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Our health insurance and public coverage programs are confusing and complex. People get lost in the maze of programs and end up with medical bills that often go unpaid. Sadly, medical debt creates individual and family stress at the worst times—when you or a family member are ill or recently suffered a medical situation. People facing stress and confusion need competent help to navigate the many systems of care and health care coverage. Our work with clients and patients affected by medical debt helps us to understand the many strategies and steps for people to take to help reduce existing medical debt and how to avoid future medical debt. Most medical bills will not just disappear if you ignore them. Instead, the debts simply pile up and could impact your credit score and many other aspects of your life like your home, car, job and more.

Dealing properly with medical debt requires patience and thinking ahead. There are some basic steps to take and some resources that may help eliminate, reduce or avoid current and future debt. We will show you ways to help understand the reasons for your medical debt and some of the health programs that might help cover some or even all of your bills. But remember to think ahead; as there are ways you can help prevent unexpected bills in the first place.

Our Guidebook will outline strategies to help understand:

  • • Ideas on how to prevent medical debt
  • • The causes of medical debt
  • • The consequences of unpaid medical bills and consumer protections
  • • Programs and resources to help pay for medical care

Introduction to Pro-Active Benefits Screening

An important way to avoid Medical Debt is by making sure you’re connected to all the health insurance and coverage programs you’re eligible for. This helps keep your out-of-pocket medical expenses more affordable based on your income. If you’re having trouble learning what you may qualify for, it’s a good idea to reach out to your local health or human services offices. There, you can learn more about eligibility or seek help with applications for benefits. This guidebook will briefly explore eligibility for a few programs, but it’s not an exhaustive list. If you’re looking for more detailed information, or have a unique situation, give us a call! The ABC for Health phone number is (608) 261-6939.

BadgerCare Plus

BadgerCare Plus is Wisconsin’s name for a Medicaid program that covers children and adults up to age 64. There are a number of eligibility rules for the program. The basis of BadgerCare Plus eligibility is monthly household income. The income cut off for children is much higher than for adults. Other things that can affect your eligibility are Wisconsin residency, immigration status, and health insurance through a job.

Your BadgerCare Plus eligibility can change from one month to another. People get new jobs, have changes in job income, move to new places, and have changes in family size. If any of these things change, you need to report the change to make sure you can keep your BadgerCare Plus that month. For help with understanding Badgercare Plus, please see our guidebook at https://safetyweb.org/healthwatchwi/publications/3-Steps-Family-2019.pdf.

Case Example: A family of 4 applies for BadgerCare Plus. The mom works and earns about $2,000/month. She is married and her spouse lost his job last month. They have 2 kids, aged 6 and 8. They get approved for BadgerCare Plus because the only income that month is the $2,000 mom gets from work. After 2 months, the husband finds work and also earns about $2,000/month. They report the new job and the parents lose BadgerCare Plus because they are over income. The kids can stay on BadgerCare Plus because the income limit is higher for kids.

Medicaid

Apart from BadgerCare Plus, Wisconsin Medicaid has a number of other programs. These programs offer the same benefits to people who are elderly, blind, or have a disability. Each program has different income counting rules. One big difference is that BadgerCare Plus does not count assets (money in the bank, retirement accounts, etc.) unlike most of the other Medicaid programs.

Here are some examples of other Medicaid programs: - Medicaid for the Elderly, Blind, and Disabled • Has the lowest income and asset limits - Medicaid Purchase Plan (MAPP) • Has higher income and asset limits for people with disabilities who work at least one day each month - Katie Beckett Medicaid • Program that does not count the parents’ income or assets for children with disabilities and a high level of care - Institutional Long Term Care • Designed to help pay for nursing home costs

People on any Medicaid program have special protections against medical bills as long as they get care from a doctor that works with the Medicaid program. You can apply for Medicaid programs any time of the year. You can also request backdated coverage to begin up to 3 months before the month in which you apply.

You can complete an application for most Medicaid programs a number of ways:

• Online at https://access.wisconsin.gov/access/

• In Person at your local human services department office

• By Phone by calling the consortium that manages your county

• By Mail by filling out a paper application and mailing it in

The Department of Health and Human Services processes applications within 30 days, and then they will let you know if you must turn anything else in. Usually, verification of income or assets requires pay stubs or bank statements.

Medicare

Medicare is a federal health insurance program for people who are over 65 or have a disability. Most people sign up for Medicare Part A, which covers hospital services, and Medicare Part B, which covers doctor and clinic visits. These people might also get a Medicare Part D plan to cover prescription drugs.

Other people choose a Part C plan - also known as a “Medicare Advantage Plan” or “Medicare Replacement Plan” – and get all their medical and drug coverage through a health insurance network. Some people also buy into a Medicare Supplement plan – also known as a “Medigap” plan – to cover costs that Medicare will not.

For many people on Medicare, out of pocket costs can add up quickly. It’s important to think about whether you should have a supplement plan or a Medicaid program as a backup to Medicare coverage. Your local Aging and Disability Resource Center is a great place to learn how Medicare can work with other insurance options.

Health Insurance Marketplace

The Health Insurance Marketplace (also known as Obamacare or Affordable Care Act plans) offers insurance plans through a website at www.healthcare.gov. All the plans sold through the Marketplace must offer good benefits, but different plans can have different out-of-pocket costs. Bronze plans are the cheapest to buy, but pay less of your medical bills. Gold plans cost the most to buy, but pay the most on your medical bills. Silver plans are in between the Bronze and Gold levels. Plans through the Marketplace can cover adults, children, and whole families.

You can get a Marketplace plan even if your job offers health insurance. If you have Medicaid or Medicare, you will probably not benefit from paying for a Marketplace plan. If you don’t have any other insurance, though, you can most likely get help paying for a Marketplace plan. You may even qualify for plans that have very low out-of-pocket costs.

