Got Great Health Insurance? You Can Still Go Broke From Medical Bills | Global News Avenue

Personal finance experts say you must have health insurance to avoid financial disaster. They are not wrong. Health insurance can put more money in your pocket and give you better care than going without insurance.

But this simple advice ignores an important issue. Many people who have health insurance (good health insurance) still find themselves deeply in debt. Nearly 1 in 10 adults had significant medical debt (defined as $250 or more) in 2019, according to a 2022 analysis from Peterson Health Care and the Kaiser Family Foundation (KFF).

Defining “good” health insurance

What are the advantages of a health insurance policy? There is no universal answer.

A health insurance policy that’s great for you might be terrible for your best friend or the coworker sitting in the cubicle next to you. For example, you may have a chronic health condition, so a policy with a low deductible, extensive network, and 90/10 coinsurance is worth paying a high monthly premium.

Your colleague might be a semi-professional cyclist who hasn’t had a cold in the past five years; the ideal policy for them might be one with the lowest possible monthly premium while providing catastrophic insurance Like, whether they should get a cancer diagnosis.

So we assume you have a good policy. How is it possible to still have a large amount of medical debt?

Charge medical expenses to credit card

Medical bills can be charged to a credit card; however, credit card interest rates are notoriously high. Debt that hasn’t been paid off in a few months or that has only made the minimum payment will quickly lead to increased medical debt, making it harder to pay off.

For example, let’s say you charge a $5,500 medical bill to your credit card. The card has an interest rate of 18% and can only pay $100 per month. Assuming you don’t charge any other charges on the card, it would take you nearly 10 years to pay it off. You may also have to pay more than $6,000 in interest, increasing the amount you owe for medical bills to more than $11,500.

The more medical bills you put on the card, the more interest you’ll owe. It’s easy to see how a few programs can quickly reduce a family’s finances to nothing.

Skipping inspections and cutting corners

Due to the hidden sky-high prices—not to mention busy schedules and a general distaste for doctors and hospitals—many people decide to cut corners on health care. They don’t take their medications as prescribed, which means they may not get better or manage their chronic disease. They skip annual check-ups and never discover problems, which are minor and cheap to treat. Then they end up with more serious and expensive problems that they can’t ignore and are forced to pay huge bills.

Get a careful medical diagnosis

The bad news of a bad medical diagnosis may be just the beginning of your problems. Let’s say you’re 29 years old and have an annual deductible of $8,300, which is the maximum allowed in a high-deductible health plan in 2025. Fortunately, your plan will also cap out-of-pocket expenses. This amount is capped at $9,200 for the 2025 Individual Marketplace plan.

When you start racking up bills for doctor’s visits, tests, prescriptions and treatments, the first $8,300 of them will come right out of your pocket.

Your treatment may not be completely completed in one calendar year. When the new year rolls around, you have to pay your deductible again. At that point, you may have switched to a plan with a lower deductible, which will help, but it will be offset somewhat by the higher premiums you pay for that plan.

Kevin Gallegos is Vice President of New Client Enrollment for Freedom Financial Network, a company dedicated to helping people improve their financial well-being. He shared the story of one of the company’s clients, a retired couple in the Dallas area who were on Medicare and had supplemental coverage when the husband was diagnosed with cancer. Neither insurance plan fully paid for the treatment he received.

“They cost close to $1,000 a month,” Gallegos said. “Over several years, plus other uncovered health-related expenses, they were $30,000 in debt when he died. The wife later moved to rural Nebraska, where the cost of living was lower and she could live In a house owned by a relative.”

Jeff Finn is a principal at Tailored Worksite Services in Katy, Texas, which provides customized benefit plans to companies and brokers. When it comes to cancer treatments, experimental treatments are often not included, he said. Conventional and FDA-approved treatments will be covered, but some may have annual limits.

Pay hidden costs

As mentioned above, annual out-of-pocket caps can lower your health spending when you need a lot of care. But the maximum value outside the network may be significantly higher than the maximum value within the network. Your out-of-pocket maximum for out-of-network care may be twice as high as for in-network care.

