Medical debt often overwhelms patients, and it is the major reason for people to declare bankruptcy.
Studies find that a certain amount of medical debt piles up because of billing errors that patients do not recognize. Consequently, they struggle to pay a stack of bills that only continues to grow.
A world of confusion
A medical bill should be easy to put together and easy to read, but 57 percent of consumers report that medical bills are confusing to them. Medical billing procedures have become so convoluted that errors are rampant. It is not unusual for health care providers to overcharge patients for their care. In 2013, the Office of the Inspector General performed a Medicare Compliance Review of U.S. hospitals. None of the audited hospitals was in full compliance with Medicare billing requirements, and billing departments in every hospital committed errors.
A debt survey
In 2013, accounting firm Ernst & Young performed a study on the collection of third-party debt. The firm found that Americans paid off debt in the amount of $55 billion and that health care represented 37.9 percent of this debt. Credit card debt only came to 10.1 percent.
According to NerdWallet Health research in 2014, hospital billing mistakes resulted in as much as 26 percent of overcharges to patients. In addition, 63 percent of medical bill recipients reported that costs were higher than they expected. Medical Bill Advocates of America reports saving clients more than $100 million in medical costs over a 20-year span after finding errors and overcharges on the billing statements from hospitals. The company finds errors in 80 percent of the medical bills that clients send to them.
Although those buried in medical debt usually try to solve their financial problems in other ways, bankruptcy often becomes the solution of choice. Fortunately, this kind of debt is dischargeable in both Chapter 7 and Chapter 13 filings. People do not have to stare at that stack of medical invoices any longer. They have options that will help them defeat bills that may indeed come complete with errors.