Why Do People With Good Insurance Still Get Into Debt?
It should go without saying that health insurance is important. Those who encounter a medical emergency without it will almost always face some degree of financial hardship. With this said, many people who do have coverage, and good coverage at that, still find themselves in some form of medical debt.
What Is 'Good' Medical Insurance?
Not all health plans are created equal. Some offer more coverage than others and it’s important to know what constitutes good medical insurance.
Unfortunately, there’s no straight answer to this question. What may be good for one individual may not be right for another. For example, someone who’s in good health rarely gets sick. They’re at minimal risk of having long-term medical issues and therefore may not require the same 90/10 coverage plan with high monthly payments compared to those who are at higher risk.
What Issues Do People Encounter?
Even if a person has good coverage that fits their needs, there are still many ways they can rack up large amounts of medical debt.
A serious diagnosis is the most common cause of medical debt. Anyone, at any time, is at risk of serious medical issues regardless of their family history and lifestyle. This can be particularly damaging for someone who has been in good health. As they have minimal risk factors, they likely choose a health insurance plan with lower monthly payments and lower overall coverage.
The Affordable Care Act states that annual out-of-pocket expenses are capped at $7,150 per year. This usually means that the first $7,150 of treatment will have to be paid by the individual. Not everyone has this amount of money in savings and will most likely cause them to go into debt to make the payment. This issue can be compounded by long term health issues that roll over into a new calendar year, resulting in another $7,150 charge.
Those who lack the financial resources to make the payments will usually turn to loans, such as online medical loans, to pay their out-of-pocket expenses.
When a doctor, hospital, or health care provider accepts an individual's health insurance, they’re referred to as in-network or participating providers. Out-of-pocket expenses for out-network providers are considerably higher than those associated with in-network providers. Because of the difference in coverage, patients almost always choose an in-network provider for their health care needs. While this may be the smart choice, this doesn’t mean that they’re free from hidden costs associated with certain out-network charges.
Below are some of the most common examples of out-network hidden charges.
- Blood Work: Even if an individual uses a participating hospital or clinic, certain samples such as blood work, may be sent to an out-network laboratory for analysis
- Assistant Surgeon: Some surgical procedures require a high degree of specialization. If there’s no in-network doctor available, the patient may have to go to an out-network surgeon. This can also be true for assistant surgeons. Depending on the nature of the procedure, an assistant surgeon may be called in to help the lead surgeon. If this assistant isn’t a participating doctor, then the patient can expect to pay for their services out-of-pocket
- Assisted Care Provider: Not all care providers will be covered by an individual's medical insurance. Some types of long term care providers aren’t covered by common medical insurance plans and can result in extra costs for the patient
Anyone who has gone through the process of comparing procedure prices between hospitals and clinics knows how opaque their pricing estimates can be. Generally speaking, hospitals will only provide potential clients with an estimate of the total cost but the final price may end up costing significantly more.
For example, many people who see a doctor due to nerve pain, find out they will require surgery. In the majority of cases, the hospital can’t tell the individual exactly how much the procedure will cost, leaving many surprised when they receive the bill. This issue may be further complicated if the hospital or clinic performing the surgery decides to use an out-of-network doctor or laboratory for the parts of the procedure. Typically, the patient will not be informed of this until the surgery has been completed.
Missing appointments can lead to medical debt in two primary ways.
- Charges For Missed Appointments: Many plans will not cover appointment costs if the patient fails to show up on time
- Missed Medical Issues: The best way to treat a disease or illness is to catch it early. Not going to regular checkups and screenings greatly reduce the chances of catching a medical issue early on when it’s in its most treatable phase
Paying With Credit Cards
Many people decide to pay for their out of pocket costs with their credit card. This is generally a bad idea because the interest rates on credit cards are typically much higher than the interest rates on medical loans.
Because of the nature of medical emergencies, it can be difficult to keep costs down in many situations. Nonetheless, it’s still important to be aware of the most common reasons people with good insurance get into medical debt.