Making sound financial decisions for another person can be overwhelming for even the savviest caregiver, particularly when it comes to health care. While selecting the right Medicare plan for yourself or an aging loved one is critical during each annual open enrollment period, that is only the first step, as out-of-pocket (OOP) costs not covered by Medicare continue to be a major financial burden.
In fact, a study conducted by The Center for Retirement Research at Boston College calculated that the average household spends about $197,000 on out-of-pocket medical costs during retirement years (not including nursing home care).
Health care costs are exorbitant, but there are simple steps both caregivers and seniors can take to reduce these out-of-pocket expenses.
10 Tips for Handling Medical Bills and Insurance Matters
- Understand your paperwork and your insurance coverage. If you have ever received a medical bill or an Explanation of Benefits (EOB) form in the mail and been confused by the two, you are not alone. Most of us wonder if the bill is correct and why we received the EOB in the first place, since it doesn’t seem directly related to payment. Here’s the difference: Your medical provider sends you a bill telling you what you need to pay, while your insurance company sends you an EOB explaining why you need to pay that amount. An EOB will usually state the retail rate of the service you received, the lower contracted rate the provider has agreed to accept as payment in full, how much the insurance company will pay, and how much you should pay.
For example, let’s say that the typical retail rate for knee surgery is $45,000. An insurance company may negotiate a contracted rate as low as $5,000 for this surgery with certain “in network” providers. If you go in for knee surgery with one of these providers, then you are billed at the reduced rate, which can represent a huge OOP savings. Providers that do not have negotiated contract rates with insurance companies are called out-of-network providers. These providers do not agree to a reduced rate and may charge anything they deem appropriate for the medical service you received. What the insurance company will pay for that bill depends on your policy. It’s important to do your research beforehand, if possible, when selecting a health care provider to be sure you’ve made a quality choice that is also cost effective. - Don’t pay immediately. Many of us want to pay what we owe and then get on with our lives, so we tend to write a check for a bill as soon as we receive it. However, given the number of instances where medical bills contain inaccuracies and overcharges, unlike some of the other bills you receive, these require closer examination. Do not pay the bill until you have determined that the amount on it is what you truly owe. If you make a payment to a provider and then find out later that you paid too much, it can be very difficult to recoup that money. If you have any questions, contact the provider and/or your insurance company.
- Check the basics. Make sure that your bills have the correct basic information. This includes your name, address, service(s) provided and dates of service. If the bill lists the insurance companies they have on file for you, double check this information as well, especially if you recently changed insurance carriers or have both a primary and a secondary insurer.
- Understand and verify the charges. Many medical bills are difficult to understand because they tend to be vague and drafted in cryptic medical billing codes. The best rule of thumb is don’t pay what you don’t understand. Request an itemized bill from your provider to get a clearer picture of what you owe. Go through the itemized bill to make sure you did indeed receive the services for which you are being charged. According to Medical Billing Advocates of America, more than 75 to 80 percent of bills contain errors. Remember: always check before you write a check.
- Make sure the bill is adjusted for contracted rates and insurance payments. If you go to an in-network provider, that provider should submit a claim to your insurance company. If your bill does not contain line items that show an adjustment for the contracted rate or insurance payments, that means your insurance was not applied to the bill. Instead of working the issue out with your insurance company, the provider has decided to simply bill you instead. If your bill does not reflect an insurance payment or an insurance discount, it is a red flag that it may be billed incorrectly.
- Check that the EOB matches the bill. The EOB your insurance company sends you is the counterpart to the medical bill your provider sends you. Make sure you that you have an EOB for a bill before making a payment. If you have not received an EOB, that means your insurance company has not finished processing the claim and has not determined what your portion of the bill should be. An EOB should arrive around the same time as its matching medical bill.
In addition to making sure you have an EOB for the medical bill, you also need to make sure that the two documents match. Your EOB should state exactly what you can expect the provider to bill you for the service. If you compare this amount to what you are actually billed, and it is different, it is another red flag that something is wrong. - Be persistent and don’t back down until the issue is resolved. If you spot any of the red flags mentioned above, call the provider and your insurance company immediately to resolve the issue. Be polite but persistent, and document all your phone calls. Make sure that you write down the name of the person you spoke to and the date and time. Be sure to follow up until your problem is solved and you have received a revised bill.
- Don’t ignore bills and let them go to collections. This may seem contradictory to tip number three, but providers are sending past due accounts to collections more quickly than ever before. You should certainly take the time to make sure your bill is correct, but do not ignore providers’ requests for payment while you investigate. Let them know that you are working on the bill and request that they do not send the account to a collection agency in the meantime. When your provider knows that you are actively working on securing payment and not simply ignoring it, they will often give you extra time to resolve the issue. The key here is to make sure your bills are correct before paying them, but do not let them pile up and forget about them.
- You can negotiate! If you do not have health insurance, many providers will give you a discount to bring your bill closer to the contracted rates that they have established with their accepted insurance companies. If you do have insurance and determine that the amount you owe is correct, ask the provider if they offer any flexible payment options. Some providers will give you a discounted rate if you are able to pay in full up front. Research your options and ask questions! You may be surprised by the options they can extend.
- Ask for an interest-free payment plan or an application for financial assistance. If you have determined that the bill is correct but cannot pay it all at once, ask your provider if you can arrange for an interest-free payment plan. Many providers are happy to do this, and the arrangement can be set up quickly and easily. Once the provider has allowed you to set up interest-free monthly payments, be sure to keep up your end of the arrangement and make these monthly payments on-time.
Many providers, especially hospitals, have a financial assistance program available to those who meet the income requirements. Most of these programs will ask for proof of income by requiring documents such as payroll stubs or income tax filings. If you qualify and are accepted, your bill can be significantly reduced.
Knowledge is power, so be sure to do your research when it comes to choosing health care providers, understanding insurance policies and paying for medical services and supplies. If you need assistance, don’t be afraid to contact your providers or meet with a State Health Insurance Assistance Program (SHIP) counselor at your local Area Agency on Aging.