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Medical bills represent a major financial challenge for many families. You can’t always prevent or foresee medical bills, even if you have insurance. By understanding how to check your medical bills for possible errors, you may be able to avoid being overcharged and making unnecessary payments.

How Common Are Medical Billing Errors?

It’s difficult to know what a medical procedure will cost before it’s performed. So, without being sure of the cost, it’s also difficult to know if there is an error on your medical bill. It doesn’t help that the language used on medical bills is not easily understood. It can be hard to spot mistakes when you aren’t clear about what you’re looking for.

The Centers for Medicare and Medicaid Services last year found a 7.46% improper billing rate for Medicare providers last year, which accounted for $31.46 billion in overpayments. And according to a survey conducted by the Kaiser Family Foundation (KFF), 53% of adults who have health care debt — and 43% of all adults — say they’ve received a medical bill they believe contained an error.

With medical bills so complicated and medical errors so prevalent, it’s no wonder that the amount of medical debt in the U.S. is so high. According to KFF, in June 2022 an estimated 17% of Americans had medical debt in collections. Medical debt is the largest source of debt in collections and has increased to $140 billion since 2009.

What Are Some Common Medical Billing Errors?

When medical billing inaccuracies emerge, they can either be purposeful or genuinely accidental. Either way, there are some frequent errors you may want to keep an eye out for.

Was the Bill Sent to Your Insurance Company?

If you have insurance, making sure your provider submitted a timely claim to the insurance company can be a good first step to take. Occasionally, providers may neglect to send the bill to your insurance company at all and charge you for the entire amount.

Your claim could also be denied if the provider didn’t have the right insurance information for you — even if the ID is off by just one digit. You’re already paying an insurance premium, so paying for the entire procedure out-of-pocket could boost your overall medical costs.

Were You Charged for Services You Didn’t Receive?

You may have to ask for an itemized list of all the charges in your bill, but verifying that you are only being billed for services or treatments that you actually received may be wise.

You may also want to confirm that the quantities are also correct — so you’re not being billed for two MRI scans when you only got one. The itemized bill should include prices, so checking that no extra zeros were added by mistake may be a good step in this process.

Was the Wrong Billing Code Used?

If your insurer denies coverage for a procedure or medication, you may be able to identify the correct billing code and request that the provider refile the claim. If you have questions about the codes used, checking with the medical provider and insurer may save you some research time.

One type of billing code error is known as upcoding. This is when the provider bills for a longer session than was provided (for example, being billed for a 60-minute session when you were only seen for 15 minutes). Another common error is known as unbundling, which refers to using codes for each component part of a procedure rather than a single code that covers them all.

Appealing an Insurance Denial

If you find an error during your hospital bill review, you may be able to file an appeal with your insurer if the charge was denied and you were billed for it. Appeal instructions can usually be found on the explanation of benefits received from your insurance company. Documentation to back up your appeal, such as medical records, can often help strengthen your case. The Patient Advocate Foundation offers a detailed guide to the insurance appeal process , including a sample letter.

There is usually a time limit to submit an appeal to an insurer, which can range from just 10 days to 180 days, depending on the insurer. Insurers may provide a decision within 60 days. If you disagree with the decision, you can ask for an independent review — your insurer should provide you with information on how to do this.

If your appeals aren’t successful, you may wish to turn to one of several advocacy groups. For example, the Patient Advocate Foundation offers one-on-one assistance at no charge, and its website also lists organizations that provide help for people with specific conditions. People with Medicare can access free counseling through the State Health Insurance Assistance Program.

If you’re still stuck, hiring a medical billing advocate to represent you may be helpful. These professionals typically charge an hourly rate or take a percentage of the money they save you.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

What Are Some Options for Paying Off Medical Bills?

Even if you find errors in your medical bills and are able to resolve them, chances are this won’t eliminate what you owe entirely. Here are some ways you can approach paying off medical debt:

Negotiating a Reduced Bill or Payment Plan

Even if your bills don’t include any mistakes, they aren’t necessarily set in stone. If you’re having trouble making a payment, calling your provider’s billing department and explaining your situation may be the best first step to take.

Some may be willing to negotiate your medical bills, possibly lowering your fees if you make the payment in cash or in a lump sum.

You may be able to gain additional leverage by asserting, politely and accurately, that the provider charged an unfair rate, bolstered by research on average prices in your area and what Medicare allows for the service.

Even if you can’t get your payment reduced, you may be able to extend the due date. Many providers and hospitals will work with you to set up an affordable payment plan, sometimes without charging interest.

