Current as of: 6/10/2021

Have you ever found yourself considering whether or not you should go to the doctor for something out of concern for what it might cost you? You're not alone – almost 1 in 3 families surveyed said that they had decided not to seek medical treatment due to cost last year, a statistic that highlights the growing problem of overwhelming medical bills leading to financial nightmares for American families.

If you were treated for Covid-19, chances are that you have some medical bills rolling in so it's especially important to be aware of your rights and how to best handle bills that you can't pay immediately. If you were diagnosed with and treated for Covid-19, make sure you understand how the specific laws enacted could help. If your bills are for other reasons (even just follow-up issues such as pneumonia after surviving the coronavirus) the rest of the steps can help you too.

What you need to know about medical bills for Covid-19

Many of the largest US health insurance companies (United Healthcare, Aetna, Humana, etc.) enacted policies that waived "cost-sharing" during the height of the pandemic for people who were hospitalized with Covid-19, but what does that mean? And how do you know if it applies to you?

What is cost-sharing?

Cost-sharing is anytime you have to chip in for healthcare-related expenses, such as paying your deductible, co-pays or co-insurance. By waiving cost-sharing, companies basically agree that they will foot the bill for Covid-19 hospital stays and other costs. Depending on when your expenses were incurred, the cost-sharing rules may be different than your standard policy. This is a comprehensive list of the various emergency plans that were enacted, sorted by insurance company. Note that most of the special plans expired either at the end of 2020 or in early 2021.

You might still have to pay, though

Despite what appears to be health insurance companies helping out their customers, there are a few reasons you might not actually benefit from these emergency measures.

Reason #1 -- If you get your health insurance through work, there's a chance that your plan is what's called "self-funded," which is how many large employers actually pay for their employees' healthcare. What this means is that while your company may use a health insurance company to administer the plan and determine the network, the company itself actually covers the costs that we think of our insurance paying. For example, if you go to the doctor and she charges $150 and your co-pay is $30, then your company actually pays the $120 balance, not the health insurance company.

So, when the health insurance companies announced that they were going to cover the costs of their participants' Covid-19 hospitalizations, whether or not that was actually implemented by the self-funding plans is up to each company. How do you know if your health insurance is a self-funded plan versus fully-insured (which is where your company actually pays a premium to the health insurance company who then pays your costs)? You'll have to ask HR.

Reason #2 -- You were hospitalized after the emergency measures expired. Most of the cost-covering agreements expired on or before December 31, 2020, meaning if you contracted Covid-19 and went to the hospital after that, you'll likely be on the hook for the costs.

Reason #3 -- If you were hospitalized for follow-up issues such as a blood clot or pneumonia, that falls outside the emergency measures that were implemented and would be billed to you as if the condition were an isolated incident.

What to do if you receive a large medical bill

Regardless of the reason for your bill, there are universal best practices to keep the bills from bankrupting you if at all possible.

First, do some homework to make sure your bill is no higher than it should be.

• Take some time to research and make sure that there were no special laws implemented at the time your bill was incurred that may allow you to have some or all of the bill canceled (this is mostly if you were hospitalized due to Covid-19 but could apply in other specific scenarios). Don't procrastinate this too much though – you'll need to take some type of action by the bill's due date to protect your credit.
• If your bill is for Covid-19, check to see if the hospital where you were treated accepted federal relief. If so, the CARES Act outlawed them from "balance billing" beyond what your in-network coverage would be, regardless of whether they were in-network for you.
• Review the bill for accuracy – even a typo can cause you to be over-billed, but also make sure you received every service listed and that the dates are accurate. A common error is a hospital billing for the day you check out, which can save thousands.
• Compare your bill to your Explanation of Benefits (you know, that letter or email you often get that clearly tells you that it's not a bill?). That should match the bill and if it doesn't, that's an indication of an error that needs investigating.
• If it feels too complex to you or you don't have the resources to do that work, consider using a bill negotiator – they may be able to get you a discount (which you'll share with them in order to pay for their work) but they are also experts at billing accuracy. Your workplace benefits may even offer you access to a service like this!

Once you're certain that the bill is accurate and what you truly owe, here are some suggestions to keep it from ruining your finances.

• If you can pay the bill right away, request a prompt pay discount.
• Look into negotiating – the website www.healthcarebluebook.com offers pricing for many services and you can use that as a benchmark to offer less than what you were billed.
• Don't just put it on a credit card – most medical providers have more flexibility than credit card companies as long as you keep paying, and they often don't charge you interest. This will also help you avoid a hit to your credit score for a high balance on a credit card.
• Double-check that you don't have any old Health Savings Accounts or Flexible Spending Account dollars available. If you have an HSA available and haven't maxed it out yet for the year, consider putting any funds you're going to pay anyway into your HSA first to get the tax deduction. And if you have an FSA, check with your HR to see if any of the more flexible rules were enacted that might let you pay for more of your bill that way than you may have elected at open enrollment.
• If you need more time, request a payment plan – many hospitals even let you apply for these online, but you have to ask, and you have to be timely. You may also be required to put a form of payment on file, but you'll still have the option to pay via check or debit card each month.
• If you simply can't make any payment, request information on the facility's financial assistance program.
• If all else fails, look into other borrowing options – peer-to-peer lending programs are gaining in popularity or you may have a workplace assistance program that can help. Avoid payday loans and if you're worried that you may end up needing to declare bankruptcy, avoid using any retirement funds since those are protected in bankruptcy. That includes borrowing from your 401k – those loans aren’t forgiven in bankruptcy, so best to leave your retirement accounts intact unless you know that you’ll be financially fine after the fact.

Don't forget your taxes

The deduction for medical expenses is one of the few tax breaks still currently available to individuals these days, so make sure you include the amount of your bills on your tax return to make the most of any tax deductions available.

While there have been changes in recent years to this rule, as of right now, expenses that exceed 7.5% of your Adjusted Gross Income are technically deductible, but only if you otherwise itemize your deductions. For 2021, that means your total itemized deductions (qualifying mortgage interest, qualifying state and local taxes, qualifying charitable contributions and medical expenses over the threshold) must exceed $12,550 if you're a single filer, $18,800 if you qualify as head of household and $25,100 if you're married filing jointly.

Being hit with large medical bills is a double-whammy and can be frustrating and confusing. But before you throw your hands up take some time to explore the options so you can keep the bills manageable in your life. Most healthcare providers are aware of the burden and willing to work with you, but you must take the first step.