You can choose a Marketplace plan during the Open Enrollment Period between November 1 and December 15 of each year. If something changes in your life, like getting married, having a child, or losing other insurance, you can qualify for a Special Enrollment Period that gives you 60 days to choose a Marketplace plan. Covering Wisconsin helps residents of 12 counties with health insurance enrollment assistance. For more information, visit their website at https://www.coveringwi.org/.

Case Example: Mark finds out on August 15 that he will lose his job soon. His last day of work will be September 30, and he will lose his insurance the same day. Since he knows when he will lose his insurance coverage, he can apply for a Marketplace plan up to 60 days before his job ends. If he applies in that window, his new Marketplace insurance could start October 1. If he doesn’t apply before his job ends, he still has another 60 days to find a Marketplace plan, but he won’t have any insurance while he looks. If he needs any medical care during that time, he could end up with big bills.

There are a lot of scams out there looking to sell you insurance plans that aren’t good coverage. It’s a good idea to work with an insurance agent or marketplace application assister to ensure you’re signing up for a quality plan.

How to Avoid Medical Debt

Understand your Health Insurance

Understanding your health plan can help you avoid surprise medical bills and medical debt. A health insurance policy is a contract you make with an insurance company. Under a plan or policy, you pay the insurance company in exchange for them helping to pay for your future healthcare. Insurance is a safety net, it helps protect you from high medical bills and provides peace of mind. Insurance plans vary in what they cover, which is why it’s a good idea to review your policy. A pamphlet outlining what your insurance covers is not your policy, to receive your true policy ask your insurer for your “complete policy.” When an insurance company pays your medical bills, your bills were “covered.”

Insurers give out summaries of the services covered and excluded by your plan, often called “benefits booklets.” But, these are not actual contracts. Your insurer is legally bound by the language within your actual contract. Ask your insurer or employer for a copy of your complete policy, sometimes called a “Summary Plan Description” or “Certificate of Coverage”. Read the whole policy, even when it confuses or bores you. You need to know what your policy truly covers. If you are unsure about a part of your policy, you can call your insurance company and ask a customer representative. Ask that they provide an answer to your question in writing. Keep all documents, write down contact information, dates, and times. Understanding your policy helps you to combat surprise bills.

Premiums” are the amount that you pay your insurer each month in exchange for coverage. Different insurance plans have different premiums. Premiums are not the only payment you make to an insurer.

A “deductible” is an amount of money you must pay for medical bills before your insurance will begin paying. Typically, a deductible is a yearly amount. Your insurance might cover certain services, like a check-up, without the need for you to have met your deductible. For example, if you have a $2,000 annual deductible and need a $6,000 surgery, you would pay $2,000 of your bill prior to your insurance kicking in.

Your “co-payment” is the fixed amount you pay for health care under your insurance. For example, a $25 co-payment would mean that each time you receive healthcare, you pay $25. Check your policy to learn if this amount counts toward your deductible.

Co-insurance” is the percentage of a medical bill you pay. For example, if your co-insurance is 20%, and you have a $200 doctor visit, then you would pay $40.

Maximum out-of-pocket” is the absolute maximum amount you pay during a plan period for covered services. For some plans, this is the same as the amount of your deductible. Some plans charge you co-insurance even after you’ve paid your deductible. These plans sometimes set a maximum out-of-pocket amount. Example: You have a yearly deductible of $500, but your maximum out-of-pocket is $1,500 for the year. This means once you’ve met your deductible, you continue to pay co-insurance until the total you’ve paid for covered services is $1,500. After that, your insurance will pay 100% for covered services.

Case Study: Jenna has a healthcare plan through an insurance company. Under her plan, she pays a $100 premium each month and her employer pays the rest of the premium. Jenna has an annual deductible of $2,000. Jenna has co-payments of 20$ and co-insurance at 20%. Jenna’s insurance policy has no maximum out-of-pocket limit. This year Jenna had a $20,020 surgery and a $2,020 doctor visit that her insurance plan covered. Under her plan she would pay $2,000 of the surgery to meet her annual deductible. She would pay another 20$ of the surgery for her co-payment. That means there is $18,000 left in surgery costs. Her co-insurance of 20% means that she pays $2,600 more and her insurer will pay the rest. In total, Jenna paid $4,620 and her insurer paid $15,400.

Her $2,020 doctor visit occurred after Jenna’s surgery. Jenna met her annual deductible, so her insurer will pay right away. Jenna will pay only her co-payment of $20 and her co-insurance of 20%. After her $20 co-pay the bill is $2,000. Her 20% co-insurance is $200 and her insurer will pay the remaining $1,800. In this year Jenna had medical bills totaling $22,040 and her insurer paid $17,200.

What if my insurance doesn’t pay?

Reading your plan documents is essential to prepare to battle a denied service. In your plan, you can find the information about how to appeal – there is usually a limited time period for filing an appeal. You can also review the service you got and compare it to what your plan says they cover. If you feel there is a mistake, think about finding help with your appeal. If you choose to appeal, make sure to let your health care provider know. You can ask them to hold off sending the bill to collections until the appeal concludes.

Saving for a Rainy Day - HSAs and Flex Accounts

One way to prevent medical debt is with an HSA (Health Savings Account) or Flexible Spending Account (FSA). These accounts are savings accounts just for medical expenses. You might have the opportunity to set up an HSA or FSA through your job. If not, try calling your bank to see if they offer an account like this that will work for you. HSAs and FSAs help if you have a high deductible insurance plan because they can help you save ahead to afford your out-of-pocket costs.

Mind the Gaps: Avoid Gaps in Health Insurance

A gap in health insurance coverage can lead to medical debt if you have ongoing health needs or an unexpected illness. Insurance gaps can happen for a lot of reasons, like when you lose or change your job, or if you turn 26 and can’t stay on your parent’s insurance anymore. Most of the time, you can avoid a gap in insurance by planning ahead. If you can’t plan ahead, you should act quickly after losing insurance coverage.

