The expense of medical bills
Medical bills are one aspect of your personal finance that you cannot control. When a medical emergency strikes, you must seek care, and you do not have time to shop for the best bargain. Even if you have medical insurance, chances are you will still be stuck with a portion of the medical bill. When this happens, sources are available for financing your medical bills.
Medical Bill Finance Companies
Companies exist that allow you to apply for credit to finance your medical bills. This is an option only if the doctor's office or hospital where you received your care is contracted with a finance company. If it is, you may apply for credit while you are at the checkout desk. Generally you get an answer back within several minutes regarding acceptance or rejection by the finance company. If you are approved for credit, you will begin making payments based on the terms allowed by that finance company. Once you are approved, you no longer owe any money to the doctor's office or hospital. Your financial obligation is to the finance company.
Interest Rates
Credit.com states that many of these medical bill finance companies carry high interest rates. This will depend on your credit score. The primary reason for the high interest rates is that the credit is unsecured. Unsecured credit indicates that the finance company has nothing tangible to repossess if you do not meet your financial obligation.
Regular Credit Cards
Credit.com advises that if you are going to use a form of credit, it might be better to use your current, lower-interest credit card. However, Kiplinger.com cautions against this practice. It reports that the credit bureaus look more favorably on medical debt than they do credit card debt. If you pay for your medical bill with a regular credit card, you still carry the debt but the credit bureaus no longer acknowledge it as medical debt. This can adversely affect your credit score.
Home Equity Loans to Finance Medical Bills
Kiplinger.com advises against using a home equity loan to finance medical bills. If you must default on your medical bills, you are safer to not have an asset such as your house tied to that debt. The medical debt is unsecured. If you are sued for default on the medical debt, you are not likely to lose your house in the process. If the medical debt is tied to your house through a home equity loan, you could lose your house if you default on the debt.
Other Solutions for Covering Medical Expenses
Both Kiplinger.com and Credit.com offer several tips for negotiating down your out-of-pocket medical expenses. All of your leverage for negotiation depends on your debt being tied to the health care facility. Once you finance it through one of the methods outlined above, your leverage is lost. Depending on your personal financial style, you may choose to utilize one of the methods above for patient financing of medical bills, or you may choose to try your luck at negotiating your costs down to a level you can afford without financing.
