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May 6, 2019

Medical Expenses Have Gone Crazy. You Don’t Have to Do the Same

In the United States, healthcare has grown into a $3 trillion industry. That’s $3,000,000,000,000. That’s a lot of zeros—so many that for most of us, the number doesn’t even seem real. But if we break it down to a personal level, that means the average American spends more than $11,000 per year on healthcare costs. If that doesn’t sound troublesome, consider the fact that the annual cost of healthcare for a family of four tops $28,000. With the median household income coming in at $63,000 per year, that means the average US family can wind up spending more than 40% of their annual income on medical-related expenses. That’s steep.

Even with employer-provided health insurance, which covers roughly 56% of the US population, the employee contribution and out-of-pocket deductibles can leave families buried under an avalanche of medical debt. It’s hard to understand how an industry responsible for personal care can seem so unconcerned when it comes to the financial state of its patients. But with a growing number of hospitals being operated as investor-owned, for-profit businesses, return on investment often seems more important than compassionate patient care.

Difficult Times Call for Creative Approaches

As medical bills continue to climb, the corresponding rise in medical collection agencies only perpetuates the healthcare industry’s callous reputation. In a conversation about the cold, impersonal nature of medical collections, Elizabeth Rosenthal, author of An American Sickness, observed, “…to them [collection agencies], a bill is a bill is a bill. They don’t care if it’s for somebody’s heart transplant…or if someone spent a lot more money on a Rolex watch that they couldn’t afford.”

Over the last few years, medical bills have become the number one cause of bankruptcy in the United States. With that in mind, it should come as no surprise that GoFundMe campaigns have become one of the most popular ways for consumers to cover their medical costs. According to GoFundMe statistics, approximately 250,000 fundraising campaigns are established on the platform every year just to pay for medical expenses. The $650,000 generated by those campaigns points to a significant problem in the healthcare system.

If you’re one of the thousands of Americans struggling to keep your head above water as medical bills flood in, you might feel helpless. And while there are no magic solutions that can make legitimate medical debt disappear, there are a few steps you can take to stay afloat. If you haven’t run into medical debt yet, these steps might be able to help you avoid the frustrations so many others have experienced.

3 Ways to Keep Your Medical Expenses in Check

  1. Review Your Bill
  2. When hospital or doctor bills show up, it’s natural to skip right to the “Total Due.” It’s natural, but it’s not necessarily the best way to approach the statement. Glancing at the amount due could leave you feeling helpless, confused, and overwhelmed. Before you send any money, take time to review every line item listed. Due to complex medical billing codes, it’s not uncommon for incorrect or duplicate charges to wind up on the bill. If you notice discrepancies or questionable entries, it is your right as a consumer to ask your insurance company or medical provider for an explanation. The dispute process may be lengthy, but it’s better than paying for medical services you never received.

  3. Consider a High-Deductible HSA
  4. If you and your family are in relatively good health, a Health Savings Account (HSA) can be an excellent way to secure medical coverage while keeping your insurance premium under control. Traditionally available through employers, insurance companies, banks, or credit unions, HSAs allow you to set aside money from your paycheck to be used specifically for medical expenses. These accounts feature higher deductibles than traditional insurance plans, but they make up for that by allowing account holders to deposit funds on a pre-tax basis, which can provide some savings and stress relief.

  5. Create an Emergency Fund
  6. Setting aside $1,000 in a savings account is a smart way to protect yourself against life’s unpredictable twists and turns. Minor illness and occasional doctor’s visits certainly qualify as unexpected expenses, so an emergency fund can help you address sudden medical needs without derailing your budget. If you decide to follow the previous suggestion and secure a high-deductible Health Savings Account, you may want to boost your emergency fund to a level that would cover your deductible. While this adjustment will likely take more work to establish, knowing you’re able to cover your entire deductible in the event of a medical emergency provides enough peace of mind to make it worth the effort.

Current medical expenses are astronomical; that’s a fact. And while it will probably take an industry shake-up to make any lasting changes, it doesn’t make sense to worry about things you can’t control. The steps we’ve outlined may not solve all your problems or eliminate all your medical debt, but they can go a long way toward helping you feel like you have a little more control. That’s a step in the right direction.

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