Here are some options that might help you avoid a coverage gap:

The Marketplace (Obamacare)

If you lose health insurance or Medicaid, you have a 60-day Special Enrollment Period to choose an insurance plan through the Health Insurance Marketplace. If you haven’t lost insurance or Medicaid yet, but you know that you will lose coverage, you can choose a Marketplace plan as early as 60 days before your current coverage ends.

COBRA

COBRA is a federal law that lets you keep the same health plan you got through your job or your spouse or parent’s job. COBRA can be expensive, because you have to pay the full insurance premium each month, including the part your employer used to pay. The benefit of COBRA is that you and your family can stay on the same health plan while you look for a new job or a cheaper health insurance option. Not all jobs have to offer COBRA under the federal law, but Wisconsin has a state law that acts the same way and applies to almost every employer in the state.

If you are curious about COBRA, you should also check if you qualify for Medicaid or BadgerCare Plus and see how much it would cost to a get a plan through the Health Insurance Marketplace. Once you sign up for COBRA, you can’t get a Marketplace plan until the next Open Enrollment Period. 

Medicaid

BadgerCare Plus offers insurance for people below a certain income level. If you will lose health insurance because your employment ends soon, BadgerCare Plus can be a great way to prevent medical debt before you get back to work. If you lost a job because of medical problems, you may qualify for disability benefits, including Medicaid. If you think you might have a disabling condition, you should apply for benefits as soon as possible because it can take months or longer to get a decision. If you’ve already received a disability determination, you might already qualify for Medicaid or Medicare.

You can apply for Medicaid programs any time of the year, so you don’t have to wait until you lose insurance to start working on finding out if you’re eligible. If you’ve already lost insurance, you might qualify for backdated coverage going back as far as 3 months plus the month of application. Medicare You can get Medicare if you are over 65, about to turn 65, or if you were found eligible for Social Security Disability benefits at least two years ago.

Medicare

Part A is free for most people, but most people have to pay a monthly premium for Medicare Part B and Part D. Your premiums could be higher if you don’t enroll as soon as you become eligible, but there are programs that can help with premium costs for lower income people. Most of the time, you need to enroll in Medicare during the open enrollment period from October 15 through December 7 each year. If something changes in your life, like losing insurance through a job, you may qualify to enroll outside the open enrollment period without having to pay a penalty for late enrollment.

Case Study: Jerry is 45 and married with no minor kids. Jerry learns that he will lose his job in two months. As a result, Jerry will lose the health insurance he gets through his work. Jerry has a new job with insurance included lined up, but it will not start for five months. Jerry has these options:

-See if he can get coverage through his wife’s insurance

-Use COBRA to continue his current coverage until his new insurance starts

-Apply for a plan through the Marketplace before his job ends Jerry reviews plans on the Marketplace but doesn’t qualify for an Advanced Premium Tax Credit. He decides to take the COBRA option because it is a similar price and he doesn’t want to change doctors.

The Affordable Care Act and Medical Debt

The Patient Protection and Affordable Care Act, (ACA) requires most hospitals to have a “financial assistance policy” (FAP). A hospital’s financial assistance policy may give you a discount on your medical bills and may even write off your whole bill.

Am I Eligible for Financial Assistance?

Different hospitals have different policies for financial assistance. Most of the time, the discount you can get depends on your household income. There may also be other rules that affect your eligibility, like immigration status, or a requirement that you apply for Medicaid before applying for financial assistance.

If your hospital is required to offer financial assistance, it is also required to tell you that it has a financial assistance policy. Hospitals must make their FAP available on their website, in the hospital, and by mail (without charge). If you get a bill from the hospital, the billing statement should also tell you that you might qualify for financial assistance. FAPs should be available in languages other than English. To find out if you qualify for financial assistance check your hospital’s FAP. It should be available online or in the reception area.

If you are curious about where your household income falls as a percent of Federal Poverty Level guidelines, see our FPL Calculator in the resources section of this book or at https://home.mycoverageplan.com/fpl.html.

When can a Hospital Take Extraordinary Collection Activities?

Extraordinary collection activities (ECAs) are certain actions taken by a hospital to obtain payment of a bill which can seriously harm the patient’s financial future.

These actions include:

• selling your debt to a third party,

• reporting information about you to credit agencies,

• requiring payment before you get medical care, or

• suing to collect a debt.

A hospital must make reasonable efforts to determine whether you qualify for assistance under its FAP before taking an ECA. For example, a hospital cannot take legal action against you without first giving you notice that financial assistance is available and allowing you 120 days to apply after the date of your first billing statement. Before taking an ECA, the hospital must notify you and give you a summary of the FAP 30 days before it takes action. In summary, before taking an ECA a hospital must wait 120 days after sending its first bill, give you 30 days’ notice of the action, AND inform you that financial assistance is available.

For more information on financial assistance policies see: https://www.irs.gov/charities-non-profits/financial-assistance-policy-and-emergency-medical-care-policy-section-501r4

For more information on extraordinary collection activities see: https://www.irs.gov/charities-non-profits/billing-and-collections-section-501r6

To see a copy of your hospital’s financial assistance policy, visit the hospital’s website or contact the hospital for information.

Case Study: Olivia lives alone and studies at her local university. She works 12 hours a week at her local coffee shop earning around $400 a month. Olivia needed surgery 18 months ago to repair a wrist ligament, but she couldn’t afford to pay the bill. She just got paperwork letting her know that the hospital will sue her. Her court date is in 2 weeks. Olivia does some research and finds the hospital suing her has a financial assistance program. She thinks her current income is within their limit. She applies, but they only take applications for 1 year after the date of service. She worked full time at the time of her surgery and would not have qualified for Medicaid then. Olivia didn’t appear in court, the judge didn’t know she was trying to work with the hospital, and a issues wage garnishment against her. She later receives a denial letter for her financial assistance application. Olivia is a good example of how important timely communication is.

