Ways to Pay Medical Bills Through the Government

Most of us are will eventually get sick or injured. For those with insurance, the medical bills can cost hundreds or even thousands of dollars, and for those without insurance, the medical bills usually lead to bankruptcy. Inability to pay medical bills is the number one cause of bankruptcy in the United States. Although government cannot solve every problem, there are many federal resources and subsidies available to those who cannot afford to pay for insurance premiums and medical bills.

COBRA Subsidies

If you received health insurance through your job and lose your job for any reason beside gross misconduct, you are eligible for health insurance through COBRA (Consolidated Omnibus Budget Reconciliation Act) for up to 18 months. With COBRA, you cannot be denied for a pre-existing condition, but you must apply within 60 days of losing your previous insurance.

However, the main problem with COBRA is the cost. While employed, your employer pays half of your premiums. Under COBRA, you pay the full cost, which is usually above $400 per month. For those who cannot afford it, the government enacted a COBRA subsidy program, which pays 65 percent of premium costs. When you apply for COBRA, you will receive an application for the federal subsidy program. You must submit this form and the general application form within 60 days.

Medicaid and State High-Risk Pools

Medicaid is available for people under the age of 18, pregnant women and, in some states, low-income families. Call your state's Social Security Office or contact a social worker to find out how to apply.

If you are an uninsured and do not qualify for Medicaid, apply to a state high-risk pool. State high-risk pools are for those who cannot get individual health insurance due to pre-existing conditions. As of February 2010, 35 states have high-risk pools, which are managed by the individual states. Unlike Medicaid, high-risk pools are not welfare programs since the state pays very little to operate them, and the state does not cover all the premiums. Although high-risk pool premiums are expensive, a few states, such as Missouri and Ohio, subsidize these costs for low-income residents.

Tax Deductions

Self-employed persons can deduct health insurance premium costs that exceed 7.5 percent of their gross adjusted income from their taxes. However, those who could have received coverage through a spouse's employer are ineligible for this premium deduction.

For all citizens, self-employed or not, the IRS allows them to deduct certain medical costs, such as surgery, tests, prescription drugs, dental treatments and doctor visits. If you are unsure how to do this, see a tax professional. Hold on to receipts for all medical and dental bills, since the IRS audits about 2 percent of all individuals.