Medical Debt
EPISODE 2
Hello Healthcare Consumers and welcome to Gary and Jay’s Healthcare Insider, the program that tries to help “Make healthcare easier to understand and navigate.” . We are committed to make healthcare personal.
Today’s program: MEDICAL DEBT: THIS IS THE SECOND EDITION FOCUSING ON SOLUTIONS. For our second episode on Medical Debt, we’re going to start looking at solutions beginning with the simple and most straightforward to more complex.
I’m Gary and I’m Jay and we will be hosting today’s program.
- We are not Clinical people.
- We are experienced in the Business of Healthcare with over 50 years of combined experience.
- We bring an Insiders view of how healthcare works.
- Our goal is to share our knowledge with consumers.
Gary Prala: Career in spans managing hospital and physician revenue cycle operations that include
Pt Admission, Precertification, Ins verification, billing and medical collections
Jay Herron: Chief Financial Officer for several large healthcare systems
Here we go with today’s program: IDENTIFYING MEDICAL DEBT SOLUTIONS
First, let’s recap: What is Medical Debt?
Medical debt is debt incurred by individuals due to health care costs and related expenses. Medical debt is different from other forms of debt, because it is usually unplanned, accidental, or faultless. Medical debt can have negative impacts on households, such as reducing their spending on other essential items, or preventing them from seeking needed medical care or treatment. Medical debt can also lead to bankruptcy.
Do you have a Medical Bill?
If yes, medical debt can indeed be a significant financial burden for individuals and families. When someone incurs medical expenses that are not fully covered by insurance or you do not have insurance, you may end up owing money to healthcare providers. This debt can accumulate due to various factors, such as high deductibles, copayments, out-of-network charges, or uncovered services.
Before we start, we thought it would be important to summarize recent Federal Legislation that will help and protected healthcare consumers:
Inflation Reduction Act
The Inflation Reduction Act will protect Medicare recipients from catastrophic drug costs by phasing in a cap for out-of-pocket costs and establishing a$35 cap for a month’s supply of insulin.
Millions of Americans will continue to benefit from subsidies that help with rising health insurance premiums that were originally slated to expire next year.
The bill will put a $2,000 annual cap on out-of-pocket prescription drugs for people insured by Medicare,
But that provision won’t materialize until 2025.
Credit reports will exclude medical debt collections under $500 and more
Starting July 1, 2022, medical debt that’s been paid will no longer be included on credit reports from Equifax, Experian and TransUnion—even if it’s been on your report for several years.
In addition, the three credit bureaus are increasing the amount of time before medical debt in collections appears on your credit reports. That cushion is now six months but will be lengthened to one year.
Finally, beginning in the first half of 2023, the three consumer credit reporting agencies will no longer include medical debt in collections under $500 on credit reports.
Private insurance cost comparison tools will be expanded.
Price estimation tools from hospitals and health plans can help you calculate your healthcare costs in advance. To ensure that these tools benefit consumers, federal law mandates:
- Hospital price transparency:Since 2021, hospitals have been required to publish standard charges for services that can be scheduled.
- Health plan price transparency:Since 2022, health insurance plans have been required to publish price information on certain covered treatments, services, and medications on their websites. In 2023, insurance plans had to provide online cost-sharing estimates for 500 shoppable services.
Good faith estimates must now include costs beyond the main provider
If you don’t have health insurance or you plan to pay for health care bills yourself, generally, health care providers and facilities must give you an estimate of expected charges when you schedule an appointment for a health care item or service, or if you ask for an estimate. This is called a “good faith estimate.”
No Surprises Act
The No Surprises Act is a federal law that protects consumers from most instances of “surprise” medical bills123The law took effect on January 1, 2022, and applies to all health plans. The law requires insurers to bill plan holders no more than the median in-network rate for emergency services and certain non-emergency services provided by out-of-network providers13.
New rule would eliminate medical debt from credit reports: PENDING
The Consumer Financial Protection Bureau has proposed a rule that would remove medical bills from credit reports, a ban that would prevent lenders from considering those debts when making decisions about whether to issue loans.