Protections for Medicaid Patients

Wisconsin law protects Medicaid and BadgerCare Plus patients against bills for medical services that Medicaid should have covered. First, the law requires health care providers who take Medicaid patients to accept Medicaid payment as payment in full. They cannot bill you the difference between their normal charges and the amount that Medicaid pays. Second, health care providers cannot bill you directly while refusing to bill Medicaid. Third, if you ask for medical services that require prior approval by Medicaid and your health care provider does not ask for prior approval before providing medical services, the provider cannot bill you for those services. Finally, if you paid out of pocket for medical care and then get backdated Medicaid to cover those services, you may have your health care providers bill Medicaid and repay you the amount that Medicaid pays.

It is important to remember these protections only apply to services covered by Medicaid and only if you get your medical care from a provider that takes Medicaid patients.

“Surprise” Medical Bills

There are a wide variety of “surprise medical bills. Most commonly, a “surprise” medical bill occurs when an insured person visits a hospital inside their insurer’s network of covered health care providers but receives an expensive bill for “out-of-network” care. Insurers contract with different hospitals and health care providers to determine payments. When an insurer and a hospital have agreed to a contract, then that hospital is “in-network.” Visits to hospitals or doctors outside of your network most likely won’t be covered by insurance. Issues arise when doctors who treat patients at a hospital are not part of the same insurance network as the hospital. This can happen when hospitals hire other companies to provide some of their medical services, or when you have no opportunity to choose who provides your medical services.

Types of Surprise Medical Bills

Ambulances

One common source of surprise medical bills is ambulance services. More than half of ambulance rides are out-of-network. This is because private companies run many ambulance services. These ambulance companies and insurance companies often cannot agree on a contract, so many ambulance companies are out-of-network for many insurance companies. To avoid these bills, check that the ambulance service is in-network before your ambulance ride. Of course, that is normally not possible when you need an ambulance ride for an emergency.

Emergency Departments

Emergency room visits also often lead to surprise medical bills. Some hospitals staff their emergency rooms with doctors that work for private companies. They may not have a contract with your insurance company even though your hospital does. Avoid these bill by figuring out if your hospital’s emergency department is in-network. If it is out-of-network, other hospitals may be in-network and able to give you the same level of care. For a minor injury or illness, an urgent care clinic can be a lower cost option to get care and stay in-network.

Specialists

Another source of surprise medical bills is out-of-network doctors treating patients at in-network hospitals. Specialist doctors, like anesthesiologists, radiologists, and pathologists sometimes are not direct employees of the hospital. They may be out-of-network even though the doctor treating you is in-network. Avoid surprise bills from specialists by learning which doctors will take part in your procedure. Find out whether those doctors are in your insurance network before you go for treatment.

Prior Authorizations

Your health insurance plan may require you to get prior approval for certain types of medical services. This is often called “preauthorization” or “precertification.” Usually, it is your job to call your insurance plan to get approval before you get medical services that need prior approval. If you don’t get prior approval, your plan will not pay for the services.

Unfortunately, even when you get prior approval, your plan might still refuse to pay. Most insurance plans will tell you that prior approval is not a guarantee of payment. You might do everything your plan requires and still end up with a surprise bill for a service you thought your insurer would cover. If that happens, remember that you have a right to appeal the plan’s refusal to pay and think about finding someone to help you with your appeal.

State and federal lawmakers are working to protect patients from surprise medical bills, but it will most likely take more than one new law to protect every patient under every insurance plan. If you get a surprise medical bill, remember to find out if your hospital has a Financial Assistance Policy. Even though out-of-network doctors or ambulance services may not accept your health insurance, they may agree to honor your hospital’s financial assistance decisions.

To learn more about Financial Assistance Policies, see our section on the Affordable Care Act.

Keep a Paper Trail

If you receive a surprise medical bill, keep all documents related to the bill (including those sent by the hospital, insurer, government, and collection agency). It can also help to log information about phone calls, including the date of the call, who you spoke to, the company they work for, and what you spoke about. Make sure to keep a copy of any written communications about your bill, including letters and emails. Important documents include your bill, itemized explanations of charges, prior authorization forms, your insurer’s explanation of benefits, and anything received from a collection agency. Keeping these papers can help you to appeal the bill to the insurance company, correct a mistake the hospital made in billing, or any other effort you make to correct a surprise bill.

For existing medical debt, a few practical pieces of advice can go a long way.

First, if you intend to pay your debts it helps to take a cooperative attitude you’re your health care provider. If you show that you intend to pay the debt, and explain why you can’t pay immediately, most providers will be less likely to turn the debt over to a collection agency.

Once the debt has reached a collection agency, the situation changes. You are no longer in the hands of an organization that delivers health care. You are in the hands of a company that exists to collect debts. Collection agencies do not know you, and they are less likely than your health care provider to appreciate your cooperative attitude.

Often, providers expect to full payment at the time you receive medical services. When you talk with your provider, ask to set up a reasonable payment plan and stick with it. A good plan will help you to pay as quickly as possible, while avoiding debt collection agencies.

When setting up a payment plan, the provider may ask personal questions about your financial situation. Your provider might ask for proof of your income - a recent pay stub or income tax returns. The provider must keep your income private, except in the process of collecting a debt.

Charity Care

Any hospital operating as a non-profit must offer financial assistance, often called charity care. If you qualify for charity care, the hospital will cover all or part of the bill. Only certain people qualify for charity care based on income and family size. Each hospital will have its own eligibility requirements, but many hospitals will offer discounts to people across a wide range of incomes.

The Affordable Care Act outlines the requirements of charity care for non-profit hospitals. Most hospitals can’t turn your bills over to collections until they give you the chance to find out if you qualify for charity care. A hospital’s financial assistance staff should help you to understand if you qualify for financial assistance. For more information on charity care see our section on the Affordable Care Act.

