I make a living by helping people figure out a strong financial plan. My job is to come up with a program that accounts for every possible scenario between now and when a client finally gets to retire and enjoy all the fruits of their labors.
That’s why unplanned expenses can drive me right up the wall.
It’s not because I blame people for lacking foresight; it’s actually just the opposite. It’s really, really frustrating to help someone create a brilliant road map for the future and then watch something totally unexpected upend all those efforts.
Health issues and medical expenses almost always throw people off their savings objectives. Sometimes it’s just the money lost, while in other cases people lose the ability to work and generate the income they planned on having. Both situations are unpleasant at best and require some serious rethinking on the financial end.
No matter what stage of wealthiness you find yourself in, knowing how hospitals and insurance companies operate can make a huge difference with what you end up owing after any type of hospital visit. From giving birth to recovering from surgery, there are ways to navigate the system that can save you a whole lot of cash.
If you have a scheduled procedure on the horizon or if you just want to be prepared, here’s a list of strategies and steps everyone should know about.
The biggest and smallest issues often have multiple courses of treatment. You have fewer options when it comes to bigger procedures, but it’s always worth checking to see what your choices are. This is especially true when it comes to the medicine prescribed.
Doctors and hospitals are used to writing up prescriptions for the fanciest, most expensive meds, even when there are much cheaper, equally effective generic brands available. As long as you have a doctor you like and who feel comfortable asking questions and making requests, do some inquiring about your meds. Better yet, ask about and research prescriptions ahead of time. Track down some people who have undergone similar procedures or have similar health issues and find out what they pay and if they give the drugs they use a thumbs up.
If a hospital can run up your bill by providing useful but unnecessary services, that’s probably what will happen. You won’t be presented with a bunch of different options, making it your responsibility to ask about and look for alternatives. In the end you might only have a single choice, but it’s always worth inquiring.
It’s a depressing reality, but hospitals rake in TONS of money by charging for services they don’t provide. Especially with the longer, in-patient procedures like labor and surgeries, patients frequently get blindsided by more fees than they actually owe.
More often than not, people don’t take the time to find out everything included in their bill and just end up paying the lump sum. However, if you spend a few minutes looking at and questioning every charge, you can find all sorts of listed items you don’t have to pay for. The longer you stay in the hospital, the more likely it is your tab will get inappropriately hiked up.
If you have the foresight, you can call ahead and ask for the cost of a procedure ahead of time. This is just an estimate, but when you have that number to work off of, it will be easier to locate discrepancies once you’re discharged. You might get the runaround, but you have to stay persistent until the hospital gives the information you’re requesting.
This isn’t always as easy as it should be, but taking every possible step to stay within your insurer’s network can save you lots of money. Unfortunately, sometimes the best way to stay in-network is to pay for premium insurance prior to any medical conditions forcing you to seek care.
Hindsight is 20/20, so hopefully this bit of advice will find some of you before you find yourself needing it. As much fun as it is to save on your monthly healthcare premiums, it’s more fun to have awesome coverage in your moment of need. If the only reason you go to a certain clinic is because of your insurance, but given your preference you’d absolutely see someone else, figure out what kind of insurance swap that might require.
If you’re insured through your employer, you might be able to go with either a health savings plan or an HMO that gives you more options for your care provider. There comes a point where you just have to accept the cards you’re dealt, but you should do all you can up to that point to see the doctor you like best and who works with your insurance company.
This only works when you have a good idea of what your insurance will cover and know you can save money by paying upfront. Hospitals will lessen the blow for people who pay on their way out the door to avoid billing insurance. If your provider will absorb most of the bill, you definitely don’t want to hand over your own money. Conversely, if you can save a few hundred dollars by paying before insurance gets involved, that’s obviously what you want to do.
Hospitals will almost always advise you to take this route, but that’s because they’d rather get receivables in one day as opposed to 90. I don’t think you’re being lied to by anyone suggesting you could save money with an advance payment, but it’s usually not a guarantee. It all depends on your insurance and how the care provider codes their billing. Communication between medical providers and insurance companies is subpar at best, which creates a lot of billing inconsistencies and excessive charges that get passed on to the patients.
If you get recurring care and know that you can save money paying directly, do that. If you can call your insurer ahead of time and get a straight answer, do that. If you have no idea which will cost more, it’s probably best to let the bill go through insurance first, just to see what they’re willing to pay.
The fine print in an insurance policy can be outlandishly confusing or misleading. Every plan has a mess of variables and rules and exceptions, making it a real trick to figure out what will actually be paid for. I was charged for an X-ray at the dentist once even though my plan said X-rays were covered. I then learned my dentist office used a special X-ray machine that delivered images my insurer considered outside the umbrella. Needless to say, I was frustrated.
