Underinsured Medical Bills

I recently have some surgery done, and we thought we had decent Medical Insurance.  Turns out we were wrong.  We are just starting to get the bills from the Doctor’s office, and its looking like it will be over 15,000 dollars.

We would like to see about getting a house, and have about 12,000 in a Rolled over 401K.

We are wondering if we should use the money to pay the medical bills, so the Medical Collections do hit our Credit Report, or should be be using the money to use as a down payment on a house.  But, I’m not sure what the Medical bills will do to our credit reports.

Please give me any help you might be able to..

Thanks.
Dale

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Hello Dale,

There is a high likelihood that your $15,000 bill is over-inflated.  Insurance companies whittle down medical costs and negotiate lower amounts with hospitals and medical providers.  Most consumers don’t know they too should be doing this.  Even worse, for the uninsured (underinsured), that padded bill gets ignored by the consumer and attaches as cancer to a credit report – growing, it’s passed along to collection agencies and junk debt buyers.  The patient is healed, but now the credit report is sick.

Fear not!  All you need is access to the medical billing charts that the insurance companies use.  You have that here:

cms.hhs.gov/HealthCareConInit

Standard fees for (1) hospital inpatient, (2) ambulatory surgical centers, (3) physician, and (4) hospital outpatient are all labeled.  Don’t pay any more than those fees.

You also want to challenge each and every fee as to the reasons why your insurance company is not willing to pay them.  Don’t blindly accept what the customer service rep at the insurance agency tells you.  You need to investigate why it was charged and why the policy did not pay.

Dale, don’t let these items get to your credit report if you can avoid it by being proactive now.  If left unchecked, the medical collections could be $20,000+ in a few years and it may be possible to settle all of these items with the hospital/insurance agency for a fraction of that now.

Thanks for the questions and hope this helps.

Paul