Backdating Medicaid

When you apply for Medicaid or BadgerCare Plus, your benefits usually start the first day of the month when you apply. If you have any medical bills during the three months before the month when you apply, you can ask to see if you qualify for backdated coverage. If you met all the eligibility requirements for any of the three months before the month you applied, you can get Medicaid or BadgerCare Plus for those months. Once you get approval for backdated coverage, you can ask your health care providers to bill Medicaid for those services. If you paid out of pocket for any health care, you can ask them to bill Medicaid and you should get repaid the amount that Medicaid pays your health care provider.

Using Medical Debt for Medicaid Eligibility

Some people whose income is too high for MA can become eligible by meeting a deductible or “spend down” amount. If you already have medical bills or have regular medical expenses, including health insurance premiums, you can subtract those amounts from your income to become eligible for Medicaid.

Once you meet the deductible amount, it doesn't erase the debt you used to lower your income, but it does give you Medicaid coverage for the next six months. That can help you get treatment you need and can save money on out-of-pocket costs if you also have health insurance. If you don’t have health insurance, the end of your Medicaid coverage can give you a special enrollment period. That can give you a chance to enroll in other coverage, like a Health Insurance Marketplace plan, to avoid a coverage gap and stay on top of your health needs while avoiding unnecessary debt.

In Wisconsin, pregnant women and children under age 19 can get BadgerCare Plus coverage by meeting a deductible. People with disabilities and people over age 65 may qualify for Medicaid coverage by meeting a deductible.

Case Study: David is 37 and unmarried. He receives SSDI because he has a disability and is unable to work. His SSDI is $2,061/month. He incurred medical debt last year when he didn’t have insurance. He makes payments, but he has ongoing health needs and the bills will keep piling up. He isn’t sure how he’ll get ahead. He applies for Medicaid with a deductible. Since his income is above the monthly limit for “regular Medicaid”, he can meet a deductible using his medical bills. The amount he needs to meet is $6,000. David owes about $8,000 in medical bills. When he applies for Medicaid, he can send in copies of his bills to meet this deductible. Once approved, he has Medicaid coverage for 6 months, allowing him to try to catch up on his bills without worrying about incurring new medical bills.

Challenging Medical Debt and Fighting Forward!

If you and your medical provider can’t agree on a payment plan, then the provider may send your bill to a collection agency. This can cause extra stress, especially when you are sick or have an illness in the family, because collection agencies are often aggressive and intimidating. Once a creditor places your debt with a collection agency, it will hurt your credit score, even if you later pay off the debt. For more information on your credit score see our section on The Modern Debtors Prison.

Appealing Denied Insurance Claims

If your health insurance refuses to pay for services you think should it should, remember that you have the right to appeal! Every insurance plan has to offer a process to appeal negative decisions. Among other things, you can appeal denials of claims for services, requests for preauthorization or precertification, and requests for referrals to out-of-network health care providers. Most insurance plans have a one-step appeal process, but some plans offer two levels of appeals.

If you want to appeal a health insurance decision, the first thing to know is that you have a deadline to ask for an appeal. Most plans give you 180 days to ask for an appeal, but some plans have shorter time limits. You need to look at your insurance policy to find out what time limit applies to your plan.

When you appeal an insurance decision, a group of people not involved in making the original decision will review your claim. You will have a chance to send items that support your claim, like letters of support from your doctors. You may also have a chance to make your case in person.

Most insurance plans also have to offer an independent review if they deny coverage after the appeal. These reviews are done by companies that don’t work for the insurance company. Any letter from your insurance plan informing you of the denial of a claim should also tell you how to ask for an independent review. That information should also be in the appeals section of your insurance policy.

Appealing Medicaid/BadgerCare Plus Decisions

If you get a negative decision about Medicaid or BadgerCare Plus benefits, you have special rights to appeal the decision. You can appeal almost any kind of decision that affects your benefits, like a denial of eligibility or a denial of coverage for certain types of medical services.

Every Medicaid or BadgerCare Plus member has the right to ask for a “fair hearing” to appeal a decision. A fair hearing works like a court hearing, but it is much less formal. Fair hearings usually take place by telephone. Before the hearing, you can send in any items that you think will help make your case. At the hearing, an administrative law judge (ALJ) will listen to your side of the story and, in most cases, will also hear from the Medicaid agency. After both sides have made their cases, the ALJ will issue a written decision – usually within about four weeks after the hearing.

If you get your Medicaid health care through a managed care plan, you get an extra chance to appeal. If you want, you can start with asking your managed care plan to do its own review of the decision – much like the way you can appeal a decision with a health insurance company. If you aren’t happy with the managed care plan decision, you can still ask for a fair hearing.

If you are unhappy with your fair hearing decision, you can ask for review by your county court, but you may have to pay a filing fee. In most cases, you can’t present any new information to the court. That means it’s important to make a strong case at the fair hearing stage. If you think you need a fair hearing, you may want to see if you can find someone to help you prepare. For ideas about where you might find help with a Medicaid fair hearing see our list of resources in our section “Get Outside Help.”

Appealing Medicare Decisions

Medicare has a five level appeal process. The first two levels of appeal are through a process that looks a lot like an appeal to a health insurance plan. The third level is a hearing like the fair hearing you would get for a Medicaid decision. The fourth level is a review by the Medicare Appeals Council, and the fifth level is review by the federal courts.

If you have a Medicare Advantage (Part C) plan, you can get even one more level of review. You can start with asking your Medicare managed care plan to do a review that works like the appeal process for a regular health insurance plan. If you don’t like the decision, you can move on to the five-step appeal process.

The Medicare appeal process can be more complicated than other types of appeals. If you want to appeal a Medicare decision, a good place to ask for help is your local Aging and Disability Resource Center (ADRC).

The Modern Debtor’s Prison

In the old days, people were often jailed for not paying their debts. Today, a low credit score can act like a modern debtors’ prison. Your credit score can be used by landlords to refuse to rent to you, by insurers to charge you more, and by banks to give you higher interest rates on loans. Although the modern debtors’ prison is not made of brick and mortar, it is just as hard to escape.

