COVID-19 hospital bills are wiping out savings accounts. Here's how to protect yours

More than 1 in 5 COVID-19 patients said they used up "all or most of their savings" in one month, according to a new study.

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By

Adam Morgan

Adam Morgan

Editorial Director, Personal Finance

Adam Morgan is an editorial director at Policygenius who leads the personal finance team. Previously, he led editorial teams across multiple brands at Red Ventures — including Bankrate, The Simple Dollar, NextAdvisor, Million Mile Secrets, and many others.

Published August 31, 2021|4 min read

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The pandemic has made dramatic changes to the economy since early 2020, from unemployment and lost wages to stimulus payments and student loan pauses. 

But a new study published in the Journal of Hospital Medicine reveals “a devastating and under-reported pandemic consequence,” says the journal’s editor-in-chief, Dr. Samir S. Shah. According to the study, more than 1 in 5 people (23.2%) hospitalized for COVID-19 said they used up “all or most of their savings” within the first month after being discharged from the hospital.

“We were shocked and appalled when we saw how bad it was,” says Dr. Theodore J Iwashyna, one of the study’s lead authors. His team surveyed patients about COVID-19 hospital bills after seeing similar results in previous studies about other respiratory conditions, like pneumonia. “This past work suggested that financial toxicities can prevent people from getting the recovery services they need. We wanted to see if that was happening after COVID-19,” Dr. Iwashyna says.

The study was based on telephone surveys with 253 COVID-19 patients about their first month after being discharged from the hospital. Patients were asked, “Since your COVID-19 hospitalization, how much has your health been a drain on the financial resources of you or your family?” After seeing the results, Dr. Iwashyna says the researchers “are really worried this financial toxicity, [by] preventing full access to recovery services, might worsen long COVID-19.”

Black and Hispanic patients were more than twice as likely than white patients to report losing all or most of their savings, while more than half of all patients (55%) said their hospitalization had been “a drain on the finances of their family,” with 25.4% rating the drain as “moderate, severe, or extreme.”

How to protect your savings from COVID-19 hospital bills

The best step you can take to avoid COVID-19 hospital bills is to get vaccinated, if you haven’t already, since the vaccines make hospitalizations far less likely and less severe. If you’re unable to get a vaccine or wind up in the very small percentage of breakthrough cases that require hospitalization, there are actionable steps you can take to avoid, minimize, or cope with your medical debt.  

“Every COVID-19 patient should get an itemized bill and a copy of their entire medical record from the visit,” says Marshall Allen, author of Never Pay the First Bill: And Other Ways to Fight the Health Care System and Win. “It’s their legal right to have those [records] and they will enable them to check and see whether the charges were accurate and fairly priced.”

For long hospital stays with complex bills, Allen recommends considering a patient advocate. “An experienced advocate will cost a fee, but can help sort through the complexity and save the patient a lot of money. Check out the patient advocate directory at advoconnection.com. My book also lays out the details about how to analyze medical bills and insurance company documents. It is possible for anyone to do it, but it may be more complicated if it was a lengthy stay in the hospital.”

Another tip from Marshall: “If the patient is in an employer-sponsored health plan, make sure and reach out to your company’s insurance broker or advisor. They are a go-between with employers and insurance companies and they can help resolve any problems.”

You can also call the hospital to ask about a payment plan. Paying a few hundred dollars per month instead of thousands in a lump sum can help keep your savings account relatively stable, assuming you can keep depositing some savings into it as you earn income. Just make sure the hospital’s payment plan doesn’t charge interest, otherwise you’ll wind up owing even more than you started with.

As a last resort, you could consider a medical loan or personal loan to pay for the bills in installments over a period of time. But unlike a hospital’s payment plan, these loans will almost always charge interest, with the possible exception of an introductory payment period. The interest rates on loans can be quite high, all the up to 30% APR and higher, depending on factors like your credit score. So before considering a loan, make absolutely sure you’ve exhausted the other possibilities above, that you can afford the added interest payments in due time, and that it’s truly a better alternative than paying a smaller amount immediately.

Image: Getty Images / Portra Images

Editorial Director, Personal Finance

Adam Morgan

Editorial Director, Personal Finance

Adam Morgan is an editorial director at Policygenius who leads the personal finance team. Previously, he led editorial teams across multiple brands at Red Ventures — including Bankrate, The Simple Dollar, NextAdvisor, Million Mile Secrets, and many others.