Medical bill payoff strategy

[pdxvandal]

Hey MMMers! My spouse recently had a weeklong hospital stay. Her employer-provided insurance isn't very awesome ($7.5k deductible, $8.5k OOP max), but better than not being insured I suppose. Anyway, we're looking at a hospital bill at about the OOP max ($8.5k) and curious what y'all thought about my plan of attack to pay it off. For the record, I have $10.5k earning 9.6% in an iBond through the summer, but trying NOT to tap that unless absolutely necessary. I initially invested in the iBond in October 2021, so I can pull out the funds whenever. Outside of the iBonds, have very little cash reserves (on purpose).

Here's the rough plan:

1. $5,000 VTSAX post-tax sale (long-term taxable gain of ~$2k)
2. $3,700 vacation cash out from work (still would have 260 hours left)
3. $1,800 HSA cash balance (can use from older medical bills)
4. $350 stock sale ($2k LT tax-loss harvesting)

The VTSAX is maybe more than I'd want to sell, but trying to match the offset of the $hitty individual stock I bought a year ago and I have about $60k in that account anyway. With some of this excess, it would give me some cash cushion, avoids selling iBonds amazeballs rate before summer, and I would potentially reinvest some of this extra into kid's 529 and/or Roth IRA contribution in early 2023.

Thoughts on this?

[ixtap]

1) $8.5k OOP max is actually pretty good. For ACA and, we would be paying a whole heck of a lot to get that.

2) You can use your HSA, no old medical bills required.

3) Your I bonds can't have that high of a rate through the summer. Late Spring at best. April, if I am mathing right tonight.

4) The vacation cash out is going to be your highest tax option. You would be paying your ordinary income tax to keep cash in ibonds. Without knowing your rate, hard to tell if that is a good deal.

4) Have you asked about a payment plan?

[Abe]

Would highly recommend asking for a payment plan. Most hospitals expect to go this route with a big bill.

[HPstache]

I would avoid selling the investments.  As mentioned, could you ask for a payment plan and pay over the next year or two?  Maybe you could open up a new CC with a no-interest 1st year introductory rate and juicy cash bonus?   

[sonofsven]

I would avoid selling the investments.  As mentioned, could you ask for a payment plan and pay over the next year or two?  Maybe you could open up a new CC with a no-interest 1st year introductory rate and juicy cash bonus?

I have a medical bill coming up and that is my plan. I just opened a new BofA card with a $500 bonus on $5k spend, 0% interest for nine billing cycles.
Look at all your options on Doctor of Credit if you want to go this route. I saw cards with a $750 bonus on $7,500 spend; that would defray the cost some.
I also plan on going in and trying to negotiate with them as soon as I get the bill, it's worked before. "I'm a poor carpenter, have pity".
I'll make sure to limp.

[pdxvandal]

Thanks for the great input. Definitely leaning toward not selling VTSAX (or very little of it) and the vacation cash out would get eaten up by taxes for sure. I might revise that to a much smaller vacation cash out (I can only do it once per year in December), that might net me $1k-$2k instead. I like the payment plan potential option as well as looking into CC 0% bonus-cash offers. I'll be sliding under the 5/24 rule in about 3-4 weeks anyway if there's a juicy Chase card.

My iBond stops accruing the high interest rate in March, but if I sold it then, would claw back three months of that interest. If I wait until June/July, I'd get the full term of the 9.62% rate ... at least how I figured it. I have enough in my HSA but most of it is parked in investments and trying to not touch that either (up to $2k cash balance I still might use however).

[Sibley]

How much cash flow do you have available each month for this bill?

Use that on a payment plan.

[pdxvandal]

Cash flow is fairly tight, as I dump about 50% of my earnings into pre-tax investments, so not a lot left over. I have a seasonal side hustle that will net me about $500 - $750 per month from January-April that will help. And I learned I have to cash out at least some vacation otherwise I'll lose some on my work anniversary, so I'll have to collect at least $2k from that and pay some federal/local taxes. I can make all this work, just going to have to be a little organized. I'm fortunate to have options and a solid 'stache to work with.

How much cash flow do you have available each month for this bill?

Use that on a payment plan.

[fuzzy math]

Open a credit card with a ~15 month 0% APR? I just did it yesterday because my most recent APR special from opening a card last year is finally running out

[secondcor521]

Frequently hospitals will offer a large discount for prompt payment.  Call the billing office and ask.

And this may be obvious, but it is usually wise to wait for the hospital bill to run through insurance completely.  The insurance company may pay some, some might get written off if the hospital was in-network, and maybe some other benefits.

Once you get the "post insurance processing" bill, the amount might be lower.  At that point, you can call and ask about a prompt payment discount.

[Dicey]

Open a credit card with a ~15 month 0% APR? I just did it yesterday because my most recent APR special from opening a card last year is finally running out

Ooh, glad you did that. I was going to ask about that on the other thread. Glad it worked out to do that.

[fuzzy math]

Open a credit card with a ~15 month 0% APR? I just did it yesterday because my most recent APR special from opening a card last year is finally running out

Ooh, glad you did that. I was going to ask about that on the other thread. Glad it worked out to do that.

I think you have me confused with someone else! I just do it for fun to float some costs here and there. I don't think I've ever posted about a situation that required me to do it.

[kite]

Another vote for payment plan. 

Call them, tell them you can afford to make equal payments for 24 months at 0% interest. And then just send $360 each month. If they sell the debt to a collection agency, they won’t get anything close to what you’ll be paying them, so you’re giving them quite an incentive to work with you. 
Start with that, keeping the HSA balance for the next health emergency and keep building up the HSA to more than cover your deductible.   

If they won’t take your deal, offer them $1800 from the HSA and then $300/month until it’s paid.

No need to get another credit card.     

[Dicey]

Open a credit card with a ~15 month 0% APR? I just did it yesterday because my most recent APR special from opening a card last year is finally running out

Ooh, glad you did that. I was going to ask about that on the other thread. Glad it worked out to do that.

I think you have me confused with someone else! I just do it for fun to float some costs here and there. I don't think I've ever posted about a situation that required me to do it.

Now I'll be scratching my head until I figure out who it was. I'll let you know if I do.

[lentil]

Frequently hospitals will offer a large discount for prompt payment.  Call the billing office and ask.

Came here to say the same thing. The last time I had a set of substantial hospital bills (and did not have insurance), I called for each one and asked if there were advantages to paying it off immediately. I was offered about 30-40% off on each bill without having to haggle. They billed separately for labs, radiology, and treatment, so even if you can't pay the entire thing off up-front, it might be worth figuring out which pieces you can sweep up quickly that way.

[Finances_With_Purpose]

Try Step Zero: wait until it clears insurance, then call the hospital and work something out with them.  They know that most people don't have $10k on hand, so don't act like you do.

Ask (1): what sort of deal they can give you, and (2) what deal they can give you if you pay cash. 

You'll either get a nice payment plan, most likely, and maybe one without any interest.  Or you'll get a hell of a discount.  They would be dumb not to do one or the other, and I have yet to find a hospital that won't if you just call and ask. 

I had one that was for a few thousand once a baby was born, but I wanted to invest even though the money clearly wasn't a problem (we had anticipated it), so I just asked and they wouldn't give me a discount but they put it on three years at 0% interest with inflation running at 5+%.  So that's what I did.  I think it's all paid now.

My point is: call and negotiate.  They want to get paid, so they'll work with you.  Act like you don't have cash.  Then ask what they'll give you if you pay in full with cash.  Do whichever is best for you. 

Hospitals will often give good discounts to get paid right now (before you get underwater), even if you already have insurance.