While you try to make sure you only receive in-network care, it’s easy to get missed with out-of-network bills. You may have surgery at a local in-network hospital but receive a bill from an out-of-network assistant surgeon. You might see an in-network primary care doctor but receive an out-of-network bill from the lab where they performed your blood test. Or you may have a rare disease and need to see an out-of-network specialist with expertise in treating the disease.

If you’re in trouble with an unexpected, large bill, a medical billing advocate may be able to help. Ruth LindenThe founder and president of Tree of Life Health Advocates in San Francisco said she recently negotiated on behalf of an unemployed client in Texas to cut a large unpaid physical therapy bill in half and create a manageable plan payment plan.

Additionally, Gallegos said many policies limit the number of physical therapy sessions per calendar year, but doctors may recommend more than that. However, any visits that exceed policy limits will be paid out of pocket by the patient.

There’s another set of hidden costs: If you need frequent treatment for a health condition, your transportation costs will increase. If your illness affects your work, your childcare costs may also increase, and your income may decrease. If you have been caring for an elderly parent, you may need to pay someone to care for them. You may need to hire a home health aide to care for yourself. If you’re too tired to cook, your food bills may go up. If you’re too tired to clean, you might hire a housekeeper.

Finn points to other hidden costs, such as travel to professional facilities, lodging and lost income to support a spouse or partner.

Pricing is opaque

You can have good health insurance, but still be saddled with medical debt when providers can’t or won’t give you a price before you agree to a potentially expensive but necessary procedure.

Let’s say you severely cut your finger in a kitchen accident. You go to the ER and get stitches. Who knows what the bill will be until you get it in the mail at least a month later? Good luck asking the front desk person to give you a cost estimate when you check in, as they won’t know what procedure you need until a doctor or nurse sees you, at which point you’ll incur a bill for at least one emergency room visit.

What will happen after a few days of stitching? Let’s say you see a specialist for nerve pain and numbness and learn that you need hand surgery to repair the severed nerve. The hospital where you’re having surgery can’t seem to tell you in advance how much it will cost.

Finn said medical pricing is very opaque because that’s how it’s set by providers and insurance companies. They have confidentiality agreements so neither party can reveal the provider’s billing rates or the insurance company’s discounts. Consumers also don’t get straight answers about costs because providers need to know who the insurance company is and how specific plans are designed regarding deductibles and coinsurance. Patients often have surgery with multiple providers, such as a hospital or surgical facility, surgeon, anesthesiologist, etc.

Sometimes pricing isn’t transparent because a doctor doesn’t know what services you need before you receive care, just like a mechanic may not know how much it will cost to repair your car before he starts running diagnostics, says Sean McSweeneyFounder and President of Apache Health, a medical billing company serving physician offices, diagnostic testing facilities, hospitals and surgery centers nationwide. When it comes to pricing your surgery, pricing up front should be easier. “Most surgical teams are good at getting preauthorization before surgery, which includes the CPT code they require payment for,” he said.

CPT codes are five-digit billing numbers developed by the American Medical Association and assigned to each medical service a patient receives. Insurance companies use these numbers to determine reimbursement rates. All healthcare practices use the same CPT codes.

To know the cost of surgery in advance, Sean FoxThe co-president of Freedom Debt Relief, a Phoenix-based company that helps Americans get out of debt, recommends asking a billing manager or surgery coordinator. These positions have different titles in different practices, so it can take some work to get in touch with the right person, he adds. “It’s also well worth the time and effort to get a second opinion on costs and concerns.” ”

bottom line

These are just a few of the reasons why people with good health insurance may fall into medical debt. Bad luck, denied claims, over-the-counter prescriptions, huge cost differences from one facility to another, chronic illness, and astronomical prices COBRA Premium You can also contribute when you are laid off. Even if you are aware of these problems in our current health care system, you may not be able to get out of medical debt. However, knowing that so many people find themselves in this situation may provide you with information that can help you at least reduce the extent of your medical debt if this happens to you.

For people determined to get out of debt, even the best plans can’t cover everything, especially in an emergency, Finn said. But the best thing to do is to be an educated consumer and take care of yourself.

“As educated consumers, they will know what questions to ask and how to get the lowest cost and highest quality care possible,” Finn said. “By simply taking care of themselves, not only can they reduce the amount of health care they need over their lifetime, but when they do need care, the severity may be significantly less.”