How to Deal with Financial Hardship and Your Health Care Providers
by Alan B. Simons, CPA/ABV, DABFA
Chronic illness frequently creates financial hardships on families. This article discusses some of the things you should consider and do if you are unable to meet financial obligations to your health care providers.
Overcome Pride and Embarrassment
Most of us feel a sense of failure when we are unable to meet our financial obligations. We are embarrassed to admit that we have financial problems and seek assistance. We think that eventually we will recover and be able to pay all of our overdue bills.
If we are unable to pay our bills, however, physician offices and hospitals will start to hound us. They may even turn us over to collection agencies, attorneys or, in some cases, refuse care. This creates a lot of additional pressure during a time when we are already stretched to our emotional limits.
You need to overcome your pride and embarrassment in order to deal with this aspect of your illness rationally and to minimize an already stressful situation. Think about all of the times that you have donated time and/or money to your, church, synagogue or other charitable organizations to help others. There is a time to give, but there is also a time to take. Now it's your time.
Nobody Pays Retail for Health Care
The first thing you should realize is that (almost) nobody pays retail for health care. When your physician or hospital participates in a health plan they generally receive between 50% and 80% of the retail fee. Your physician or hospital receives this reduced payment from most of the patients they see with a few exceptions.
If your physician or hospital does not participate in an insurance plan or if you do not have insurance they are entitled to collect 100% of the fee from the patient. In fact Medicare rules may require that physicians and hospitals to "attempt" to collect these charges. If your physician or hospital does not participate in your insurance plan they will either bill the insurance company for you or ask you for payment directly, and have you submit a claim to your insurance company for reimbursement. In any case, if your insurance company doesn't pay 100% of the fee, they will expect you to pay the balance.
Under some insurance plans the patient may be obligated to pay a percentage of the total fee whether or not the physician or hospital participates. This may be called a deductible, co-insurance or some other name and most of the time there is an annual limit to the amount you are obligated to pay.
This is how the system works and if you understand the system you may be able to deal with it more effectively. For example, physicians and hospitals don't bill you because they are uncaring businesses (some may be). They bill you automatically because their systems are set up that way.
Speak to Your Physician or Hospital Business Office
Now that you know how the system works you should arrange to meet with your physician or with someone in the hospital's business office. Explain you situation as clearly as possible. Do not minimize the challenges you face. Be honest and sincere. If the physician's office or hospital business office wants proof of your financial hardship give it to them. Do not threaten or become abusive to make your point. They generally do not have to accommodate you and you will get farther with honey in these circumstances.
If you have insurance suggest that, considering your financial hardship, they accept whatever payments your insurance company makes as payment in full. Many times they will do this because they realize that if your insurance pays 50% to 80% of the fee they are no worse off then they are under the plans they participate in.
If you are uninsured and have some financial resources, try to negotiate a reduced payment similar to the discounts given to the insurance companies that they already participate in. If you are uninsured with minimal financial resources, first negotiate a discount and then try to negotiate a small monthly payment amount that you will stick to for as long as it takes.
If you are uninsured and without financial resources you need to ask your physician or hospital to treat you as a charity case. Consider insurance offered under the Medicaid program if you qualify.
Non-Profit Health Systems
There are many non-profit hospitals; health systems and some physician practices may be owned by non-profit organizations. Generally these are organized as charitable organizations so that they are able to solicit tax deductible contributions from the public. In fact, prior to your chronic disease you may have contributed to them as well. People make charitable donations because they want to do something good and worthwhile with their money. Helping you during your financial hardship is both good and worthwhile.
In order to qualify as a non-profit and solicit donations from the public, these organizations must use some of their money for educational, research and/or charitable purposes. Most of the time they won't seek out new opportunities to be charitable because they also need to keep their organizations financially healthy. If too much of their revenue were lost to charity cases, the organization would not be able to stay in business.
If you know that your hospital, health system or physician is part of a non-profit organization, you should not hesitate to ask whether you might qualify to be treated as part of their charitable mission. Here again, you may need to demonstrate financial hardship to their satisfaction. You also may need to see physicians at a clinic instead of their office.
You Can Always Repay a Debt
If you are still uncomfortable asking for financial assistance, remember that you can always repay the kindness you receive now, later when you are financially able. In fact, depending on your circumstances, you could name a hospital or physician practice as a partial beneficiary in your will or on you life insurance policy if it makes you feel better.
The point is that you need to be proactive in order to minimize the potential stress from the financial obligations of your chronic illness. You and your family will be better off if you do.
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