Health Care Credit Cards: A Healthy Choice?

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Health care credit cards put a pretty face on the price of plastic surgery and other elective medical procedures – but they come with risks, and they aren't your only option.

Americans spent more than $10 billion on more than 13 million plastic surgeries last year, the American Society of Plastic Surgeons [PDF] says.

But unless a procedure is “medically necessary” typical health insurance won’t pay. A nose job that fixes a breathing problem? Sure. But one that just makes you look better? Nope. And to put a little salt in that wound, most cosmetic surgery isn’t tax-deductible either.

So how do people come up with the money for breast implants, tummy tucks, cosmetic dental work, and face lifts? One popular solution is a line of credit specifically for procedures like these. Stacy talked with oral surgeon Arun Garg about how he helps his patients work out financing through this kind of program: Hear what he said in the video below, and read on for more details of how it works – and why it might not be for you.

As Stacy said in the video above, if you get a $10,000 cosmetic procedure that’s financed through a specialty health care credit facility, the doctor may be receiving $9,000 the next day, while the company that’s offering the credit will get $10,000 over time – typically two years.

This is good to know, because if the doctor is willing to accept $9,000, you should be able to get that much discount for paying cash. But if you’re tempted to use this type of health care credit – known as health care credit cards, even though you may not actually receive any plastic – read on.

Beware of health care credit cards

Companies like Chase Health Advance or CareCredit that provide these types of specialty loans are quick to point out the benefits:

  • Instant decision, potentially allowing for same-day procedures
  • No down payment
  • No or low interest

Sounds good: But credit is all about the fine print. With CareCredit, Chase Health Advance, and other credit providers,  the “no interest” applies only for a promotional period, usually ranging from 1-2 years. And if you don’t completely pay for the procedure within the promotional period, you could be paying rates of up to 30 percent retroactively to include the entire loan. In Chase’s language:

Interest will be charged to your account from the purchase date if the balance is not paid in full within the promotional period (12, 18 or 24) months, you make a late payment or you are otherwise in default.

So this option is suitable only for people who can comfortably afford to pay the debt within the allotted time period.  It’s appealing to a demographic that wants to feel good about themselves without feeling bad about the price. But some state attorneys general see these companies as predatory.

New York went after CareCredit directly last year, alleging “fast-talking sales pitches and deceit,” as well as kickbacks to providers. From their press release:

The investigation was based in part on hundreds of consumer complaints received by the Attorney General’s Office. Consumers reported that health care providers promised that the credit card had “no interest,” when it often carried retroactive interest of over 25 percent if not paid in full during a promotional period. Consumers were also unknowingly charged up front for services they never received, and their attempts to obtain refunds were often thwarted or ignored. Meanwhile, CareCredit pays the health care providers in-full within 48 hours of the charge.

Minnesota also put out a consumer alert on health care credit cards. From their alert:

Before being tempted by a zero-interest offer, be absolutely sure that you can pay the balance in full during the interest-free period and that you can make all your monthly payments in full and on time. If you can’t, you may end up being responsible to pay off your health care bills at double-digit rates that you cannot afford and may also be responsible for hefty late fees.

So these financing plans are great for providers, who get their money right away even if they haven’t performed the full service yet. But maybe not so great for consumers – miss a beat, and you may pay dearly.  And if the  provider closes shop or you get cold feet? There have been cases where consumers had trouble getting refunds.

If all this doesn’t scare you, compare several health care credit plans online. But make sure you understand all the terms and conditions before you sign up. This is a case where you really want to read the fine print.

A better idea might be to ask your doctor about other payment plans. If you can afford at least a down payment, medical professionals may be willing to work with you on a repayment plan, and they’re probably more forgiving than the corporate finance giants on late payments.

And the best idea?  Save up and pay in real dollars. Cash is still king, and might allow you to negotiate a discount.

Stacy Johnson

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