Instead of waiting for the bills to come and make you feel nauseous, sit down with a friend or a family member who has a little more experience. If you don’t have a doctor in your immediate circle of friends, see if anyone in your community can vouch for someone with the knowledge you’re looking for. It’s not fair that people without a PhD in medicine or a master’s in insurance terminology are expected to make heads or tails of so much complex stuff. Through whatever means possible, you should try to find someone who can help make sense of it all.
A little caveat on this point - asking your doctor about insurance issues during a visit is often a dead end. Lots of physicians and nurses have no clue what will be covered and they definitely don’t want to mislead you. Their goal is to provide the best care and keep you in good health, and whatever the insurance company agrees or doesn’t agree to cover isn’t really in their purview. There are certain front office people at the hospital who are better equipped to answer insurance questions, or you can try meeting up with a friend in the medical field when they’re off the clock.
I’m sure it doesn’t feel like it, but you have a little bit of leverage when it comes to healthcare. The system operates as if this weren’t true, making people feel like they’ll die if they don’t pay top dollar for whatever procedure will offer some peace of mind. In reality, you paying for insurance and care is what keeps the whole industry afloat.
If you know a procedure isn’t covered, you can shop around at different hospitals and clinics to find the best price. At that point, you can start to negotiate what you pay, even requesting a discount if you pay a lump sum upfront. Not to compare your health to a used car, but you can put some of the same car shopping tactics to use while trying to get a better price for your care.
You probably feel like you have no say in the cost of medical procedures. That’s exactly how those on the profiting end want you to feel. It doesn’t hurt to talk price and see if you can do some beneficial negotiating. You might be surprised by how effective it can be.
When you take a meeting with a friendly physician to discuss insurance billing, ask for some casual medical advice as well. I can’t tell you how many times I’ve had a little shoulder pain and wondered if it was worth scheduling a doctor’s visit, then spent two minutes talking to a doctor buddy who put my concerns to rest.
Even if you don’t have a doctor from whom you can readily get free advice, it’s usually worth getting a second opinion if you feel overwhelmed by the asking price of a first doctor. You might spend a little money on the co-pay, but that’s a small price to pay if you get a competitive offer that cuts your final bill by hundreds or thousands of dollars. Don’t go shopping around in excess, but don’t accept one quote as the amount you have to spend no matter what.
I know a lot of people head to the internet looking for a quick fix to their problems. I do the same thing. If you need the quick fix on health care, asking for an itemized bill and contesting any questionable charges might be the closest you're gonna get.
If you really want to save money on medical bills, you need to be proactive with taking care of yourself and going in for regularly scheduled checkups. It’s a pain to go to the dentist twice a year and an even bigger pain to shell out a couple hundred dollars to have cavities filled. Want to know what the biggest pain is? Paying for an implant because you ignored some decay for too long and the roots died in your tooth.
If you’re headed to the hospital for elective surgery or to have a baby, there’s no good preventative care for that. Telling people to take better care of themselves can sound really preachy in the wrong context. However, since insurance can be so difficult and going to the doctor is never that fun, it’s really easy to put off the routine inspections that can be so important for maintaining our health. The cost incurred when an ambulance comes for a heart attack victim dwarfs what one has to pay to get the right prescription blood pressure medication.
As we just discussed, healthcare can’t be avoided. Even if it’s expensive, you need to take the necessary steps to keep your body in tip-top shape. That means potentially paying more than you feel like you can afford, and the best way to deal with that is setting up a payment plan that keeps you from throwing the whole bill on a credit card.
The billing office for the hospital cares much more about your financial well-being than the customer service reps over at Visa or Mastercard. I’ve had hospital workers ask if I needed to arrange a payment plan before I even knew what the bill was going to be, showing a general eagerness to get people the care they need and try to make the financial burden as manageable as possible.
Unlike with car loans and credit cards, an extended payment period on your medical bills probably won’t land you with massive interest charges. You can usually figure out something that works for both you and your provider, and it might make all the difference.
I know what you’re thinking. Saving money ahead of time to pay your hospital bills is much different than saving money on those hospital bills. You’re not wrong.
However, an emergency fund that keeps you from going into debt after a medical emergency will absolutely help you save money in the long run, and that’s what I’m most concerned with. You might pay every penny that the hospital asks for and you might feel like it’s a really exorbitant bill, but that’s still better than putting thousands of dollars on a credit card and knowing you’ll be paying interest on this hospital visit for years to come.
With medical expenses, the importance of an emergency fund cannot be overstated. No matter how fit you are, an unexpected trip to the ER can have you wishing with all your might that you’d set more money aside.
The fun part of financial planning is buying houses and investing in exciting emerging markets. The boring part is thinking about things like health and life insurance and making sure all your bases are covered. It pains me to say this, but the boring part is at least as important as the fun part.
Whether you’re in the midst of a health crisis or just trying to be cautious, set aside some time to think about the bills and how you can either reduce them or make sure they get paid. You might not enjoy it in the moment, but you’ll be so glad you did everything you could once it’s all said and done.