Study finds millions of Americans have billions of dollars in medical debt
A study by West Health and Gallup Healthcare found that 31 million Americans will have $74 billion in medical debt by 2024.
Sierra Freeman’s heart-related medical emergency in 2022 quickly escalated into a financial emergency of more than $4 million after she was hospitalized for two months with a brain hemorrhage.
It was “definitely stressful,” Freeman said. “I was still recuperating and returning to work, but I had a $4 million bill looming behind me. That’s definitely not good for a condition that’s exacerbated by stress.”
Her mother then discovered Dollar For, a free nonprofit that helps patients participate and apply for hospital charity care programs. Charity care provides free or discounted medically necessary hospitalization and emergency services from hospitals to patients who cannot afford to pay for their medical care. Patients typically must meet certain household income and financial hardship criteria. Freeman said she twice applied for financial assistance from Stanford Health Care, the hospital she was flown to for specialized care, but was denied.
“At first we both thought it was a scam,” Freeman said of Dollar Four. However, “I thought the worst thing that could happen with the Dollar Four was that they applied on my behalf and got rejected for the third time. The other options I found online were to set up a GoFundMe or declare bankruptcy, so that was one of the better options for me. Stanford didn’t work out. But when the second Dollar Four came, they were like, ‘Okay, now we’re listening.’
Freeman’s health insurance company ended up covering most of her bill, but Dollar Four managed to get her charity care, reducing her out-of-pocket costs from tens of thousands of dollars to a few hundred. Her application is one of 50,000 financial assistance applications filed by Dollar Four to help Americans with more than $151 million in medical debt.
“Medical debt is the number one reason people file for bankruptcy, but there’s no need to file for bankruptcy,” said Jared Walker, founder of Dollar Four. “They’re filing for bankruptcy or making payment plans for bills they don’t have to pay.”
How does charity care work?
According to the IRS, charity care is free or discounted care for patients who meet the organization’s financial assistance eligibility criteria and are unable to pay for all or part of the service.
Hospitals will determine their own eligibility criteria and decide whether to offer it to both uninsured and insured patients, according to nonprofit medical researcher KFF. KFF said federal law requires nonprofit hospitals, which make up nearly three-fifths (58%) of community hospitals, to provide some level of charity care to earn tax-exempt status, and many state governments require all or some hospitals to extend charity care eligibility to certain patient groups.
To receive charity treatment, patients usually have to apply to the hospital where they received the treatment. Analysts say each hospital has its own rules, including how to apply, who is eligible and how much charity care they can provide. Hospitals typically consider a patient’s income, household size, and age on the bill to determine who is eligible.
Still, patients often don’t apply because they don’t know about it, Walker said.
“The law just says that a hospital has to have a financial aid policy, and it has to be widely publicized and available. So the hospital put up posters in the ER and it was widely publicized. It was posted on its website page and it was widely available,” Walker said. “But that’s actually the biggest secret.”
How can patients access charity care?
Once informed, patients can apply for financial assistance from the hospital. But even if you’re lucky enough to learn about hospital charity care, Walker says most people will find the process difficult until they get to submitting their application.
“Hospitals will continue to require applications to be faxed or mailed,” Walker said.
Because Dollar Four is focused on providing medical cost relief for Americans, it has built a database of all the policies and requirements for most hospitals across the country and also knows how to negotiate medical debt, Walker said.
“Our process is easier than any other hospital in the country,” he says. “If you know your household income, the number of people in your household, and the hospital you were admitted to, you can find out in seconds if you qualify for charity care.”
If that’s you, Dollar Four will “submit your paperwork and hopefully eliminate your medical bills. They don’t pay your medical bills. They try to get the hospital to forgive you. And their services are completely free,” Triage Cancer said on its website. Triage Care, a national nonprofit organization that provides free education on legal and practical issues that may affect cancer patients and their caregivers, is one of many partners that send patients to Dollar For for assistance.
“The first thing people do when they get home and get a big bill is think about charity,” Walker said. “Why worry about a bill you don’t have to pay? Medical bills are almost always negotiable. Dollar Four also has scripts and resources to help. The line everyone should remember is, ‘How much is the settlement?'”
He said there are always a large number of hospitals that receive lump sum payments on the same day to close their accounts. That alone can consistently save you 30% to 40% of your bill, Walker says.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday..
