancy has an advantage many medical procedures do not: Time to plan.

“The second the test is positive go and talk to whoever you’re going to look to to deliver the baby and ask for a written estimate,” said Sarah O’Leary, founder of ExHale Healthcare Advocates. Though you probably already have a primary care doctor and OB-GYN, consider researching multiple providers and what they’ll charge you for childbirth.

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Michael, Aileen, family and friends.
Image courtesy of Michael & Aileen Andello

The process starts by finding a health care provider in your insurance network and calling to confirm that the doctor has an active contract with your insurance, said Adria Goldman Gross, president of Medwise Insurance Advocacy. Ask for cost estimates, compare them with the average costs in your area for the same procedures (you can research that online), and once you’ve settled on who is delivering your baby and where the delivery will occur, get everything in writing.

“When a doctor asks (an insurance company) for preauthorization, they need to give the procedure codes, ” Gross said. The process takes about a week, she said. “You’re going to ask for them in writing.”

You’ll also want to make sure you have a solid understanding of your pregnancy coverage, so you’re prepared for what you’ll have to pay out of pocket. O’Leary recommends calling your insurance provider so you can ask questions as the policy is explained to you.

In addition to getting the estimates, make it clear with your health care provider that you want “everyone who touches you” to be in your insurance network, O’Leary said. She also recommends you establish with your doctor that you only want to receive what is medically necessary, to avoid having to pay for any charge your insurance may not cover.

“The best advice is to question really everything, ” O’Leary said. She went on to describe the legwork as a second job — one that can really pay off in the end. “The more work you can do upfront before the birth, it kind of puts everyone on notice that you are clued in, and that will always work to your benefit.”

The Andellos still have a few months left in this process, and they said what they’ve learned so far has made them more mindful of the financial aspects of pregnancy. They want to have a few kids, but maybe not as close together as they previously thought they would.

“They always say high school and college will prepare you for life but it doesn’t prepare you for the cost of life,” Aileen said. “It’s kind of a different perspective for us. It’s not something we were taught about.”

Whatever you might be budgeting for, it’s good to keep in mind your overall financial well-being. High debt levels, among other things, for instance, can keep you from a good credit score. Alternatively, people without savings may not be able to make all the payments they need to if something disrupts their budget, which can lead to loan default, debt collection accounts and credit score damage. (You can see where your credit currently stands by viewing your two free credit scores on

More Money-Saving Reads:

Main Image: sdominick; Inset Photos Courtesy of Michael & Aileen Andello

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The One Thing People With Health Insurance Forget to Do


Wednesday marked the sixth anniversary of the Patient Protection and Affordable Care Act — commonly known as Obamacare — being signed into law, and the battle over its various elements continues to be waged as vigorously as ever.

Perhaps one of the biggest points of contention is the so-called individual mandate, which stipulates that most Americans have qualifying healthcare coverage in place or pay a fee for the period they are uninsured.

Some view the mandate as a yet another example of a meddlesome federal government interfering in a personal decision. Others are grateful for coverage they would otherwise be unable to afford. And while the individual mandate is viewed by many as the motivating reason for obtaining this insurance in the first place, there is another important consideration to take into account.

Healthcare is like any other business: After all is said and done, providers need to collect enough revenues to make it possible to continue doing what they’re doing.

Healthcare is also complicated in that there is surfeit of procedures with costs that require quantifying and prices that are often individually negotiated between providers and payers.

Therein lies the rub: The extent to which a payer—you, me, insurance companies, employers, the government—is able to bargain down that price to an acceptable level.

As you might expect, providers don’t always readily share that information among patients and their intermediaries. Nevertheless, the fact that these discounts—which are known as contractual allowances (the difference between what a provider bills and the sum it’s willing to accept in full payment)—is as important a reason as any to have insurance, as the following personal experience will illustrate.

A little more than a month ago, my wife underwent some testing on an outpatient basis in a hospital setting. Although the medical center typically charges $3,700 for the procedure, its billing department applied a $1,700 “insurance adjustment” against that amount—presumably in keeping with the pricing agreement the institution and our insurer have in place for the current year—and billed us for the difference (because we hadn’t yet met our plan’s annual deductible).

This wasn’t a singular occurrence. Every one of the healthcare-related invoices we receive is adjusted to take into account the discounted prices our insurance carrier has successfully negotiated with each of our healthcare providers.

When the statement arrived in the mail, I called the hospital’s billing department to arrange for payment. Sure, I could have done this online or snail-mailed a check, but I decided a sizeable bill warranted a conversation.

The billing clerk was nice enough. After we talked a bit about the charge and the insurance adjustment, he politely asked how much I was in a position to pay at this time.

That set me to thinking.

So, with equal politeness, I responded by asking if he was in a position to give me a reason to pay my bill in full, then and there.

As it turns out, he gave me 400 good ones—a 20% discount on my $2,000 balance.

