According to The Commonwealth Fund, the United States is home to the most costly healthcare system in the entire world, with the average American spending over $10,000 per year on healthcare.
Why is Medical Financing Vital for Many Patients?
Given the enormous financial burden which results from receiving medical care or undergoing medically necessary procedures, patients in the United States can benefit from the opportunity to finance their medical bills over time. Healthcare becomes more accessible and affordable for patients financing because deductibles and other medical costs can be split into payment plans. Patients can reimburse them in smaller installments during a period of months or years. This enables patients to continue living high-quality lives while paying off medical debts.
High-cost medical bills can weigh down even the most resilient and well-intentioned patients. According to The Sycamore Institute, people with health-related debt or who struggle to keep up with bills are significantly prone to mental and physical health complications. High blood pressure and poor states of mental health are among those complications.
Who Can Benefit From Financing Medical Care?
Any patient living within the United States who is able to obtain healthcare patient financing can benefit from this option. One way that this occurs is that every time that a patient makes timely payments toward their plan, their credit score increases. The opportunity for patients to increase their credit by paying back medical debt allows them to benefit from doing something that is already required of them, namely paying for medical care.
Medical Financing Options: Benefits and Drawbacks
LendingUSA is a loan provider that offers personal loans. These loans can be utilized to pay for various products and services, including financing options for medical patients. This lender approves loan amounts from $1,000 to $47,500, giving borrowers immense purchasing power. This company prides itself on providing fast care for patients who can fill out an application in minutes and receive a pre-approval decision in just seconds. Furthermore, Lending USA is more flexible than most credit card providers in that they create fixed payments and fixed terms for borrowers.
However, Lending USA only approves borrowers with a FICO score of 620 or higher, making their options inaccessible for individuals who have poor credit scores or lack credit history. If a loan is repaid through Lending USA within six months, it is possible to get a low-interest rate. Yet, if the loan is not paid off in six months, interest compounds quickly which can raise the amount that a patient pays by hundreds of dollars in total. Also, loan origination fees at Lending USA are significantly higher than some other loan or payment plan companies.
Ally is a lending service that offers medical loans without requiring down payments or application fees, and they do not charge fees for loans that are paid off early. There is no credit impact for loan pre-qualification, meaning that when Ally checks a potential borrower’s credit history, their credit score is not affected.
Additionally, they offer many financing options which all include a fixed APR. Installment loans, or those which allow for consistent monthly payments to be made over time, are available and some applicants may even be able to qualify for 0% APR on their loans.
Despite the many great offers that Ally has available, borrowers must face a few downsides. For instance, fixed APR rates are based on the term of the loan and the creditworthiness of the prospective borrower. Also, 0% APR is only available through certain medical providers and requires applicants to meet specific qualifications.
Denefits retains a 100% acceptance rate of applicants seeking patient payment plans because they do not check credit scores to determine approval. Family members and friends can easily contribute to the repayment of payment plans through what the company calls “social payments.” As Denefits receives payments from patients with payment plans, they pay the companies that have provided services to such patients.
Notably, Denefits can help patients finance copayments or deductibles that other companies may see as too small. For reference, a copayment is a partial payment that a customer must provide before receiving a medical service. If a dental patient needs to receive a crown that costs $1,000, and their copayment is 30%, then they would need to pay $300 before the procedure can be performed by a dentist. While many other companies would charge significant interest on the $300 loan, making the total fees add up to a substantial percentage of the loan itself, Denefits offers low-interest rates that will help patients pay off their debts over time.
While Denefits does not collect the credit information of individuals seeking a healthcare payment plan, they report payment information to credit bureaus, affecting borrowers’ credit either positively or negatively. They also charge fees on late payments, which is common among lending services to ensure that borrowers are committed to upholding their end of the deal by making payments on time. However, the late fees at Denefits tend to be significantly lower than the late fees of other companies and Denefits’ payment plans do not accrue interest when payments are made late.
Additionally, Denefits only charges a small one-time enrollment fee compared to the high-cost origination fees of other companies. Although some medical practices do not work with Denefits yet, they can easily call to set up an account at no cost, enabling their company to gain and maintain relationships with customers who would like the ability to finance their medical bills.
Comparison of Financing Companies
While each of the above companies offers many benefits to healthcare patients who seek financing options to repay their debts, there are disadvantages to each option. Lending USA has a great range of acceptable loans, but it does not accept a large population of medical patients who need help repaying medical debts but do not have a high credit score. Ally offers 0% APR in some instances, but this is not the case for all applicants.
Also, Ally’s APR rates are based on credit, seemingly penalizing individuals who do not have impeccable credit but would like to take out a loan for their medical expenses. Lastly, Denefits accepts every applicant and offers affordable payment options. But, your medical provider’s practice may need to set up an account with Denefits if they have not yet made Denefits’ payment plans available to patients. Again, if patients cannot obtain healthcare financing through other providers, Denefits guarantees the ability for all applicants to establish payment plans with them.