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  • Steven Corn

Lowering Medical Bills

"You always miss 100% of the shots you don't take" - Wayne Gretsky

Deductibles are rising for nearly every insured American. According to the Business Insider: "In 2016, 83% of workers have a deductible — an amount that they have to pay themselves for medical care before insurance covers it — with an average of $1,478. The average deductible for workers has gone up $486, or 49%, since 2011."

Out-of-pocket (OOP) caps are also on the rise. The Department of Health and Human Services (HSS) determines what the maximum OOP limits are for each calendar year for ACA plans. According to them, the out-of-pocket maximum will have increased by 12.6% since 2014. For an ACA plan in the year 2017, it $7,150 for an individual, and $14,300. (If you have a non-ACA plan, then your OOP may be even more.)

What does this mean? The average insured American is paying more OOP healthcare related expenses. You will be paying 100% of your costs until your deductible is reached. Then you will be paying your co-insurance (10, 20 or 30%) until your OOP is reached. So a person with a $1000 deductible and a $7150 OOP max could wind up paying up to $8150 per year in addition to their health insurance premiums.

I don't care what anyone says (politicians, healthcare experts, etc.). Insurance premiums are not going down...ever. (When was the last time that you had any type of insurance go down??) I might be wrong in thinking this. But let's assume that I am not.

At least for the time being, there's only way to save on your medical costs

  1. Negotiate the initial costs

  2. Negotiate the left over balances

Option 1 rarely works unless you are a cash-paying customer. Otherwise, providers are usually obligated to charge the rates that have pre-negotiated with insurance companies. You should note that sometimes it is cheaper to pay cash on a discounted bill than it is to pay your deductible and co-insurance balances. This is difficult to determine since price transparency is sorely lacking in the healthscare [sic] system. But if you are having a procedure, it never hurts to ask about the costs prior to giving your insurance card over to the receptionist. However, once you do so, you can't go back to paying a cash discount.

Option 2 is, perhaps, the most effective means to lower your OOP costs.

When faced with a high left-over balance (e.g., surgery, outpatient procedures, etc.), most institutions will allow you to structure the payments over time. But this doesn't save you any money. Many institutions also have a process to offer a hardship discount. But this doesn't apply to most middle class families and above who make too much money to be eligible for a discount.

I suggest two strategies. It will take a little guts and a lot of confidence to pull it off.

First, almost every institution will offer a discount if you pay "now". For some, that means before leaving the facility. For others, that might mean immediately after getting your bill. It's not unusual to get a 10-15% discounts.

Don't stop there!

I had an experience where they offered me a 15% discount on a bill from my wife's surgery. Very graciously, I thanked them. Then, I asked if they could do any better. After a few minutes on hold, they said that they could offer me a 20% discount. "Wow, that's great. Thanks so much. But is there any way you give me more of a break?" I asked.

The agent said that she would have to go to her supervisor to go any higher. So I politely asked if she could do that. She did. I ended up with a 33% discount. This saved me over $500. Just for asking!

This same strategy also applies if you wind up falling behind on a structured payment plan and end up getting a notice from a collections agency. Please know that such notices are preliminary and generally do not affect your credit as long as you respond immediately.

Again, the agency will generally offer you a discount. Don't accept the first offer! Also be humble, sincere and grateful. But keep asking. You'll know when you've reached their best number.

Today, I just saved $360 on a bill related to my wife's surgery in January of last year. Took me only 15 minutes to do this. So, let's say the patient is in the 25% tax bracket (just to choose a middle ground). $360 saved is the equivalent of $480 pre-tax earnings. If you are making $60k a year, that is 2 days worth of pay. Or you can look at it as getting paid $1440/hr for your time. (The equivalent of a $3millon/year salary!) Either way, it still is a good return on your time.

It doesn't matter the size of the bill. If the bill is below $100, most people will simply pay it because they don't think it's worth their time to negotiate a 20-30% savings. But just think about what an extra $20-30 in your pocket feels like. If you saw a $20 bill on a sidewalk, would you step over it and go on your way? Likely, not. I wouldn't.

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