How to Cover Surgical Costs Not Covered by Insurance?

Paying for surgery out-of-pocket, commonly known as self-paying, can be incredibly expensive. If you don’t have insurance or your insurance will not pay for your surgery, as is common with some weight loss procedures and most plastic surgeries, there are ways to afford the health care you need, even if you must pay for the procedure yourself.

While self-pay surgery is not ideal, it may be a more attractive option than life without surgery, which may mean living in pain or with an unhealthy condition.

Also, even if you have insurance you may need to explore self-pay options, since most insurance pays only a portion of the bill, leaving you to pay the rest.

What Will You Owe?

If you have exhausted your options with your health insurance and Medicare (if that is an option), it may be time to begin investigating alternative methods of financing. Keep in mind that all of the financing options require the funds to be repaid, unlike insurance which takes care of the majority of the bill.

Be sure that the costs that you are financing include all of the expected expenses, including the surgeon’s bill, the cost of the surgical suite, anesthesia expenses, hospital care before and after surgery, labs, medications, X-rays, and any testing ordered by your physician, as well as visits required before and after the surgery.

In addition, be sure to establish what your payments will be after the surgery prior to having the procedure. You do not want to have a rude awakening when your first bill arrives and your interest rate or payment is substantially higher than you expected.

You will also need to plan for any contingencies, like complications, which may elevate the total cost of your care significantly.

Befriend the Collections Department

Resist the temptation to ignore calls from the hospital’s collection department. These individuals can work with you, help you set up a payment plan, and have the power to reduce the total amount of money you owe.

Think of these people as your new best friend, who you will treat more nicely than you have ever treated anyone in your entire life. Really.

Seriously, If you are paying for surgery out of pocket, this is the person that you ask to allow you to pay the same rate that insurance companies have negotiated for the same procedure. This is a reasonable request and is often honored, especially if negotiated in advance. Get this agreement in writing.

If you need an extremely expensive surgery, such as an organ transplant, rather than more standard surgery, it will be even more challenging.

Reduce Surgery Costs

Before you try to figure out how to pay without insurance, try to determine how you can best decrease the cost of your surgery before you even have the procedure. First, find out where the procedure will cost you the least amount of money.

If you have insurance, that means everyone providing care, from anesthesia to the surgeon, the hospital, and the pharmacy needs to be in-network if you have insurance. You will have a better rate, even if your insurance company isn’t picking up the tab.

Next, negotiate a better rate. It is a bitter irony that cash payers pay a higher rate than people with insurance, even though insurance has negotiated a better rate with the provider.

Call the surgeon, surgery center, anesthesia provider, and anyone else providing your care and explain that you will be paying out of pocket and would like to have the best rate they offer insurance companies. If you are pleasant, persistent, and explain your situation, you may be shocked at how much the potential bill can change.

Ask questions from everyone you talk to about reducing the fees. In some cases, using a surgery center instead of a hospital can result in thousands of dollars saved. The people who work in billing will be the people most likely to know how to save you money, and they will also know about programs for people with financial difficulties.

Questions to Ask Before Financing

Before you finance your surgery, ask these important questions of the lender and of yourself:

How long will you have to repay the loan?
What will the payments be on the debt?
Will you be able to manage the payments or will you struggle to pay your bills on time?
Will you be paying your credit cards off forever because you will be unable to make a payment larger than the minimum?
What will you do if the cost of surgery is higher than estimated by your surgeon?
Will you be driven into bankruptcy if the cost, and therefore the payments, are underestimated?
Will you be able to afford the prescription medication you require after surgery if you are paying your credit card bill?
Will you be unable to save for your future needs if you are paying for your surgery?

Borrowing From Retirement Savings

Your 401(k) or 403(b) plan for your retirement may allow you to take a loan against the funds that you have already saved without a penalty. These plans differ from employer to employer, but most will allow you to withdraw 50% of your vested balance up to $50,000 for healthcare expenses.

The length of time allowed for repayment varies, but if you leave your place of employment before you repay the money, there can be substantial tax penalties.

You will lose the interest you would have earned on the money you withdraw, but you will not be paying interest on the loan as you would with traditional borrowing.

If you have a Roth IRA, you may be able to access the funds to pay for your surgery^. Typically, a Roth IRA is not managed by employers but by individual investors, so you may have to do your own research. Start by calling the customer service number for your fund and inquiring about taking money out of the IRA before retirement age.

Using Savings

If the surgery is necessary, it may be well worth the dent in your nest egg to pay for the surgery with your savings. While spending your life savings on something like surgery is not ideal, if the surgery will improve your quality of life, it may be money very well spent.

Depending on your credit and income, you may want to borrow the money from an outside source and keep your savings easily accessible.

While a loan will result in interest being charged, it may be worth the extra money paid in interest to maintain the security of a nest egg or emergency fund, especially if you may need the money during your rehabilitation if you are unable to work.

The particulars of your situation will help determine whether you are better off taking money out of savings or making payments on a loan taken out for surgery.