Budgeting for the Unexpected

Medical bills can pack an unexpected punch to an already tight budget. If you’ve already used some of the strategies listed above to reduce what you owe, it might be necessary to reduce expenses or increase income while you pay medical bills.

Taking a look at current spending is a good place to start. Determine whether there is nonessential spending that could be put toward what is owed.

If there is absolutely no wiggle room at all, you might consider increasing your income by taking on a side hustle or asking for a raise. Once you find a way to include medical payments into your budget, using a spending tracker could be a helpful way to make sure you have the funds available each month.

Using a Credit Card

Paying medical bills with a credit card is certainly an option. It might be a quick and initially easy option, but it might not be the best. Credit cards typically charge high interest rates, which could make your medical debt larger over time. One solution might be to look for a no-interest credit card.

You’ll also want to create a debt reduction plan so that you can pay the balance in full before the promotional period ends.

Taking Out a Personal Loan

A personal loan can be a smart way to pay off medical debt. This type of loan is typically unsecured, meaning you are not putting your home or any other asset on the line.

A personal loan can be used for many purposes, including paying off medical bills, but typically comes with much lower interest rates than credit cards or payday loans.

Note that you can use a personal loan calculator to see how much interest you could save by using a loan to pay off a credit card.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

Taking time to review medical bills and making sure there are no errors can save time and money in the long run. Understanding medical bills and the insurance appeals process — if that’s a step you have to take — can be confusing, so getting assistance is sometimes helpful.

Keep in mind that even if you’re able to resolve the medical billing error, you may still owe money. There are different strategies for paying off medical debt. You may decide to try negotiating a reduced bill or setting up a payment plan with your provider. You could try removing nonessential items from your budget so you can pay off your bills. A credit card is another option, as is taking out a personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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You may have heard the term “slush fund” used to refer to a business setting aside money for miscellaneous and sometimes shadowy expenses.

However, a personal slush fund can be something quite purposeful and useful. It can serve as a pool of money that you can use for discretionary expenses. It can be an asset to your budget and might keep you from being tempted to dip into your emergency fund when you really shouldn’t.

Here, you’ll learn more about:

•   A slush fund’s definition

•   What a slush fund is for

•   The pros and cons of having a slush fund.

Including Slush Money in the Budget

A slush fund typically describes money set aside for miscellaneous purposes, often fun, discretionary expenses.
The word “slush” was created in the 17th century to describe half-melted snow. By the following century, “slush” was also used to describe the fat from meat that was boiled on a ship for sailors to eat.

When any leftover fat was sold at ports, the proceeds became the crew’s “slush fund.” When a military publication suggested that the money be used to buy books of the men’s choice, the phrase began to take on one of today’s meanings: as extra cash to spend on wants, rather than needs.

In modern business accounting, a slush fund is an account on a general ledger that doesn’t have a designated purpose and so is treated as a reserve of funds.

In its most negative meaning in the business world, a slush fund is kept off a company’s books for nefarious purposes. In the political arena, the term can be used to describe money, perhaps raised secretly, to be used for illegal activities.

When talking about personal finances, however, a slush fund is usually considered fun money: an account with some easily accessible cash you can use versus using your credit card or dipping into other funds.

Including Slush Money in the Budget

So do you need a slush fund? It may make sense to have one.
First, it can help people to not overspend on wants. If someone uses (or has at least heard of) the 50/30/20 rule of budgeting, the slush money can be what goes into the 30% category.

For those who haven’t heard of this budgeting strategy, here’s an overview.

A person takes their after-tax income and divides it into three buckets:

•   50% to needs: This comprises rent or mortgage payments, car payments, groceries, insurance, student loan payments, minimum credit card payments, and so forth.

•   30% to wants: From eating out to buying a piece of jewelry or tickets to a game or concert, this is the discretionary spending category.

•   20% to savings: From emergency savings account to retirement account contributions, this money is for future spending, including but also going beyond rainy-day needs.

Here’s another reason why some people may want a slush fund: They are part of a couple and have a joint account for bill-paying and other practical purposes. Each partner may also want to have a slush account of their own, though. Those individual accounts can be used for your own personal spending (yoga classes, iced lattes, clothing, etc.) without your partner being privy to your purchases.

Pros and Cons of Slush Funds

Slush funds have their pros and cons. First, consider the upsides:

•   Easily accessible

•   Allows for discretionary spending

•   Helps you avoid using high-interest credit cards

•   May help reduce money stress.

As for downsides, consider:

•   Could encourage you to overspend

•   Could incur banking fees on an additional account

•   Funds might be better used to pay down debt or to save

•   Money might grow more or faster if saved or invested.

Here is this information in chart form:

Slush Funds vs. Emergency Funds

You may wonder how a slush fund and emergency funds differ, as both are pools of money kept in reserve.

