Medical Payment Products: Know the Risks

What is a Medical Payment Product?

A medical payment product is specifically issued for the payment of health care services, products, or devices. These include credit cards, deferred interest credit products, or payment plans. Though they are usually marketed and sold by financial institutions, they are often available to enroll in at health care provider clinics as well as many specialty practices such as dentists, optometrists, dermatologists, cosmetic or plastic surgeons, health spas, wellness centers, and weight loss clinics. Some of the better-known medical payment products include CareCredit, MedKey, Comenity Alphaeon, and Wells Fargo Health Advantage.

Before You Sign Up for a Medical Payment Product:

• Ask for alternative payment options.
  Before your medical procedure or service, your health care provider must give you an itemized list of all costs. Ask about your out-of-pocket costs and if there are additional payment options available, such as insurance, Medicaid, pay-over-time plans, or other financial assistance plans. Contact your insurance to find out what it will cover. If your provider doesn’t accept your insurance, ask your insurance to recommend another provider.
  
  Be sure to ask questions to ensure you understand exactly what sort of product you are enrolling in. For example, if your care provider refers to a “payment plan” or “installment plan,” make sure you understand whom you will be paying, how much you are expected to pay and on what schedule, and what potential fees might apply.


• Understand “deferred interest.”
  If your provider tells you that a medical credit card has “zero interest,” “zero APR,” or “deferred interest,” make sure you know what that actually means.
  
  “Deferred interest” usually means you do not pay interest during a promotional period, but if you do not pay the entire balance before the deadline, you pay the interest on the original amount from the date you made purchase—not just on what you still owe. This means that you may owe far more than the original amount of the treatment, service, or good cost, and it may happen even if you pay the card’s minimum monthly amount during the promotional period.

For example, you charge $2,500 for a dental procedure on a card with 0% interest for 12 months. After a year of making minimum monthly payments of $200, you have $100 left to pay. You might expect to pay interest on just the remaining $100 balance. Instead, with deferred interest, you actually owe interest on the entire $2,500 amount because you didn’t pay off the full balance before the promotional period ended.

• Carefully read the contract.
  Take time to read through the contract and ask your provider any questions about fees, repayment schedules, penalties, and terms you don’t understand. Keep an eye out for the below terms which may appear in the contract:
  
  
  • Mandatory Arbitration Clause: Forfeits your right to pursue claims against the provider in court.
  • Consent for Credit Reporting: Gives the provider access to your credit report, which allows them to report any late or missed payments to a credit reporting agency. This may potentially lower your credit score.
  • Waiver of Jury Trial: Forfeits your right to a jury trial in court, only allowing a judge to resolve the case.
  
  If you do not agree with the terms, do not sign!
  
  If you need language assistance, ask if translation or interpretation is available before you sign.

After You’ve Signed Up for a Medical Payment Product

• Review charges.
  Check your statement for charges you don’t recognize, fees that were previously undisclosed, or products or services you didn’t receive and dispute them immediately. Document your dispute with both the medical payment business and any debt collector or third party reaching out to you about the amount you allegedly owe.


• Track balance and make timely payments.
  Pay on time and in full. Minimum monthly payments may seem affordable, but watch out for deferred interest when your full balance isn’t paid before the promotional period ends. Missing a payment may potentially harm your credit score and limit your access to future credit.


• Keep records.
  Save your application, letters, contracts, statements, receipts, or any documents you receive from medical credit cards, health care providers, and debt collectors. If something doesn’t feel right, file a complaint with DCWP.