Using Your Home Equity

Home equity loans are borrowed against the value of your home that is greater than the balance of your mortgage. For example, if your home is currently worth $300,000 but you owe only $200,000 to the bank, you may be able to borrow against the $100,000 in equity.

It is typically easier to obtain this type of loan than an unsecured one because the house is your collateral. This type of loan also provides a tax break as the interest is tax-deductible like on a standard mortgage.

Keep in mind that if you are unable to make the payments on a home equity loan, the consequences can be dire. Failure to pay the loan back can result in foreclosure and eviction from your home.

Unsecured Loans

An unsecured loan is just what it sounds like: a loan that is not secured by property that you own. It is a loan based on your credit and income and does not use collateral to guarantee the loan. Credit cards are one type of unsecured loan, but there are other types available.

The bank or loan company will determine how much you may borrow and at what rate, as well as the terms of repayment. This type of loan is harder to get than a home equity loan and typically has a higher interest rate.

Your surgeon may also be affiliated with a loan program, but be sure to compare interest rates with other sources if you qualify for this type of loan.

Pay close attention to the interest rate and compare it to your other options. If you have a credit card that offers a very low rate, the credit card may actually be a more attractive option.

Payment Plans for Surgery

Some surgeons and hospitals offer payment plans for their services. Payment plans are most commonly offered when your surgery is routinely paid for by the patient instead of an insurance company.

A hysterectomy is almost universally covered by insurance, so surgeons who specialize in hysterectomy might not offer a payment plan. Conversely, plastic surgery is almost never paid for by insurance, so the surgeon would be more likely to know about self-pay options.

In some cases, payment plans are a formal agreement that you will make monthly payments in order to pay for the expenses of your surgery. In other cases, the payment plan is a loan, but the hospital or surgeon is involved in the financial arrangements.

Some hospitals may offer a payment plan for their services, but the plan is a monthly pre-payment plan that is finished by the time surgery occurs.

In the case of an unplanned surgery or emergency surgery, hospitals are highly motivated to establish a payment plan with willing patients.

Monthly payments, even if they are not large, are more attractive to the billing department than no payments, and it may keep the debt from appearing on your credit report as a negative account.

International Surgery or Treatment

Known as medical tourism or international surgery, there is a trend to seek health care outside of the United States. Surgery in other countries is almost always less expensive, and in some places, the cost is significantly less.

Surgeons from outside the U.S. have begun to actively seek patients who are willing to travel for the surgery that they need, promoting themselves with websites and other advertising.

In some cases, the surgeons in question were trained in outstanding American facilities, and have the same, or better, training than surgeons practicing in the United States.

International surgery is not to be taken lightly and should be thoroughly investigated. In addition to the surgeon’s credentials, which should be verified, the facility in which you would recover needs to be researched as well.

It is imperative that the surgeon be highly skilled, but the person who cares for you during your recovery is equally important. They must be able to identify any warning signs or complications that may occur and notify your surgeon. Your surgeon is only as skilled as the staff members who care for you in his absence.

Some insurance companies are even paying for medical tourism for necessary procedures, as the cost to them is dramatically less than usual. You would need to discuss this with your insurance company representatives to get more information.

Credit Cards

With the sky-high interest rates that credit cards charge, this option is not normally an attractive one, but an option of last resort. Some credit cards charge as much as 22% interest, a staggering amount when borrowing the large sums needed for surgery.

In some cases, the rate of interest is significantly lower than that, providing a much more attractive option for paying for surgery. Your credit card statement will clearly state your annual interest rate, but it may be possible to have the rate lowered, depending on the company.

If you have exhausted your options and must use credit cards, you should determine what your payments will be after you pay for the surgery. If you have multiple cards, be sure to use the card with the lowest interest rate, and do not hesitate to transfer the balance if a different card offers a more attractive rate.

Many card companies will offer low-interest balance transfers to earn your business, and then raise the rates to normal levels after six months. If you have multiple cards, you may be able to keep your interest rate to a minimum by transferring the balance when the opportunity arises.

Changing Insurance

If your current insurance has an exclusion for your surgery, but a different insurance plan will pay for the procedure, you may want to consider changing insurance plans. For many people that means changing jobs, but you may not need to take that drastic step.

If you are married and your insurance won’t pay for the surgery, but your spouse’s will, you could potentially save thousands of dollars by switching to your spouse’s insurance.

Many companies wait until January to make alterations to their insurance policies, but others may make changes during a different part of the year. Be sure to inquire about any upcoming changes.

When the new policy begins, your coverage may have been changed or moved to a new insurance provider. In these situations, it pays to investigate what the new company or policy provides.

You may find that you need to schedule your surgery before the change in order to save money, or you may be wise to wait, depending on the changes in coverage and the copay amount.

Final Word

Surgery is expensive, but there are ways to make surgery possible without insurance or with minimal help from your insurance. Some planning can make a huge difference in the size of your bill, and even small payments every month can prevent your medical bills from ruining your credit.

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