8 Reasons Why Medical Debt Happens and How to Avoid It

Listen people medical debt is a growing concern in many households, and it often arises from factors that could be prevented or managed more effectively. Lets be honest here, many people find themselves drowning in healthcare-related expenses within the healthcare industry. To note the US healthcare industry is a Trillion dollar system. Below, I will dive into eight common reasons for medical debt and share insights on how to keep some money in the bank.

1. Misinterpretation

One of the leading causes of medical debt is the misinterpretation of healthcare-related costs. Many individuals fail to fully understand the costs for care and extra hidden fees tucked in their medical bills. For instance, a patient might assume a procedure is fully covered, only to discover that certain healthcare fees are not covered by the insurance company. Why the surprise? It just means that the patient was not disclosed all the potential fees prior to the procedure to then ask the insurance company how they could be covered.

To avoid this issue, it is crucial to ask your healthcare provider for a detailed explanation of costs before undergoing any treatment.

Make that call to your insurance company or your health insurance agent, to learn the facts before the procedure to plan for the costs. Additionally, reviewing an Explanation of Benefits (EOB) from your insurance company after the procedure can help clarify what portion of the bill is covered and what remains your responsibility.

2. Misreading Your Health Coverage Plan

Health insurance plans can be complicated at times to understand, with varying verbiage for how medical care is covered. Example: Co-pay for office visit if you are sick to see Primary Care $10.00. But what does that mean exactly? No further charge after paid or will we have a balance to pay because we still have a annual deductible to meet per year. Misreading or misunderstanding your plan can lead to unexpected medical expenses, which we do NOT need!

To avoid surprises, thoroughly review your health insurance plan. Pay close attention to how medical is covered with the plan, read the non-covered items and limited covered items. If you are unsure about any aspect of your coverage, call your insurance provider or health insurance agent if you have one to ask questions before seeking medical treatment.

3. Being Uninsured and Underinsured

Lack of insurance or inadequate coverage is one of the top reasons people accumulate medical debt. Without insurance, even a minor medical procedure or emergency room visit can lead to thousands of dollars in out-of-pocket costs. Underinsured individuals may also struggle with high deductibles or limited coverage for essential treatments.

When health insurance rates are high, shopping for the right plan can seem very over-whelming. What do most of us do? Pick a plan based on price without understanding our health needs or understanding the overall financial investment to keep in mind if we enroll into the plan we selected.

Example: Most people select a high deductible plan, this could be a plan of a $5k to $9K deductible and most people do not have this kind of cash in the bank. Anther example, would be choosing a health plan that is not an actual insurance product. The plan is either a Discount Health plan or a Cost-Share aka Faith Based Health-share plan. These plans are not actual insurance plans, they are not regulated and have 0 guarantee of paying any of your medical bills. On the health card and policy documents printed "not an insurance product" labeling to look for with these type of plans.

When shopping for new coverage, if the process seems over-whelming to do yourself meet with an licensed agent who can help. There are programs available for your health and budget that can suit your needs. Also, check out if your employer offers coverage or if they do not offer coverage check to see if they might sponsor a portion of your coverage.

4. Poor Diet and Eating Habits

Health issues stemming from poor diet and lifestyle choices contribute significantly to long-term medical expenses. Conditions such as diabetes, hypertension, and heart disease often result from unhealthy eating habits and can lead to costly medical treatments, hospital visits, and medications.

By maintaining a balanced diet rich in whole foods, fruits, and vegetables, you can reduce your risk of developing chronic illnesses. Investing in preventive healthcare through better nutrition and regular exercise can save thousands of dollars in future medical bills.

5. Expensive Medication Treatment

The high cost of prescription medications is anther top reason for medical debt, especially for individuals with on-going to chronic health conditions requiring long-term treatment. Many brand-name medications are costly, without proper coverage or proper education of the medication; patients may struggle to afford their necessary prescriptions.

To cut down on medication costs, consider asking your doctor about generic alternatives, which are often much less expensive than their brand-name counterparts. Also, look into patient assistance programs, discount prescription cards, or mail-order pharmacies that offer lower prices on long-term medications. Do not assume that all health insurance companies will cover these pricey medications. A red flag to look for, if your doctor gives you push back on an alternative medication after you have reviewed their recommendation that is unaffordable for you it would be advisable for a second opinion.

6. Charging Medical Bills to Credit Cards

Pssst! Here is what they wont tell you. Using credit cards to pay for medical bills can be a dangerous financial trap. Many individuals turn to their credit cards when faced with high medical expenses, but the high-interest rates can quickly compound the original debt if not paid in full at the end of each month. Over time, this leads to an even greater financial burden as interest accumulates.

Instead of using credit cards, explore options like hospital payment plans, medical loans, or financial assistance programs offered by healthcare providers and local banks. Many hospitals, clinics and banks offer zero-interest or low-interest payment plans that allow you to pay your bills in manageable installments.

7. Limited Coverage for Medical Care

Not all health plans will cover all medical care that is recommended by providers. Health insurance plans that may have limited coverage for certain procedures, treatments, or medications can work for some but not for others. This can leave patients responsible for significant out-of-pocket costs that they may not have anticipated.

Before signing up for a health insurance plan, thoroughly review its limitations and exclusions. If your current plan does not cover essential treatments or services, consider switching to a different plan during an open enrollment period. If changing plans isn’t an option, look into supplemental insurance, medical grants and second opinions with other Providers before saying yes to care.

8. Medical Billing Errors

Errors in medical billing are surprisingly common and can result in overcharges or unnecessary expenses. Patients who do not carefully review their medical bills may end up paying for services they never received or being charged the wrong amount due to coding mistakes.

To avoid medical billing errors, always request an itemized bill and check for discrepancies. If you find an error, contact the Providers billing department or your insurance company to see about a dispute to the charges. It’s also wise to obtain a copy of your medical file. In the file you can see notes about your medical care and what the doctor billed your insurance plan for. The truth is in your file.

Conclusion

Medical debt is a serious issue, but understanding its root causes can help individuals and families take proactive steps to minimize their financial burden. By improving financial literacy, maintaining a healthy lifestyle, exploring cost-effective healthcare options, carefully reviewing insurance and medical bills. Can significantly reduce your risk of accumulating overwhelming medical debt. Awareness and preparation are key—take the time to educate yourself about your healthcare options and plan ahead for potential expenses.