Tuesday, June 14, 2011

Medical Issues Can Ruin Good Credit

This is a guest post by Ed O’Brien. This is his third time writing for 50PlusFinance and we always appreciate his insightful perspective.

Many people mistakenly believe that paying doctor and hospital bills is not as important as paying other expenses. However, medical bills are typically reported to the credit bureaus just like any other debt. Unpaid medical debts can cause big problems in your financial life very quickly. Plus the stress of debt on top of poor health can be a dangerous combination.

Medical Bills Matter
Doctors and hospitals will report unpaid bills on your credit report which leaves black marks against your good credit. Unfortunately because medical bills will often pop up unexpectedly and can get quite expensive, debt can easily start spinning out of control. Add to the situation your inability to work and earn and income and a life-long struggle may be ahead to get back on financial track.

Consider also that medical debts you are not paying may eventually go to a debt collector who will be more aggressive in collection efforts and also add black marks to your credit score. Even with insurance, medical costs are high these days and are projected to only go higher in the future.

Staying Above Water with Medical Costs
In order to avoid major debts heading into your retirement years, it is better to prepare for the unexpected as soon as possible. The more you prioritize your plans for what may happen in the future, the more you are able to safely navigate the financial waters when your health makes a turn for the worse.

Here are some ways to get yourself in order before something should go wrong:

Understand Insurance Coverage
Most people will chose insurance coverage based more on price than benefits. Others who receive affordable insurance through their employers often have no clue what they even have. It is important for you to understand what kind of benefits you are paying for long before something happens. You will likely make wrong decisions concerning your health and treatment when you remain unsure about the financial side of things. Review your policy information and contact the insurance company for explanations on anything you don’t understand.

Contribute to an Emergency Fund

Financial experts urge consumers to sock away between 6-12 months worth of living expenses in a good interest-earning account. This money should be allowed to earn interest and should only be used during times of true emergencies, including health concerns. If you can’t work due to a work injury or medical illness, an emergency account may be your only viable resource. Contribute to the account monthly. You may even consider setting up automated deposits from your payroll department. What you do actually see will likely not be missed. It will allow you to build a significant stash of cash for when you need it.

Live a Better Life
Many health conditions that break us are actually of the preventable variety. Eating better and getting regular exercise is important. Sedentary lifestyles can trigger all kinds of expensive medical conditions including unhealthy weight, high blood pressure, depression, and heart problems among many other things.

Organize Your Life
If medical treatment requires you to be treated in a hospital for a period of time, other people will be relied on to get your important documents the hospital might need. Always keep relevant health information, including updated health insurance policy information in an accessible and clearly marked folder for easy retrieval.

Ask for Assistance
If you anticipate having issues paying your medical bills even if you have insurance, it is wise to contact your medical provider’s office right away and keep them informed of what is going on with your situation. Many will work with you on new payment arrangements that will keep you out of collections until the debt is satisfied. If you do not communicate, your bill will likely be expedited to the collection agency.

If you don’t have insurance or have a co-pay you can’t afford, speak with the medical provider’s office on the day of your visit and explain the situation. Many times doctors will allow for discounts or will waive service fees for their loyal patients. The worst that can happen is they turn you down with a ‘no’. At least you tried all available resources to save money.

Ed O’Brien is a seasoned writer in personal finance, specializing in credit repair. You can find more of his articles located at CreditRepair.org.

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