Despite having health insurance, some Americans find themselves falling victim to medical debt. It’s not a new problem, but one that is concerning as the costs for both insurance and treatment are on the rise. Minimizing the chance of medical debt is possible, but first, it’s important to understand the different methods that debt can accumulate. Here are some common reasons why people with health insurance end up in medical debt, and some ways to prevent or minimize debt:
When a person chooses their health insurance plan, there are two numbers that are important: the premium and the deductible. The premium is the amount a policyholder will pay annually or monthly to maintain their health care plan.
On the other hand, a deductible is an amount that a policyholder will need to pay before their insurance covers their medical expenses. Generally, the higher the premium (monthly payments), the lower the deductible and vice versa.
If someone chooses a low premium plan that comes with a high deductible, they may not be able to pay that deductible in case of an emergency. That deductible alone, which is not unusual to exceed $5,000, can be enough to put someone with limited funds in debt.
Limited health insurance coverage
Many don’t have a choice when it comes to what their health insurance policy covers, especially if the plan is government-sponsored. Additionally, if a standard plan is available with an employer, it may not be adaptable to cover everything that a person needs, which leaves many vulnerable to out-of-pocket treatment.
Similarly, some health insurance policies will only cover medical conditions that happen after the policy has started and renders pre-existing conditions not covered by the insurance. For example, if a health plan with an employer covers dental but has a missing tooth clause, meaning they won’t cover any missing teeth prior to the policy start date, then an implant or other treatment won’t be covered under the policy despite having insurance.
If a serious illness takes a primary provider away from their place of work, they may lose their wages. In addition to not having money for maintaining their households, it can be impossible to make payments toward copayments, deductibles, or other necessary expenses related to a health problem.
If any savings are going toward childcare, mortgage payments, and other necessities with no additional funds for medical payments, it’s understandable how a person or household could fall into medical debt as they struggle to maintain their livelihood. If the funds are not available to cover a medical bill, a family may need to rely on credit cards or loans to cover the cost, which can cause them to spiral deeper into debt.
How to prevent or minimize medical debt
Minimizing the chance of medical debt or even preventing it in some cases can be difficult, but not impossible. One great tool to combat some common issues is supplemental insurance.
There are many types of supplemental insurance, and what is best for one family may not be for the next. The policyholder will need to make a decision based on a household’s needs and budget, and that may mean prioritizing one over another. Below are a few types of supplementary insurance that can help provide extra insurance coverage:
In the case of a serious illness, critical illness insurance can help with expenses that are particularly costly treatments that may not be covered by traditional insurance. Critical illness insurance functions similar to a traditional health insurance program in that monthly premiums are made and work in conjunction with a traditional plan for added protection.
In addition to providing an additional layer of financial protection, critical illness insurance can help with other costs like initial deductibles or out-of-network visits.
In some cases, critical illness insurance can be used to help with experimental treatment options that the main health insurer will not cover. Keep in mind that these are only applicable to the specific diseases as the name suggests and other restrictions may apply.
Helping close the gap
Employees may also be able to apply for a supplementary insurance plan that can help close the gap between what health insurance covers and extra out-of-pocket expenses. These policies can help where other forms of insurance may leave one vulnerable. The government offers an extension of this known as Medigap, but private insurance companies offer similar options.
If an employer does not offer vision or dental, then applying for vision and dental supplemental policies through a private insurer can help save the policyholder money. A vision policy is affordable and will help with routine eye exams and typically help with glasses or contacts. Dental insurance can vary in what it covers, but usually offers help with cleanings and portions of additional treatments like cavity care and corrective measures.
Supplemental insurance can help to bridge the gap in primary coverage and out-of-pocket expenses, a common culprit for medical debt. Taking the time to shop around for options that complement one’s lifestyle may pay off big in the end.
Coverage is underwritten by Aflac. In New York, coverage is underwritten by Aflac New York. This is a brief product overview only. Coverage may not be available in all states, including but not limited to ID, NJ, NM, NY, or VA. Benefits/premium rates may vary based on plan selected. Optional riders may be available at an additional cost. Plans and riders may also contain a waiting period. Refer to the exact plans and riders for benefit details, definitions, limitations and exclusions. For availability and costs, please contact your local Aflac agent/producer. Dental: In Idaho, Policies A81100RID through A81400RID. In Oklahoma, Policies A81100OK through A81400OK. In Virginia, Policies A81100VA through A81300VA. Vision: In Idaho, Policy VSN100ID. In Oklahoma, Policy VSN100OKR. In Virginia, Policy VSN100VA. Critical Illness: In Idaho, Policies A73100ID & A7310HID. In Oklahoma, Policies A73100OK & A7310HOK. B71100OK & B7110HOK.
Content within this article is for informational purposes only and does not constitute legal, financial or medical advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process.
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