Prepaying Medical Bills? Don’t Do It Unless……

You enter a hospital or medical clinic for treatment.  You show proof of insurance coverage.  And then the in-take person asks how much you’d be willing to “prepay” for the services.  Yikes!   They’ll call it prepay of potential out-of-pocket costs, including co-pays, co-insurance and deductibles.  Without coming right out and saying the prepayment is necessary, they’ll suggest that the financial matter must be resolved before they can proceed.  And here’s the most scammy part of this practice:  asking for a co-pay is legitimate.  The others are not, unless……

But before we go to the rare situation where a prepayment for medical services might be legitimate, let’s cover where they aren’t:

Medical Care Can’t Be Withheld

Here are the circumstances where you can’t be forced to make a prepayment:

  • As a pre-condition to receiving treatment.  In general, this is borderline illegal.
  • If you won’t be admitted into an emergency room without payment.  Federal law requires that you be stabilized and treated before you can be asked about money.  If you have government-sponsored insurance such as Medicare, Medicaid, or Tricare military insurance, the Centers for Medicare and Medicaid Services says you can’t be required to pay as a condition of admission or treatment.
  • As a deposit in case your health insurer doesn’t provide full payment.   While not illegal, it is highly unethical and wrong.
  • If they won’t schedule an appointment without receiving a payment.   While not illegal, it is also wrong.

If the provider plays hardball and refuses to provide treatment your best option is to pay the bill with a credit card. Immediately afterwards, dispute the charge with your credit card issuer and claim that the transaction was not authorized.   Since you were coerced into making a payment and were not informed about how much you actually owed, you didn’t willingly consent to the transaction.   It’s akin to someone holding you up with a gun and demanding payment.    Moreover, the Fair Credit Billing Act gives consumers the right to dispute credit card charges that list the wrong amount, so card issuers should immediately slap a hold on the coerced payment, pending additional investigation.

As a general rule, it is wiser to wait to see how much of the bill is covered by your insurance plan.  You may ask to be shown how much your insurer will pay before tendering any payment from your own wallet, although don’t rely upon the hospital’s estimate:  it is likely wrong.  Insist upon seeing the insurer’s own payment

Negotiating A Better Deal

There are times when prepaying can actually save you money, especially if you use it to negotiate a discount with the hospital. According to Consumer Reports,  44 percent of hospitals offer “prompt-pay” discounts for patients who pay their share of the bill in full in advance, with an average discount of 20-30% percent, If you do decide to pay in advance, demand a discount on the entire bill.  Usually, the amount charged to insurers is 30% less.

If you are offered financing assistance by medical-loan companies like ClearBalance, AccessOne and Commerce Bank, be careful.   You might want to consider a no-interest loan — especially if you also get a sizeable discount.   That’d certainly be better than if you plan to pay for your deductible with a high-interest credit card.   However, many medical loans charge interest along with fees, so make sure you read the fine print.

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