For more info, visit: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.

Case Study: Jeff is a senior in college who wants to attend graduate school. Because of some unpaid medical bills and credit card debt, Jeff's credit score is low. As a result, several of his rental applications have been denied. This has made it difficult for Jeff to find a place to live. Jeff tried to consolidate his debts by getting a credit card with a lower interest rate, but the credit card company denied his application. They labeled Jeff as an applicant with a high risk of not paying back his debts. Jeff decided to take out a loan to buy a car that he could use to get to a new, higher paying job. Jeff's low credit score meant that the interest rates on his loan were higher than he could afford. Without a car, Jeff had to stay at his lower paying job, making it harder for him to afford graduate school.

What is a Credit Score?

A credit score is a number between 300 and 850 that rates your likelihood of paying your bills. Your credit history determines your credit score. You build your credit history by having bills in your name and paying your bills on time. Most people have credit scores between 650 and 799.

Here is a break-down of what makes up your credit score:

35% of your score is your payment history. If you make payments on time and pay in full, your score will be higher. If you often pay late or only pay part of your bill, your credit score will be lower.

30% of your score is how much debt you owe. Some types of debts, like credit cards, carry extra weight.

10% of your score comes from how much of your debt is new debt. The more new accounts you have open, the lower your score. On top of that, the number of credit checks run on you in the past year can lower your score.

15% of your score comes from the length, in years, of your credit history. The longer your history, the higher your score.

10% of your score comes from having a healthy mix of different types of credit. There are four different types of credit: (1) “service credit” which includes utility bills; (2) loans; (3) “installment credit”, which are loans like car loans that require you to make more than one payment; and (4) credit cards.

Your current income and employment history do not change your credit score, though lenders may consider them before making a loan.

Finding your Credit Score

Lenders can use one of several different types of credit scores, but most use a rating system called the FICO score. FICO scores use information from your credit report. Thee major national credit bureaus create and give your FICO score to lenders - Equifax, Experian, and TransUnion. You can get your score from each of the credit bureaus and you may find that you have a different score with each different credit bureau.

You can get a free copy of your credit report from each credit reporting agency once every 12 months. When you ask for your credit report, you’ll need to provide personal information, like your social security number and other information that only you would know.

Only one website - www.annualcreditreport.com – is approved by the federal government to provide free credit reports. If any other website offers to give you a free credit report, it may be a scam.

You can also ask for your annual free credit reports by calling toll-free at 1-877-322-8228. For more information about free credit reports, visit: https://www.consumer.ftc.gov/articles/0155-free-credit-reports

It’s a good idea to check your credit reports each year so you can find mistakes and prevent old debts from coming back to haunt you. You have the right to dispute any wrong information in your credit report. In most cases, the credit reporting agency is required by law to investigate any item you dispute.

Correcting your Credit Score

Many businesses use your credit score to decide whether to offer you their services, including lenders, government departments, phone and utility companies, landlords, and insurance companies. The number of businesses using credit scores continues to grow. Improving your credit score can help you find more affordable loans, housing, and other needs.

You have a right to add information to your credit report. Whenever you send a written explanation to a credit agency, they must add it to your report. If you need help, contact the credit agency for an explanation on how to add information. Explaining misleading information may improve your credit score. Here are some examples of when you may want to send a written explanation to attach to your credit report:

You had insurance or Medicaid that should have payed your bill, or you are working to get your insurance or Medicaid to pay your medical bill.

You made a payment plan and you haven’t missed any payments.

You questioned a bill and never received a reason why you owe the debt or to whom you owe the debt.

A bill is on your report that belongs to another person with the same name.

You lost a credit/debit card or had one stolen.

Any other times when you can explain why you could not pay, like if you had a major medical problem and couldn’t work. Make sure to explain a plan for how you will begin to start paying your bills now.

Disputing Information on your Credit Report

Disputing bad information can help raise your credit score. If you disagree with a debt that shows up on your credit report, you can file a dispute with the credit bureau that is reporting the bad information. You should explain why you disagree with the debt and provide a copy of any items that support your position. For medical debts, examples of documents that might support your position are your health care provider bills, insurance statements, a copy of a written payment plan, a notice of approval for financial assistance, or your Medicaid or Medicare enrollment information.

When you file a dispute, the credit bureau has to investigate it unless your reasons for disputing the debt won’t change the fact that you owe the debt. The credit bureau will send information about your dispute to the original creditor or whoever else reported the debt.

After the original creditor gets notice of your dispute, it must review your dispute and your supporting items and report back to the credit bureau. If the creditor decides that a debt on your credit report is wrong, it must notify all three credit bureaus to correct your credit report. You can then ask the credit bureau to send notices of the correction to anyone who received your credit report in the past six months. For potential employers who received your credit report, you can ask that the bureau go back two years. The credit bureau will usually complete its investigation within 30 days. After completing the investigation, the credit bureau must give you a written notice of the results and, if anything changed in your credit report, a free copy of your updated credit report.

Case Study: Georgia is in a long process of getting her insurer to pay for a surgery she received. The insurer has agreed to pay, but has not decided how much it will pay. In the meantime, Georgia discovers that her credit score was reduced. Her provider didn’t know she was working on getting her insurance to pay and they sent her bill to a collection agency. Georgia informs all three credit reporting agencies that she is working to have her bill paid by her insurer and that she disputes the debt. She provides the reporting agencies and the provider with documentation of her conversations with her insurer. The credit reporting agencies and provider investigate the debt and determine that it is incorrect. As a result, the debt is removed from Georgia’s credit report. In the mail, Georgia receives a letter explaining the results of her dispute, as well as a copy of her corrected credit report.

You can contact the three major credit bureaus to submit information you want included in your credit report or to dispute bad information in your credit report. You can send your dispute by mail, but it is often faster to dispute online.

