- Medical loans are personal loans that can be used on a range of health-care expenses.
- Medical loans are unsecured, meaning you won't have to put up any assets as collateral.
- Banks, credit unions, healthcare financing companies, and online lenders offer medical loans.
Introduction
The rising cost of healthcare
Dealing with a health issue can be very stressful. And that pressure can intensify if you find yourself facing the prospect of paying thousands of dollars out of pocket to cover either all of the expenses, or a portion that your health insurance doesn't cover.
Overview of financing options
There are plenty of medical financing options, but some of the most common choices include health insurance, payment plans, health savings accounts and flexible spending accounts, personal loans, credit cards, and crowdfunding.
Health insurance coverage
Understanding your coverage
Thestandard advicefor picking a health-insurance plan goes something like this: choose one with a monthly cost (known as a premium) that you can afford and that covers the drugs and doctors that you need.
If you're relatively healthy and don't expect to go to the doctor much, pick a plan with higher out-of-pocket costs and lower monthly premiums. If you need to see a doctor more or take prescriptions regularly, you might want a more expensive insurance plan that costs more each month.
Medical payment plans
Some medical care providers offer financing options like payment plans that allow you to pay in installments. Some such plans may be interest-free and others are promoted as a way to make payments in installments with deferred interest. However, that could end up being pretty costly if you haven't paid your bills in full.
Health savings accounts (HSAs) and flexible spending accounts (FSAs)
Health savings accounts (HSAs) andflexible spending accounts (FSAs)allow you to set aside pre-tax dollars foreligible out-of-pocket healthcare expenses. While you can use these two accounts for the same types of expenses, the rules surrounding them are very different.
The biggest difference is that FSA money has to be used by the end of the year, while HSA money rolls over from year to year.
Personal loans for medical expenses
When to consider
A medical loan is a type of personal loan that can be used to pay for ea wide range of xpenses including surgery, hospital stays, dental needs, and fertility treatments. Medical loans can also help pay for services not covered by health insurance. They are available through banks and online lenders, as well as credit unions. The loans are unsecured, so you won't have to put up your house as collateral.
Medical loan advantages include flexible repayment options, longer repayment terms and higher loan amounts than some other personal loans. They also typically offer lower interest rates, longer repayment terms, and higher loan amounts.
As with any loan, it's important to be fully aware of all the terms and conditions of any medical loan you're considering.
Shopping for the best rates
Like most personal loans, medical loans typically come with fixed interest rates and a fixed repayment period. That compares to credit cards, which charge variable rates and offer fluctuating payments.
Medical loans are unsecured loans, meaning you don't have to put up high-worth assets as collateral. Medical loans can be used to cover co-pays and deductibles, cosmetic surgery, and hospital stays.
A medical loan works in the same way as other personal loans in that you pay it off in equal monthly installments over a set period of time. You can also usually pay off the loans early without penalty. In most cases, the lender will ascertain the end use of funds.
How to apply for a medical loan
Applying for a medical loan is a straightforward process, as Bechtol explains:
- Determine how much you need and make sure it's enough to meet your medical expenses.
- Create a budget to determine how much you can repay monthly. "You should keep a cushion of 25% because medical expenses can spiral uncontrollably," Bechtol says. "Though you need the funds badly, it must be manageable simultaneously."
- Check your credit scores. This determines the interest rate you'll get on your medical loans. Like with most loans, the higher the credit score, the more attractive the interest rates. Checking your credit score enables you to know where you stand.
- Research different loan service providers and get a loan pre-qualification : Read everything you can across the internet to learn more about medical loan service providers, specific terms and conditions, maximum permissible finance limits, interest rates, repayment terms, etc.
- Select the lender and complete the formalities. Once you decide on a lender, apply. Should you be approved, it won't take long to get the funds.
Medical credit cards
How they work
You can use a credit card, the best option of which is most likely going to be to focus on credit card introductory offers. There's almost always a selection of big bonuses that can offset your purchase and your sizable purchase will go a long way toward meeting the minimum spending requirement.
Comparing terms and conditions
You can also get a healthcare-specific credit card, such as CareCredit. Special financing options may be available, as well as shorter financing terms. The downside is the same as with regular credit cards. If you make late payments or have an unpaid balance once this promotional period ends, you may end up with significant interest and fees on top of your medical bills, according to the Consumer Financial Protection Bureau. And it can hurt your credit score.
Crowdfunding for medical bills
A creative way of getting money for healthcare is to crowdfund. In fact, there's at least one provider 100% dedicated to healthcare crowdfunding, CoFund Health. The downside there is that you might not raise enough to cover your costs.
FAQs
What should I do if my health insurance doesn't cover a necessary procedure?
If your insurance doesn't cover a necessary procedure, you can appeal the decision, look into payment plans from your healthcare provider, consider a personal loan, or explore programs offered by non-profit organizations.
Can I use a personal loan for any medical expense?
Yes, you can use personal loans for any medical expense. They offer flexibility to cover various costs, including procedures not covered by insurance, medication, and aftercare. However, be sure to compare interest rates and terms before committing.
How does crowdfunding for medical bills work?
Crowdfunding for medical bills involves raising funds on platforms like GoFundMe. It requires setting up a campaign detailing your situation and financial needs, and sharing it on social media and other networks to solicit donations.
Are there specific credit cards for medical expenses?
Yes, there are specific credit cards designed for medical expenses, such as CareCredit. These cards tend to offer promotional periods with no interest, but it's crucial to pay off the balance before the promotional period ends.
How can I dispute a medical bill I believe is incorrect?
To dispute an incorrect medical bill, request an itemized statement, review it for any errors, and compare it against your insurance coverage. If you find any discrepancies, contact the healthcare provider's billing department and your insurance company to challenge the charges.
Christiana Sciaudone is a journalist with almost 20 years of experience writing about everything from equities to corrupt politicians and the business of fashion to environmental issues. Her work has been published in The Wall Street Journal, Associated Press, Vogue Business, Bloomberg and others.
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