How to Finance a Medical Emergency

An OppLoans E-Book

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Taking Out Medical Loans: A Before-You Borrow Checklist

While taking out an installment loan from a reputable, responsible lender can help ease the stress of a medical emergency, it should not be your first choice Before you take out loans to finance your medical debt, you need to be sure you’ve exhausted all other available options.
 Understand your insurance.

If you have health insurance, you need to know exactly how much of your medical bills will be covered under your plan. If you’re confused, call your insurance company and ask to speak to someone who can explain your plan in detail.

 Know what you owe.

It can be tempting to throw every medical bill you receive straight into the trash without opening it, but ignoring your debt won’t make it go away. Even if you don’t have the funds to pay off the full amount, it’s important to keep track of what you owe and why. Contact the hospital, clinic or collection agency sending you the bills and work out a payment plan with them. Ignoring your medical debt can lead to poor credit and even wage garnishment.

Check your medical bills for errors.

Remember, nearly 80 percent of medical bills have errors that can cause you to be charged more than you should be. If you spot an overcharge on your bill, or if you suspect something you were charged for should have been covered by your insurance, contact your provider’s billing department immediately. Quick action can help get your bill reduced to a more fair and manageable size.

Negotiate a bill reduction.

If you have a $700 bill, but only $500 left in your emergency fund, talk to a hospital financial counselor. They may well accept a $200 discount if they can get paid right away. Remember, a hospital is a business – they need your money to pay their bills, staff and buy medical equipment. If they have a choice between never getting paid and getting slightly less than they’re owed, chances are they’ll go with the choice where they actually get paid. According to many of the experts we spoke with, offering to pay your bill in cash at a reduced rate can be an effective negotiation tool.

Tap into your 401k or Roth IRA.

This is not ideal, but it’s better than taking out a high-interest loan you may or may not be able to pay back. While there are hefty fees for pulling money out of your 401k before the age of 59 and a half, there are exceptions for unreimbursed medical expenses that exceed 10 percent of your adjusted gross income. If you choose this option, do it quickly, because the withdrawal must be made in the same year that your medical bills were issued!

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