Managing health care costs is routine for many people—until a major illness or injury brings in expensive medical bills. Even with good health insurance coverage, major increases in out-of-pocket health care costs can challenge your budget, so it’s important to understand all your options.
Sometimes your insurance might not cover everything—even things you thought they’d cover. When an insurance company processes a claim, they mail an explanation of benefits (EOB); however, if they deny a claim, they’ll mail an explanation of the denial. You can call your insurance company and ask for more information. Understanding your rights can help you navigate the health insurance claims process.
Appealing a denied health insurance claim
You have the right to appeal any denial of medical claims. The Summary of Benefits and Coverage from your insurance company or job-based health plan should explain your appeal rights. Legally, you have the right to a review of your claim by the insurance company and the right to a third-party review of the claim.
You’ll usually start an appeal of the denial by sending a letter to your insurance company. Be sure to outline why you believe the denial was in error and provide any supporting evidence or documentation. Keep diligent records, receipts, and all correspondences related to your treatment, claim, and denial. Take notes during phone calls to help remember key talking points, who you’ve spoken with, and what’s been done. Also, pay attention to your plan’s timeframes for when you need to file claims and appeals.
If you don’t have medical insurance—or if some costs aren’t covered by insurance
If you’re not covered, you may be able to negotiate the costs you pay out of pocket. However, finding the right person at the hospital or doctor’s office to speak with may take extra time and persistence.
To your benefit, insurance companies pay a negotiated price for nearly everything, and you may be able to find information about prices of procedures or test online. Doing some research on a fair and reasonable price could help your case when you call to negotiate.
Additionally, providing proof of your limited ability to pay could also help lower the cost if you’ve already had the procedure, in an emergency for example, or if you saw an out-of-network doctor at an in-network hospital.
Tips for managing prescription costs
Prescription costs can vary based on the pharmacy you use but apps, online and independent pharmacies, and even big retailers may offer lower prices—some even include coupons for your specific medication.
Pharmacy membership clubs can also help you save money. Ask your local pharmacy or search online to compare pharmacy savings club options. However, there’s usually a fee for a membership club. You’ll want to make sure the discount on the prescription offsets the monthly or yearly membership fee.
To learn more about practical tips to help reduce prescription drug cost, read Fidelity Viewpoints: How to save money on prescription drugs.
Tips to manage costs when traveling for treatments or tests
Few people live close to a hospital and traveling to find a place to stay is likely necessary. If needed, check with patient services at the hospital or treatment center where you're traveling for transportation and lodging options. You can also search for hospital hospitality houses near your destination. They offer low cost or even free lodging and meals for individuals and families receiving health care away from home. Also, friends and family may be able to buy you tickets with their miles or points, and some charities accept donated miles to help patients travel for treatment.
Budgeting after a major illness or injury
After you've experienced a major illness or injury, it's possible that you may have incurred more expenses or more bills. It's a good idea to start with an in-depth look at your budget to assess your financial situation and understand where you're spending your money. It could be helpful in finding the best pathway to more effectively allocate your resources.
Consider keeping a detailed record of your expenses, including your medical bills. This could mean tracking your spending—more specifically your cash and credit card purchases, and identifying areas where you can spend less such as streaming services, subscriptions, and non-essential spending like eating out.
Be sure to prioritize your essential expenses, for example:
- Housing. Mortgage or rent payments, utilities, property taxes, and homeowners or renters insurance.
- Grocery. Food (excluding takeout or restaurant meals) and household items.
- Health care. Health insurance premiums, prescriptions, and copays.
- Transportation. Car payments, gas, car insurance, maintenance, and commuter fees.
- Other necessities. Childcare, student loan payments, and child support.
Once you’ve accounted for your necessities, if possible, try to rebuild your savings. Consider budgeting for extra payments on your debt and rebuilding your emergency savings. Little may be left over for fun; however, replenishing your savings may be worth the effort.
Emergency sources of money for major medical bills
For some, reducing discretionary expenses could be all that’s required to recover financially from a serious illness or injury. For others, sustaining quality of life may require significantly downsizing—it depends on your age, level of savings, and your income. If you’re married, the equation changes to include your spouse and their income and savings.
In some cases, borrowing to cover your essential expenses could mean borrowing against your home—taking out a home equity line of credit, a second mortgage, or refinancing to take cash from your home equity. In other cases, getting a loan from friends and family could help. If you have a workplace savings account and can keep working, taking a loan or a hardship withdrawal may also be an option.
If you have a financial need, your retirement plan may offer loan and withdrawal options. If you have a workplace savings plan with Fidelity and want to learn about your options, log in to NetBenefits® to see your options.
Under certain circumstances, the combination of lost income and medical bills could mean that declaring bankruptcy is the best option. Workplace savings accounts like 401(k)s are usually protected from creditors, and rollover IRAs are too. (Traditional IRAs and Roth IRAs are protected up to a limit: $1,512,350.1) Be sure to speak with a lawyer before making any decisions.