If you want to dispute something in your credit report, you can use these addresses and websites:

For more information on repairing your credit score visit: https://www.consumer.ftc.gov/articles/0058-credit-repair-how-help-yourself

Dealing with Debt Collection Disputing a Collection Notice

If you got a collection notice from a debt collector about a debt you do not owe, you can dispute the debt directly with the collection agency. You should send written notice that you dispute the debt within 30 days of getting the collection notice. Once you file a dispute, the debt collector must investigate and verify the debt and may not tell any other company that you owe a debt without also stating that the debt is in dispute. If you ask the collection agency to verify the debt, it must stop collection activity until it sends you verification of the debt. If the agency cannot verify the debt, then it must stop trying to collect.

You can find sample debt dispute and debt verification letters at the end of this guidebook.

The Laws about Debt Collection

The Fair Debt Collection Practices Act and the Wisconsin Consumer Act give a good deal of power to you as a consumer. Not only can you force a collector to stop harassing you, but you can sue for damages if the collector does not stop.

To take full advantage of your rights under both acts, keep a paper trail of each contact with the collection agency. Note the time, date, and content of each conversation. Keep all written communications you receive from the agency, noting the date of receipt on each. Keep a photocopy of anything you send the agency. Never send originals of your checks or insurance documents, send copies instead.

Restricted Activities and Your Rights

If you and your medical provider cannot agree on a payment plan, then the provider may send your bill to a collection agency. This can cause extra stress, especially when you are sick or have an illness in the family, because collection agencies are often aggressive and intimidating. Debt placed with a collection agency will hurt your credit score, even if you later pay off the debt. See our section on “The Modern Debtor’s Prison” to read more about your credit score.

If a collection agency contacts you, write down the following:

-The name, address and phone number of the company calling you,

-The name of the business you owe money to, and

-The exact amount they claim you owe.

Restricted Activities

The Fair Debt Collection Practices Act (FDCPA) and Wisconsin Consumer Act (WCA) prohibit debt collectors from taking certain actions to collect your debt.

Restricted activities include:

Contacting Third Parties

A debt collector may only speak with someone other than you to confirm your contact information, like your address and phone number. A debt collector can’t contact the same person twice, unless it has reason to believe that the person gave bad contact information and knows correct contact information.

Disclosing Information

In most cases, debt collectors cannot give information about your debt to anyone but you or your attorney. They can give information to credit bureaus as long as they reasonably believe the information is correct, and that information could end up on your credit report.

Contacting Your Employer

Unless you have been sued and have a court judgment against you, collectors can only contact your employer to confirm your contact information and where you work. A debt collector cannot call you at your job if it knows that your employer does not allow you take those types of calls at work.

Threatening Legal Action

A collection agency can’t threaten to sue you unless it has the legal authority to sue you and actually intends to sue you. Sometimes, collection agencies buy your debt from the original creditor, which gives them the right to sue you for the debt. More often, the original creditor keeps the right to sue for the debt. The collection agency only gets paid by convincing you to pay off your debt. Debt collectors cannot threaten you with criminal charges if you don’t make payment.

Harassment

Harassment usually means that a collector used obscene or threatening language. This includes calling you names, insulting you, your job or your family, or questioning your personal financial decisions. Harassment includes contacting you at unusual hours - later than 9 p.m. or earlier than 8 a.m. - or calling you so often that it becomes more than an inconvenience.

Your Rights

You have rights when it comes to debt collection activities. The FDCPA and the WCA offer protections and limit harassment, abuse, deception, and other unfair collection actions.

The FDCPA applies only to a business whose main purpose is debt collection. That includes collection agencies and law firms that work mainly on collections. The Act requires a debt collector to give you certain information when it first contacts you. It also gives you the right to demand that the debt collector stop communicating with you.

The WCA does not just apply to collection agencies, but also to health care providers trying to collect a debt directly. It prohibits many of the same activities covered under the FDCPA, but it isn’t limited only to businesses whose main purpose is debt collection.

If a creditor or debt collector treats you unfairly, you should consider talking to a lawyer with experience in consumer law. You may be able to get a lawyer, even if you cannot afford to pay typical fees. Under the FDCPA, if you win a lawsuit against a debt collector, you may be awarded attorney’s fees and court costs. You may also recover wages for lost work time, payment for emotional distress, and a penalty award up to $1,000.

Under the WCA, you can recover any actual damages you suffered, like lost work wages, or double any finance charges on your debt up to $1,000 (whichever is higher). You can also receive damages for emotional distress without having to prove that you suffered any physical injury or illness as a result of the emotional distress. Like the FDCPA, the WCA also gives you a chance to recover attorney’s fees and court costs.

To learn more about the FDCPA visit https://www.consumer.ftc.gov/articles/debt-collection-faqs.

To learn more about the WCA visit https://www.wdfi.org/wca/business_guidance/creditors/debt_collection/prohibited_practices.htm

Get Outside Help

Outside legal help can lessen the burdens of medical debt significantly. If you need help with disputing a debt or understanding your rights, the Lawyer Referral and Information Service (LRIS) can help you search for an attorney. You can search for an attorney from https://www.wisbar.org/forpublic/ineedalawyer/pages/lris.aspx. You can speak to a legal assistant by calling (800) 362-9082.

If you have lower-income you may qualify for legal aid through a legal aid non-profit. Judicare Wisconsin helps lower-income people from Northern Wisconsin with legal issues. For more information about Judicare visit http://www.judicare.org/.

Legal Action Wisconsin (LAW) serves people with lower-income from Southern Wisconsin with legal issues. For more information about LAW visit https://www.legalaction.org/.

Disability Rights Wisconsin (DRW) serves people with disabilities who are residents of Wisconsin. For more information about DRW visit their website at: http://www.disabilityrightswi.org/ 

ABC for Health is a Wisconsin-based, nonprofit public interest law firm dedicated to linking children and families to health care benefits and services. For more information on ABC for Health visit our website at: https://www.safetyweb.org/index.html.