Consider this typical distinction:

•   A slush fund is usually a smaller amount of excess cash, perhaps similar to a cash cushion, that’s kept for discretionary spending, such as concert tickets, a last-minute weekend getaway, or other purchases.

•   An emergency is typically an account with three to six months’ worth of basic living expenses. It’s meant to be tapped when a true emergency crops up, such as paying bills during a period of job loss or covering an unexpected medical, dental, or car-repair bill.

Prioritizing What Matters

The way people organize how their money is spent is at the heart of budgeting (whether using the 50/30/20 or other budgeting method).

When their savings and spending are understood and tracked, people can adjust their budgets for even more effective prioritization.

How to set money goals? A review of your budget might indicate, for instance, that paying down high-interest credit card debt (and then paying it off) can free up money for more enjoyable pursuits.

Some people may focus on paying off student loan debt more quickly, again to free up cash in the monthly budget, while still others may prioritize building up their emergency savings account.

Each situation is unique. This trifecta might be a good place to start: a budget that meets your needs, helps you reach financial goals, and includes some room for discretionary spending.

Reaching Savings Goals

If you want to create a slush fund just for fun, good for you. Enjoying hard-earned money may be a nice counterbalance to responsible bill-paying. To help you manage your cash to reach your money goals, here is a six-step process to consider:

1.    Identify goals: In this case, the goal is to set aside slush money, but priorities come into play. If, for example, an emergency fund is at the ready and retirement contributions are regularly being made, it may be time to focus on the slush fund. If one or both still need some attention, the slush fund may be third on the list for savings. Again, each situation is unique.

2.    Select a monthly deposit amount for the account: Perhaps there’s a specific goal (like creating a travel fund) or an amount can comfortably be budgeted. For a specific goal, such as a trip, it can help to figure out the time frame available to save and then divide the cost of a trip by the number of months available to save for it. That’s the monthly deposit amount required to reach the goal. For the second, saving as much as is reasonable to enjoy in the future can be key.

3.    Write down goals: Writing down what you want to achieve can boost the chances of reaching those goals. These jottings can be an ongoing reminder of what you want to achieve, keeping it front of mind. And because slush money is used for pleasurable purposes, it can be fun to write about plans.

4.    Monitor progress: By tracking daily spending habits and long-term savings habits, the process can be further refined. Some people like to rely on pen and paper, while others use an Excel spreadsheet or Google Docs. Still others use an app to track spending and set monthly budget targets. At the risk of sounding like a broken record (do people use that phrase anymore?), do what works best.

5.    Celebrate successes: For longer-term goals, savings fatigue can set it. To combat that, celebrate even the smallest of successes. Able to save $50 more this week than expected? Buy yourself a little treat (a quick massage or perhaps a bubble tea) to reward yourself for a job well done.

6.    Automate the process: Make the savings process easier by automating your finances. A certain dollar amount out of each paycheck can automatically be deposited into the savings account, or an automatic transfer can be set up from a checking account.

Recommended: How to Save Money From Your Salary

4 Tips to Help You Manage Your Slush Fund(s)

Here are a few ideas for accruing a slush fund:

1.    Be consistent. If you make a plan to save $10 or $25 or more per paycheck for a slush fund, keep up with it.

2.    Stash extra cash. If a financial windfall comes your way — a bonus, a tax refund — you may want to see how much can be earmarked as slush money.

3.    Bring in more money. Consider the benefits of a side hustle. Think of what hobbies can be turned into income earners and consider putting those extra dollars into the fund.

4.    Earn interest. Think about the best place to keep your slush account. You might choose to keep it in your usual checking account, a separate checking account, or a savings account. Shop around for the best interest rate so your money can earn money. Online banks vs. traditional banks tend to offer higher rates.

Opening a Savings Account for Your Slush Fund

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What is a slush fund used for?

Typically, a slush fund is used for discretionary spending on fun purchases. It is used for the wants, not the needs, in life.

How much should you have in a slush fund?

There is not a set amount you should have in a slush fund, unlike the case with an emergency fund. Rather, you should have enough to cover unplanned purchases or expenses, such as joining a yoga studio, buying a new suitcase, or going away for the weekend, instead of charging those costs.

What are the differences between a slush fund and a petty cash fund?

In the business world, a petty cash fund is kept for incidentals, such as catering a breakfast for a client, running out to get an office supply you ran out of, and the like. A slush fund is for other miscellaneous expenses that can crop up. Perhaps you’re an entrepreneur and have to hop on a plane to pitch a new client: The price of the ticket might come out of your slush fund.

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