My little story has two takeaways: Complain all you like about a healthcare system that charges different prices to different payers or a law that some consumers and businesses view as unfair. Until either or both of these conditions change, the best course of action is to use one against the other: the discounts your insurance carrier has negotiated versus the charges your healthcare providers would otherwise bill.

And one more thing

Don’t forget to attempt a little bargaining of your own.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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Image: Jupiterimages

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How to Get Your Hospital Bill Reduced or Even Eliminated

Couple Reading Letter In Respect Of Husband's Neck Injury

Here’s a little secret that many hospitals don’t want you to know: the bill they send you is only an initial offer.

There is almost always room to negotiate, and in some cases you can get your bill reduced by as much as 90%, or even forgiven completely.

All it takes is knowing who to ask.

Hospital Financial Assistance

You may not have known that many hospitals – non-profits in particular – have financial assistance programs specifically designed to help people pay for medical care they wouldn’t normally be able to afford.

And there are two situations where you’re especially likely to qualify.

1. Uninsured

The first is if you’re uninsured. In many cases, simply being uninsured can result in an automatic bill reduction, no matter your income. Those with lower incomes may qualify for even bigger reductions.

(Keep in mind that this isn’t necessarily a reason to go without insurance. Insurance comes with many protections, such as max out of pocket costs and pre-negotiated rates for procedures that reduce the cost without any work on your end. Not to mention the penalties for being uninsured.)

2. Insured, but still owe a significant amount

The second is if you are insured but your insurance only covers part of the cost. The lower your income and the more of your bill you’re responsible for, the more likely it is that you’ll qualify for assistance.

Two Types of Financial Assistance

If you find yourself in one of those situations, there are two types of assistance you might be eligible for.

1. Bill reduction or forgiveness

The first is a bill reduction, or potentially even total forgiveness. This redditor got a $12,000 bill reduced to $1,500 by simply contacting the hospital’s billing department, and there are other stories in that thread from people with similar experiences. In general, the more difficult your circumstances the more you may get forgiven.

2. 0% interest repayment plan

The other type of assistance that most hospitals offer is a payment plan with 0% interest. These programs are often offered without any eligibility requirements, meaning anyone can enroll. And while they don’t reduce your bill, they can make it easier to afford by spreading it out over a period of months instead of requiring a big payment up front.

In some cases you may be able to use a combination of the two by qualifying for a reduction and then paying the reduced bill over a number of months.

How to Get Financial Assistance from the Hospital

To see whether your qualify for financial assistance, the best thing to do is reach out to your hospital as quickly as possible once you have your bill in hand

“Just ask”, says Pam Horack, CFP® and founder of Pathfinder Planning. “I have found that if you contact the hospital billing department about payment, they are more than willing to work with you.”

Thomas Nitzsche from Clearpoint Credit Counseling Solutions agrees: “Act immediately upon receiving the bill and contact the billing department of the provider and ask to apply for financial aid, even if you think you make too much.”

Figuring Out Who to Ask

To figure out who to contact, first look at your bill. There should be a phone number for the billing department right on it, and you can call them up and ask about financial assistance.

If that doesn’t work, just Google “your hospital” + “financial assistance”. That should bring you directly to their financial assistance program with contact information to get you started.

From there, simply follow their instructions and provide the information they need. Though Melanie Lockert, the founder of Dear Debt who three years ago had a $1,600 bill completely forgiven, acknowledges that the process can take some time.

“I was grateful that they covered everything,” Lockert said, “but I did have to hand over a lot of information: bank statements, tax info, pay stubs, and any other documentation to help my case. It took about two months for me to get the letter saying that everything was covered.”

If you run into any issues or are having trouble understanding your bills or organizing your financial situation, you might consider reaching out to a non-profit credit counseling service for help. The National Foundation for Credit Counseling (NFCC) is a good place to start.

How to Negotiate Your Medical Bill

What if you don’t qualify for a bill reduction, or if the bill isn’t reduced by as much as you’d like? What are your options then?

Pay in Cash (or with an FSA/HSA)

You may be able to negotiate a lower bill, especially if you can pay up front in cash.

“Sometimes doctor offices, hospitals, labs and other medical facilities will offer a discount if you pay your portion of the bill in full,” says Shanda Sullivan, CFP® and founder of Sullivan Financial Strategies. “I myself and a client have saved 5%-10% off of our medical bills. It never hurts to ask.”

Adds Horack, “When I have had large bills, I called and asked if I could get a discount for paying cash. They reduced my bill by 20% and I paid with my FSA [Flexible Spending Account].”

Research the Price at Other Hospitals

Another strategy is to research the average cost of the care you received using sites like Healthcare Bluebook, or even calling up other local hospitals. If your hospital is charging you more, you could use that information as leverage for getting your bill reduced.

The bottom line is this: you have a number of options when it comes to reducing your hospital bill. In many cases, the simple act of asking can save you a lot of money.

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