There are many myths and common misconceptions about medical debt:

Myth: As long as I make payments, the hospital cannot send my bill to collections.

  • Reality: If you underpay a bill, the hospital can still send the bill to a collection agency, although the public usually looks down on hospital’s using collecting agencies.

Myth: If you are young and healthy, you should not have insurance.

  • Reality: Health insurance is a crucial safety net. Health issues can occur to anyone at any time. If you do not have health insurance, you are responsible for 100% of your medical expenses.

Myth: Insurance with a lower premium costs less.

  • Reality: Paying for insurance is complex. You should consider deductibles, coverage, and more when choosing a plan. Your “complete policy” is the only document legally binding your insurer to cover your care. Licensed Marketplace Navigators and Certified Application Counselors can help you understand the costs and benefits of different insurance options. Insurance brokers and agents are also able to help you find and understand insurance. However, brokers and agents are not legally required to act in your best interest whereas Navigators and Counselors are.

Myth: If you already have health insurance, you cannot receive Medicaid.

  • Reality: You can have multiple insurance plans, including Medicaid. Medicaid can help to balance your out-of-pocket costs, especially when your other plan has a high deductible. For more information see our section on Medicaid.

FPL Calculator

The federal poverty level is a number set by the federal government each year. The government bases the FPL on income and family size. The government uses FPL to determine eligibility for different federal & state benefit programs. It uses FPL to determine eligibility for: Medicaid, Marketplace Tax Credits, SNAP (FoodShare), housing & energy assistance, and other benefit programs. The thresholds vary by state. Use this calculator to get an estimate of where your family falls on the FPL.

For more information or to receive your own FPL percentage visit https://home.mycoverageplan.com/fpl.html

Aging and Disability Resource Centers

ADRCs are Wisconsin centers that help people connect with resources for: in-home care, housing, home modifications, nutrition, Medicare, Medicaid, Social Security, and more. To find your county’s ADRC information, visit: https://www.dhs.wisconsin.gov/adrc/consumer/index.htm.

Consortia and Tribal Agencies

Your regional Consortium can help you apply for benefits, process application and renewals, conduct a FoodShare interview, or answer questions about eligibility. For more information, visit: https://www.dhs.wisconsin.gov/forwardhealth/imagency/index.htm

ACCESS: Online tool to determine eligibility for health and nutrition public assistance programs, to apply for benefits and for members to manage their accounts.

Adjusted Gross Income (AGI): Your total (or “gross”) income for the tax year, minus certain adjustments you’re allowed to take.

Aging and Disability Resource Center (ADRC): Government center which offers the general public a single source of objective information and assistance on issues effecting older people and people with disabilities.

Annual Limit: A cap on the benefits your insurance company will pay in a year while you're enrolled in a particular health insurance plan.

Appeal: A request for your health insurance company or the Health Insurance Marketplace to review a decision that denies a benefit or payment.

BadgerCare Plus: Wisconsin's program to ensure that all children and parents in families that meet certain criteria have access to health care.

Balance Billing: When a provider bills you for the difference between the provider’s charge and the allowed amount.

Benefits: The health care items or services covered under a health insurance plan.

Claim: A request for payment that you or your health care provider submits to your health insurer when receive care you think are covered.

Collection Agency: A person or entity that tries to collect a debt on behalf of the creditor.

Co-payment (Co-Insurance): A fixed amount you pay for a covered health care service after you've paid your deductible. Cost Sharing: The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance, and copayments, or similar charges. Creditor: a person or business to which a debt is owed.

CYSHCN: Children and Youth with Special Health Care Needs Program.

Debtor: a person who owes money to another person or entity for services or goods received or to repay a loan.

Deductible: The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself.

Exclusions: Health care services that your health insurance doesn’t pay for or cover.

Federal Poverty Level (FPL): A measure of income. Federal poverty levels are used to determine your eligibility for certain programs and benefits. 

Grace Period: A short period — usually, but not always, 90 days — after your monthly health insurance payment is due. If you haven't made your payment, you may do so during the grace period and avoid losing your health coverage.

HealthCheck: Early and Periodic Screening, Diagnosis and Treatment program for children from lower-income families.

Household: The Marketplace generally considers your household to be you, your spouse if you’re married, and your tax dependents.

HMO (Health Maintenance Organization): A type of health insurance plan that usually limits coverage to care from doctors who work for, or contract with, the HMO.

Katie Beckett: A Medical Assistance program for children with disabilities who need skilled or intermediate nursing care.

Marketplace: Shorthand for the “Health Insurance Marketplace,” a shopping and enrollment service for medical insurance created by the Affordable Care Act in 2010.

Medicaid: Insurance program that provides free or low-cost health coverage to some lower-income people, families and children, as well as, pregnant women, the elderly, and people with disabilities.

Medicare: A federal health insurance program for people 65 and older and certain younger people with disabilities.

Open Enrollment: The yearly period when people can enroll in a health insurance plan.

Pre-existing Condition: A health problem, like asthma, diabetes, or cancer, you had before the date that new health coverage starts. Insurance companies can't refuse to cover treatment for your pre-existing condition or charge you more. Premium: The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible, copayments, and coinsurance.

Premium Tax Credit: A tax credit you can use to lower your premium when you enroll in a plan through the “Marketplace.”

Qualified Health Plan: An insurance plan that’s certified by the “Marketplace,” provides essential health benefits, follows established limits on cost-sharing, and meets other requirements under the Affordable Care Act.

Wage Garnishment: A process that must be approved by a judge that allows payment to a creditor directly out of the debtor‘s wages.

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HealthWatch Wisconsin, Inc, a subsidiary of ABC for Health, promotes improved access to health care coverage and services. HealthWatch will continue to track and inform policy developments in a changing landscape of public and private insurance coverage options for the people of Wisconsin.

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