If Family Medical Bills Overwhelm You

Even if you carry medical insurance, unexpected medical bills can still pile up. Here's why. Suppose your insurance carries a $250 deductible and then pays 80 percent of your medical expenses (your 20 percent is called your co-payment).

You are in a car accident that doesn't do any permanent damage to your body, but does result in $15,000 in hospital bills. Of that $15,000, you'll owe $250 for your deductible and $2,950 for your co-payment, for a total of $3,200! Where in the world are you going to come up with that?

Generally, you have only one option: Work out a payment plan with the hospital. (A second option is to pay the bill with your credit card and pay it off aggressively each month, but often the interest rate on credit cards is sky-high.)

Some hospitals offer interest-free payments if you pay within three to six months; others charge interest (but usually less than credit card companies charge) no matter how soon you pay.

Most medical providers are willing to work with you to pay off a large balance. They need to know immediately, however, that you'll have trouble paying the balance and want to set up a payment plan.

Never ignore payment notices from a hospital or doctor's office. So many people do this that medical providers are quick to turn to collection agencies and send negative reports to credit-reporting agencies. You may damage your credit rating for years to come.

If you're not sure how much you can pay, revisit your budget. Eliminate any expenses that aren't absolutely required, and see how much you may be able to eke out each month. If this isn't enough, look for larger-scale ways to cut your expenses.

When you've determined how much you can afford to pay each month, approach the medical provider with this amount to see whether it's acceptable. You may have to sign an agreement saying that you'll pay this amount each month — be sure you can pay it before you sign.

Remember: Check your budget first. If you're given a monthly amount by the medical provider, don't agree until you've run the numbers on your budget.

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