How to Pay Unexpected Medical Bills

One of the most unpleasant of all money-related surprises is the unexpected medical bill, emblazoned across the top with those dreaded words, Balance Payable Immediately. Most working adults encounter these out of the blue missives at least once in their lives, and the messages are universally reviled. In some cases, individuals receive bills for services they thought their insurance would cover. Other unwelcome invoices arrive months after a procedure, office visit, or consultation when the patient has long since forgotten about the potential charges. 

How can honest adults pay legitimate healthcare balances before the accounts get turned over to collection agencies? There are plenty of ways to deal with unexpected financial demands. In addition to making a hardship withdrawal from an IRA, people consolidate their college loans to reduce monthly payments, use funds in health savings accounts, pull out credit cards, negotiate with creditors, and take out personal loans. Here are pertinent details about the top tactics for paying surprise medical bills.

IRA Withdrawals

Be careful when taking hardship withdrawals from retirement IRAs. It is permissible to do so, but account holders must meet some strict requirements. The toughest of the bunch is that your unreimbursed medical expenses must be greater than 10% of that year's reported AGI (adjusted gross income). So, if your AGI was $70,000 for the year in question, and you are under 65, the IRA withdrawal could only be used to cover bills more than $7,000. Thus, a notice that you owe $3,000 for a surgical procedure wouldn't make the cut, but a $10,000 invoice would be partially covered.

Consolidate College Loans

For a consistent infusion of additional capital, consolidating student loans is an effective education debt solution. In most cases, a consolidation reduces monthly payments immediately. The move can work to free up cash to pay off a health-related expense over a short period of time. However, there can be negatives to consolidating college debt. The best way to get accurate, reliable information on the topic is to review a comprehensive guide that examines the pluses and minuses of a school loan consolidation.

Health Savings Accounts

Health Savings Accounts (HSAs) are IRS-approved ways for individuals to set aside pre-tax earnings into a designated HSA and take the funds out to cover qualified healthcare costs like coinsurance, various deductibles, and most copayments. At withdrawal, you won't have to pay taxes on the amounts.

Credit Cards

Using plastic cards is not the best strategy for dealing with any kind of financial burden because users must pay relatively high rates of interest on the balances. But in a pinch, credit cards can come in handy and, for some, are the only avenue for avoiding a call from a collection’s agency. If you must go this route, strive to pay the resulting balances down as quickly as possible using other tactics, like taking on part-time work, negotiating with creditors, or taking out a personal loan. Personal loans work well for eliminating high-interest card debt.

Negotiation

As a first-line defense, contact healthcare providers and ask if they'll let you pay the obligation over a six or 12-month period. Many hospitals and physicians' practices will agree to let people pay balances off with no interest. But you'll never know until you ask.

Personal Loans

If you have decent credit, it's usually possible to get approved for a low-interest personal loan. Most lenders let prospective borrowers check rates online without doing a hard pull. That means your current credit rating won't be affected by checking personal loan rates before choosing a lender. One of the advantages of borrowing this way is the chance to get a substantial amount of money relatively quickly. In emergency situations, speed and low rates are major benefits.

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