The proposed rule change, announced Tuesday, would also increase privacy protections, help raise credit scores and prevent debt collectors from using the credit reporting system to coerce people to pay.
New rule for annual review of prior authorizations
A new rule in 2024 requires health plans to give specific reasons for denying coverage and expedite the prior authorization process. The new guideline applies to these types of health plans:
- Medicare Advantage plans
- Medicaidor Children Health Insurance Program (CHIP) fee-for service and managed care plans
- Affordable Care Actmarketplace plans
Hospital prices
Starting in 2024, hospitals must:
- Use standardized CMS templates:This measure should ensure that price estimates appear in similar formats across hospital websites, making these files more readable and easier to compare.
- Include a link to standard charges on their website:These links may lead to a cost-estimator tool or similar resource.
- Certify that their data is accurate and complete:This means that they must provide an entire list of all standard charges.
The easiest way to avoid medical debt is to acquire some form of health insurance. The most common form of health insurance is through a person’s employer. The next solution is applying for charity from the institution services were received. Third, a negotiated discount and established payment plan is te third solution we’ll review.
We’ll start with insurance. Once upon a time health insurance was pretty simple and straight forward. If you’re sixty or your parents are sixty or older the your or your parents original health insurance coverage most likely was referred to as indemnity medical insurance. It was provided by an employer. Included a modest deductible and some form of co-insurance. Coverage was typically provided by Blue Cross and Blue Shield. Coverage was straight forward and typically paid for 80-90% of billed charges.
For ease of presentation and not wanting to make this more tedious than necessary we’ll fast forward to the present. Indemnity health insurance has largely disappeared. Employers continue to be the major providers of health insurance. The form, however, varies widely. We’ll skip the details and cover what we believe to be the most important aspects of today’s coverage.
The two most important considerations are cost and coverage.
According to a brief internet search, the annual premium for a family of four in 2024 is approximately $27,000, with a deductible of $3,100. Correspondingly, an individual plan premium of approximately $8,400.
The health insurance market changed dramatically with the passage of the Affordable Care Act better known as Obamacare. In response to a growing uninsured population, Obamacare created a health insurance marketplace accessible by anyone speaking health insurance. Included in Obamacare were subsidies available to individuals and households with net income between 100% and 400% of the Federal Poverty Level. The American Rescue Plan Act ((ARPA) changed the subsidy level by eliminating the 400% cap and replacing it with a limitation of 8.5% of income limitation. This is now referred to as subsidized health insurance. This makes acquiring health insurance available to anyone.
The flip side of medical insurance is coverage. The payment side is reasonably straightforward compared to the coverage side. This requires wading into the complex world of medical jargon along with insurance terminology. If you or your family are generally healthy, then analyzing coverage along with costs becomes an exercise in risk management and family budgeting. Going through a series of “what if” and “how much” questions is necessary. Usually, employers’ provide resources to go through this process. If you’re purchasing insurance through the marketplace insurance brokers can provide support.
If on the other hand, you or your family have a medical history involving chronic diseases or other medical conditions. Understanding historical medical costs becomes part of the aforementioned budgeting process and coverage selection.
WE CANNOT PROVIDE A ONE SIZE FITS ALL ANSWER TO EITHER OF THESE SITUATIONS. INDIVIDUAL OR FAMILY PLANNING AND ANALYSIS IS REQUIRED.
Another option recently developed in the the health insurance environment are High Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs). People sometimes confuse Flexible Spending Accounts (FSAs) and HSAs. HSAs have two distinguishing characteristics, first a HDHP is necessary to establish an HSA. Second, unlike a FSA the funds contributed to an HSA accumulate year after year. Unfortunately, HDHP plans are very rare.
HCNC is your healthcare partner that offers healthcare consumers information to navigate the healthcare maze via our website.
The program and take away information of the program will be available on our website www.healthcareconsumernavigatorcenter.com.
REMEMBER: THIS IS OUR 3TH YOUTUBE PROGRAM IN THIS SERIES, SEVERAL MORE TO FOLLOW
Our next program topic will be: How to use Charity Programs to Eliminate Medical Debt
This concludes our program MEDICAL DEBT SOLUTIONS, and we hope the program explained telehealth care and has answered some of your questions.