Category: Finance

A truism: health care providers are quick to overcharge, slow to refund.

This week I learned six lessons to help deal with this:

1. Pay as little as you can when you leave the provider. This may not work at a doctor’s office because the bill is cut and dried. But hospitalizations are different. Before you leave the hospital, the friendly hospital extortionist comes by to get as much out of you as she can. Pay the absolute minimum you can possibly pay. It’s better to get a bill later–after the claim with insurance is settled–than it is to overpay and fight for a refund.
2. Don’t pay another cent until the claim is settled. That’s right, until you have the hot little explanation of benefit (EOB) in your hands, don’t pay another cent, except under duress.
3. Only pay what the EOB says you owe. The EOBs should show exactly what the service provider billed your insurance, any discounts, what your insurer paid, and what you owe. On my insurance, what I owe is the sum of the “deductible” and “copay” fields. Sometimes there are also “non-covered charges.” Do not assume you have to pay the non-covered charges. See the next section.
4. Question non-covered charges. Sometimes non-covered charges are billing errors. One of my EOBs for a doctor’s visit had $160 of non-covered charges. It turns out that the doctor mis-coded two items. Had I not caught this, I would have owed my doctor all that money. An example legitimate non-covered charge that you would have to pay could be a hospital room upgrade, such as a private room versus a shared room.
5. Double-check that you actually paid what the EOB says you owe. I printed out every medical payment for the past year and found a corresponding EOB for payment. By double-checking all of this, I have found that I am owed several hundreds of dollars.
6. If you are owed money, be persistent. None of the five medical care providers I have dealt with this year have voluntarily refunded a single cent I am owed. In fact, had I not called them out on it, one provider would have permanently sat on $500 it owes me. (It was a really dumb billing mistake: one line item was entered twice.) Take careful notes on each call, and be prepared to speak to several people before you get everything resolved.

Attention to detail can easily save you a ton of money. I’m on track for recovering a few hundred dollars for 2004.

I reran the numbers on Buying a new car is a poor financial decision assuming 250,000 usable miles. The numbers more dramatically favor used cars:

Year	Current Miles	Value (NADA)	Depreciation from new	Percent of miles “used up”	Relative cost per mile of remaining miles (250000 – current miles)
2004	0 (still on dealer’s lot)	$23,850	0%	0%	43% higher than 2000
2003	15000	$20,300	15%	6%	30% higher than 2000
2002	30000	$16,925	29%	12%	15% higher than 2000
2001	45000	$14,875	38%	18%	9% higher than 2000
2000	60000	$12,650	47%	24%	baseline

Today I thought more about my views of car buying. I came up with the following as a response to someone who suggested that if you’re going to hold on to a car for 10 years, it’s smartest to buy new. In fact, it’s probably smartest to buy used regardless of your time horizon.

According to http://www.bankrate.com/brm/news/auto/20011226a.asp, a typical new car loses 15%-20% of its value each year in the first three years.

Let’s take the case of a Honda Accord LX V6. Based on friends’ experiences and Consumer Reports reliability ratings going back to 1996, I think it’s reasonable to say that this car will go at least 180,000 miles before requiring costly repairs or becoming unacceptably unreliable.

This chart is based on if you purchased the following cars right now:

Year	Current Miles	Value (NADA)	Depreciation from new	Percent of miles “used up”	Relative cost per mile of remaining miles (180000 – current miles)
2004	0 (still on dealer’s lot)	$23,850	0%	0%	27% higher than 2000
2003	15000	$20,300	15%	8%	17% higher than 2000
2002	30000	$16,925	29%	17%	8% higher than 2000
2001	45000	$14,875	38%	25%	5% higher than 2000
2000	60000	$12,650	47%	33%	baseline

It should be noted that Accords are in demand, limiting your ability to negotiate, and don’t depreciate as badly as many other cars.

Notice how much higher you pay per useful mile for the new car than for the 4-year-old car.

Look at this differently: suppose I had $23,800 sitting around. What is the smartest investment: $23,800 all sunk into a car, or $12,650 sunk into a car and investing the remaining $11,000 in something like a child’s college fund, your own retirement, or a charity? Or if I didn’t have the cash laying around, why double my debt just for the new car smell? What does it say about one’s values when he maximizes his deprecation losses (and debt?) at the expense of better choices?

See http://moneycentral.msn.com/content/Savinganddebt/Saveonacar/P37267.asp another perspective.

Cars are depreciating assets, a liability. It makes sense to reduce exposure to losses by not buying new.