Health benefits

What to Know About Medical Debt and Health Benefits as COVID Persists

More than a year has passed since the economy emerged from its COVID-19-related recession, hiring has started to improve and the stock market has rebounded.

Yet the pandemic continues to put pressure on the finances of millions of Americans, and it is reshaping their thinking about necessary products and strategies.

Some people with COVID-19 have racked up tens of thousands of dollars in bills to treat the disease and may have missed thousands more in lost wages. Medical debt remains a problem for many, but there are strategies to manage it.

Unpaid medical bills are in some ways preferable to other types of debt, Money Management International said in a recent commentary. There is often more flexibility in the payment of fees, and interest and penalties rarely accumulate, unlike with credit cards.

Before doing anything, people facing high medical bills should make sure the charges are correct, suggests the nonprofit financial advisory group. Check that the services provided have been correctly listed, along with the fees, dates and physicians involved. Invoices can be confusing, so ask for an explanation. If incorrect charges are discovered, request that they be removed.

Once you know the actual debts and if you anticipate payment problems, contact medical providers to inquire about financial assistance. For example, you might be eligible for certain “charitable care” if you were treated in a non-profit hospital. Or you might be able to negotiate a fee reduction or a long-term payment plan that you can afford, according to Money Management International.

Don’t charge the balance to a credit card if you can avoid it. “Medical debt is generally interest-free, so the debt itself doesn’t cost you extra money,” the group said. “Once you transfer the debt to a credit card or a loan, you will almost always start earning interest.”

Also, paying off debt with a credit card could prevent you from receiving financial assistance or signing up for a payment plan.

“It’s probably best to wait and see what you can find with the supplier before paying anything,” the group suggested.

If you have insurance and a claim was rejected, read the policy carefully and contact the insurer if you do not understand why the company took this action.

“Some simple mistakes, such as incorrect billing codes, can cause your insurance to reject the claim,” according to Money Management International. “There’s a lot of work to do, but making sure you’re getting the maximum possible insurance coverage is an important way to keep your medical bills under control. “

Increased interest in employee benefits

The open enrollment season is approaching, and it’s not just about perks like regular health insurance and 401 (k) pension plans. The COVID-19 pandemic has fueled interest in broader health coverage, telemedicine and other insurance products and services, according to insurer Aflac in its new 2021 WorkForces report.

Almost half of U.S. employees, 44%, have purchased at least one new health benefit in response to the pandemic, such as critical illness coverage, hospital indemnity coverage, telehealth services, or benefits mental health, according to the report. Aflac surveyed 1,200 employers and 2,000 employees in June and July. Another observation: the growing enthusiasm of employees for life insurance.

The COVID-19 pandemic has increased interest in telemedicine, according to a new report.

An Aflac report last year “showed the pandemic was a wake-up call for workers to consider spending more time and effort in researching health care benefits during enrollment period open, ”said Matthew Owenby, director of human resources for the company, which provides additional insurance. “Now we are seeing this revival turn into action.”

Interest in these products is particularly strong among people who test positive for the virus. For example, 38% of respondents who test positive have purchased life insurance in the past year, compared to 16% who have not had such a diagnosis.

Overall, 29% of survey respondents said the pandemic had made them aware of healthcare costs and caused them to change their decisions about benefits such as critical illness insurance, which provides coverage. higher than that provided by ordinary health insurance.

Review the basics of credit score

A favorable and surprising result of the pandemic has been that the credit scores of most Americans have remained stable or increased slightly despite job losses in some cases, increasing medical debts and other challenges.

Federal stimulus payments, eviction moratoria and other programs have helped. Only 9% of respondents to a NerdWallet survey said their credit scores had dropped before the start of the pandemic.

Studies show that credit scores have remained stable or increased during the COVID-19 pandemic.

Always, the same poll identified various misconceptions about credit, reports and scores, so now is a good time to brush up on these topics, especially as some of the federal aid programs are coming to an end.

Among the credit myths cited by NerdWallet: Four in five respondents mistakenly think their credit reports include their credit scores. Although the information in the reports is used to calculate the scores, the two are generally distinct.

Additionally, nearly half of Americans think it’s best to keep a small credit card balance to improve scores (it’s usually better to pay off balances in full), and nearly half assume closing unused card accounts will help.

Instead, canceling a card and losing its credit limit can hurt, as it will change your credit usage rate (which measures how much available credit you’ve used). Additionally, this will eventually remove any positive payment history associated with the card, according to NerdWallet.

Prepare for new pressures

Despite all the financial and employment woes caused by the pandemic, consumer credit delinquencies of 30 days or more fell to an all-time high in the second quarter, according to the American Bankers Association.

Financial health has improved thanks to a strong recovery in employment and another round of federal stimulus payments earlier this year, said Sayee Srinivasan, chief economist and head of research for the association. It should be noted in particular that defaults on credit cards issued by banks fell to 1.38% of all these accounts, the lowest level for this category since the ABA began tracking data in 1993.

However, the near-term outlook may not bode well, with the end of federal relief programs, rising interest rates and inflation, the possibility of a slowing economy and struggles. in progress to contain the virus.

International Money Management, in a blog, suggests that maybe now is the time to watch for signs of financial stress in friends or family.

You probably won’t have access to someone else’s credit report or score, but you may notice that collection letters are piling up or the person is getting phone calls from creditors. Other signs may indicate stress, including friends or relatives who seem to be living beyond their means, an evasive or defensive person when discussing finances, or the person continually asking to borrow money.

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