How to Erase Your Medical Debt
As most of you know, the cost of healthcare in the United States is outrageous! (Sicko, anyone?) For those lucky enough to have good medical insurance, an illness or an injury does not become a financial burden. However, for those without insurance or with sub par insurance plans, a seemingly small injury can quickly turn in to an emotional and financial ordeal. Interestingly enough, one of the best-kept secrets in the healthcare industry is that there are financial and charitable aid programs available to alleviate the financial burden caused by medical expenses.
Almost every hospital has a charitable or financial aid department associated with the billing and collections office. With out getting into the particulars, the financial aid department has a “magic wand” that can erase some, if not all, of your medical bills.
Who qualifies for medical financial aid?
To qualify for 100% elimination of your medical bills, most hospitals require that your annual income does not exceed 200% of the federal poverty level. If your income exceeds set limits, you can usually qualify for reduced financial aid.
Additionally, if you earn an income well over the federal poverty level, but a medical disaster creates bills that exceed a certain percentage of your income, then the financial aid department will usually offer aid to cover some of your bills. Most hospitals set a limit of medical debt-to-income ratio of 30%. If your medical bills exceed your income by 30%, most financial aid departments will pay for the portion of your bills over 30%.
The catch with receiving aid from a hospital’s financial aid department is that you have to exhaust all other available resources. First, you must utilize your insurance, if you have any. Second, you must apply for and use any other public medical benefits. If you still have medical bills after exhausting other resources, then the hospital’s financial aid department will consider your application.
How to you apply for medical financial aid?
The easiest way to find out if your hospital has a financial aid department is to ask. Call or stop by the billing office to inquire about financial aid for your medical bill.
You will usually be required to submit proofs of income for the 12 months preceding your medical care. This is how they will calculate your “annual” income.
You will also be required to list you assets. The financial aid department will want to know whether you have money in savings, checking, a certificate of deposit (CD), Individual Retirement Accounts (IRAs), trust funds, or equity in real estate that is not your primary residence. Most hospitals will require a statement from your financial institution detailing your assets.
If you do not have a job or assets, you will need to sign an affidavit indicating this.
When should I apply for aid?
As soon as possible! Most hospitals have a relatively short time limit (6 – 12 months) for applying for aid.
This sounds difficult and like a lot of paperwork.
It may take some time to fill out the paperwork and gather all of your supporting documentation, but a few hours of work could erase thousands of dollars of medical debt. Plus, you never know until you try.
I recently had a client who had $75,000+ of medical debt. (Yes, she gave me her permission to write about her.) This client went to the hospital’s financial aid department on Monday, gathered her supporting paperwork and documentation on Tuesday, submitted her forms on Wednesday, and had her medical debt erased by the following Tuesday. With 5 total hours of work, she was able to have $75,000+ in medical debt erased. Not only was a financial burden lifted off her shoulders, but an emotional burden was lifted too.
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