Advertising
Advertising

How to Make Sense of Your Medical Bills in 5 Steps

How to Make Sense of Your Medical Bills in 5 Steps

According to a U.S. News and World Report article, about eight in 10 medical bills contain some sort of error. That’s crazy high, which also makes it pretty scary, especially since every error on your medical bill results in you dishing out more dough.

With unfamiliar medical codes and terms, however, it’s difficult for you to know exactly what you’re paying for. But, you’re not only the patient, you are also the customer. Therefore, you have the right to scrutinize every medical bill that you receive and demand an explanation on any charge that looks unfamiliar, too high, or downright suspicious.

In this article, we will give you an overview on what to look for on your bill(s) and who to call if you have issues regarding anything. Get out your highlighter and get ready to mark anything that you have a question about. Keep a notebook handy to write down your questions and notes.

Advertising

The Basics

When you begin your medical bill breakdown, it’s best if you begin with what you know: your name, address, insurance information, and admittance and discharge dates.[1] If your insurance information is incorrectly inputted, then you will, for sure, be charged more than you should.

Units

If you are given Tylenol in the hospital to help with your pain, you better believe that you will be charged per capsule. These per-item charges can be found under the “Units” section on your bill.[2] If you are being charged for 500 capsules of Tylenol, then highlight this as an item. There’s no way you took that many capsules during your stay. Double check the number of units per line item to make sure you are not being overcharged for items used during your stay.

Medical Codes

Hospitals and doctor’s offices use codes to identify services rendered.[3] You are charged based on the codes assigned. There are many different types of codes, but Current Procedural Terminology (CPT) Codes and International Classification of Diseases (ICD) codes are the most well-known.[4]

Advertising

CPT codes are ubiquitous in every U.S. doctor’s office and hospital. These are usually listed as service charges. ICD codes accompany CPT codes to assure that the diagnoses fit the billed procedure, prescription, etc.

We’re not saying that you should complete medical billing and coding training online, but you do have the right to contact the billing office of your healthcare provider and have every single code explained to you. Don’t be embarrassed, you’re not the only one requesting this service.

Service Description

Read. Every. Single. Thing. Yes, the service description section should be plentifully packed with each service and item you are being charged for, even for something like Basic Life Support (BLS). In this section, there will be a lot of abbreviations. If you don’t own a medical dictionary, then we suggest using good ole Google.

Advertising

Once you have made sense of the abbreviations, get out that highlighter and pad of paper and jot down anything that you don’t remember receiving, or any charges that seem bogus.

Charges

There may come a time where you receive a medical bill with just a summary of charges and the amount owed.[5] This is unacceptable and you need to call into your doctor’s office or the hospital billing department and request a full itemized bill, complete with all codes, units, service descriptions, and individual charges. Once you receive an itemized bill, you should go down the list and look at all of the charges. If some of the charges seem too high, highlight them.

Never ever think that if your hospital or doctor bill says that it is, then it must be so. Remember, it doesn’t matter if your bill is 10 pages long (heaven forbid) — you need to go through each page, line by line, highlighter in hand, and check that everything is correct. You will pay for any error that you don’t catch. So, it’s up to you to be vigilant.

Advertising

If you have any questions at all, make sure that you contact the health provider who sent you the bill. You can also contact your insurance company as well. They will be able to help with medical coding, as well as help you understand your patient pay portion of the bill.

Featured photo credit: Pixabay via pixabay.com

Reference

[1] https://www.nerdwallet.com/blog/health/how-to-read-your-medical-bill/
[2] http://www.medicalbillingandcoding.org/health-insurance-guide/understanding-medical-bills/
[3] http://vitals.lifehacker.com/how-to-navigate-the-confusing-and-expensive-world-of-me-1765507579
[4] http://www.aarp.org/health/health-care-reform/info-03-2011/how_to_read_your_medical_bill_cpt_codes.html
[5] http://health.usnews.com/health-news/patient-advice/articles/2014/07/15/infographic-how-to-read-your-hospital-bill

More by this author

smartphone apps 15 Apps Everyone Should Have In the Phone How to Make Sense of Your Medical Bills in 5 Steps 6 Career Opportunities that Don’t Require a College Degree 4 Ways Hospitals Can Attract and Retain Talent in a Competitive Industry How Millennials Are Doing College Wrong

Trending in Money

1 How to Set Financial Goals and Actually Meet Them 2 25 Killer Sites For Free Online Education 3 10 Recession-Proof Debt Consolidation Tips 4 The Definitive Guide to Get out of Debt Fast (and Forever) 5 25 Easy Tips on How to Save Money Fast

Read Next

Advertising
Advertising
Advertising

Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

Advertising

4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

Advertising

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

Advertising

5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

Advertising

3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

    Read Next