How to negotiate the medical bill maze in search of a better deal

Dear Liz: My husband and I have run into some serious medical bills recently. We have insurance, but one provider is out of network with a huge deductible and low payout, while another claim was flat-out denied. We're looking at around $16,000 in bills, assuming nothing else is denied. What can we do to get these bills lowered?

Answer: Act fast, negotiate hard and don't pay the "sticker price" for healthcare if you can possibly avoid it.

Start by reviewing your bills for errors such as duplicate charges, fees for services you didn't receive and charges that seem excessive. A medical billing advocate may spot more subtle overcharges, such as separate, higher fees for procedures that should have been billed together as one bundle. The National Assn. of Healthcare Advocacy Consultants and the Alliance of Claims Assistance Professionals can offer referrals.

You may be able to resolve the errors with a call to your insurer, but you'll still want to ask how to file a formal appeal so you can challenge the claim denial.

Look for other ways to reduce the bills. Some medical providers have charity programs that may help, and they aren't just for low-income people: Partial relief may be available for those earning up to 400% of the poverty level for their areas.

Even if you don't qualify, don't assume that the numbers on your bills are what you actually have to pay. As you know from previous medical bills, the amounts providers charge bear little resemblance to the amounts they're willing to accept from insurers. Ask to be charged the same amount that the provider would accept from Medicare, or from the largest insurer in its network.

If you can pay your bill all at once, ask for another discount for paying in cash. If you can't pay, ask for a no-interest payment plan. Providers may push you to pay the bill with a credit card, but resist doing so unless you get a significant discount and can pay off the bill quickly.

Retirement account bears close scrutiny

Dear Liz: About five years ago, I transferred a 401(k) account to an IRA with a financial advisor recommended by a friend. I receive monthly statements, but like most people, I am busy and do not study them, which is my fault. The statements are very confusing, even though I am a college graduate with a business degree. I recently realized that the account has not grown at all, even though it's invested in stock mutual funds. The Standard & Poor's 500 has been up about 10% each year on average, so I feel that I should have a much better return. How do I best go about finding out why I am not making any money? Approaching this financial advisor is useless.

Answer: It appears your advisor is worse than useless; he or she is a hazard to your financial health.

A properly diversified retirement portfolio may not grow at exactly the same rate as a stock benchmark such as the S&P 500, but it certainly should have grown significantly in the past five years. It could be that the advisor has been trying to "beat the market" with actively managed funds, which typically fall far short of the mark and do little other than cost investors too much. Or the advisor could be pushing high-cost funds that pay fat commissions and benefit the firm far more than they benefit you.

The Department of Labor recently instituted regulations that should stop many of these shenanigans by requiring advisors giving retirement advice to put their clients' interests ahead of their own. You shouldn't wait for those changes to be implemented, though, because you've already lost enough ground. Transfer your IRA to a low-cost provider such as Vanguard, Fidelity or T. Rowe Price and consider investing in a target-date retirement fund that will take care of asset allocation and rebalancing for you.

Healthcare coverage should be part of retirement planning

Dear Liz: You've been writing about how much to save for retirement, including how much of our incomes we should aim to replace with our savings. Two additional reasons to shoot for a higher replacement rate is the possibility that medical needs will be higher the older one becomes (even with Medicare and a supplemental plan) and the possibility that long-term care will take a huge bite out of savings if one self-insures for this. My wife and I took these into account when we saved as much as we could afford during our working years.

Answer: Many people erroneously believe that Medicare will take care of their healthcare costs in retirement. In reality, Medicare generally pays for about 60% of typical healthcare services, according to the Employee Benefit Research Institute. Fidelity Investments estimates the typical couple at age 65 can expect to spend $245,000 on healthcare throughout retirement. That figure doesn't include the costs of nursing homes or long-term care, which also aren't typically covered by Medicare. Anticipating and saving for these expenses was a smart move on your part.

Liz Weston is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the "Contact" form at asklizweston.com. Distributed by No More Red Inc.