Insurance may not be enough to keep you out of debt

A roll over accident was reported on the news with pictures of mangled metal, shattered glass, and the "jaws of life." Fortunately, the passengers, who happen to be your sister and brother in-law, will be just fine after a little bit of surgery and some stitches. The doctors say that your sister won't be able to work for 3 months due to her broken leg, and your brother in-law for a couple of weeks due to his concussion. By the end of the whole ordeal, the newlyweds racked up quite a bit of medical bills, but what you may not realize is that their health insurance may not be sufficient to pay for all of it.

More and more these days, hospitals and health insurance companies are encouraging clients to pay expensive medical bills with credit. This is a good idea to settle up with the medical professionals, who may have just saved your life, but where does that leave you in the long run? Recent research indicates that even those who are covered by a health-insurance provider end up in the same boat of looming medical bills as those without any coverage whatsoever.

In a 2004 study conducted by Deborah Gurewich of Johns Hopkins University, published in the Journal of Healthcare for the Poor and Underserved, a sample of 300 individuals seeking credit counseling was surveyed to find out if their counseling was related to medical expenses. Of the 300, 39 percent were in fact in debt due to medical bills. Also, of those 118 people who had medical related debt, 81 admitted to not paying other bills because of their burden, but 84 reported having health insurance at the time of the incident. Interestingly enough, "families with health insurance in this sample were only slightly less likely than their uninsured counterparts to be burdened with large medical bills," said Gurewich.

Several factors contribute to Gurewich's findings. One is that while unable to work because of injury, people are forced to dip into savings and credit to make ends meet. Another factor is the ability of the patient to perform the same work tasks or have to cut hours because of their medical condition after the accident. Also, having to pay out-of-pocket expenses lends itself to debt.
Overall, simply having health insurance will help you from accumulating debt, but it may not be enough.

Paying costly bills with credit up front while waiting for health insurance providers to cut a check is a good way to keep the collection companies off your back, but it's important to stay on top of your credit situation. This is why it's critical to make sure you have a line of credit that has a low APR, and that you make sure the company providing your credit has excellent customer support, which provides free counseling.

Credit companies want you to have a good-standing credit score, and are almost always willing to work out an affordable payment plan tailored to your needs. Similarly, most hospitals are more than happy to accommodate your needs as long as they get something. Keep in touch with your health insurance provider and credit counselor. Make sure to keep the lines of communication open. It is much more likely to have the majority, or even all, of your bill paid faster if you talk with your representatives often.

-A.J. Register