As a last resort, your credit cards can provide a lifeline to recovery
Rob Goebel, Lana Kotioukova/CreditCards.com
While U.S. health insurance must cover substance abuse treatment, it’s common for patients and their families to turn to credit cards to pay out-of-pocket costs, additional care beyond what is covered or even the entire treatment bill if they prefer to skirt insurance for privacy reasons or if their plan doesn’t cover treatment at the facility of their choice. Plastic can be a convenient, quick way to get lifesaving care.
When Roger Palsma, who was a dairy farmer in Alberta, Canada, went to rehab in 2011 for addiction to prescription pain pills, he paid $14,500 for a month at a private residential treatment facility. He put the entire amount on a credit card because his health insurance didn’t cover treatment at his chosen facility. “It was the only option I had,” he says.
When he relapsed the following year and needed another month of treatment for $19,000, he took out a bank loan to pay for rehab and consolidate his credit card debt.
After Palsma got clean, he was able to pay off his debt within six months, partly because he was no longer sinking thousands of dollars a month into alcohol, marijuana and Oxycontin, a narcotic pain reliever he first got hooked on after his doctor prescribed it for severe back pain and migraines. The cost of rehab was worth it, even with interest, Palsma says.
“I’m happy I used a credit card,” he says.
The steep cost of rehab can strain budgets
The price tag for rehab depends on the type and length of treatment needed, and on insurance coverage. The total can range from a few hundred dollars in copays for a program fully covered by insurance to as much as $90,000 if you pay out of pocket for a month at a luxury rehab center that offers ocean views, massages and gourmet meals. For longer or repeat stays, the cost multiplies based on how long you stay or how many times you go.
However, there are much cheaper options, including state-funded facilities and free or low-cost faith-based rehab centers. Also, some private facilities offer price breaks or free treatment for patients without insurance who can’t afford a costly rehab stay.
There are different types of treatment, and the intensity level affects the cost, says Harold Jonas, a licensed substance abuse therapist in Delray Beach, Florida, who has opened and managed transitional recovery housing, which provides a structured place to live after treatment. Generally, costs start out highest at the beginning of treatment then diminish over the course of recovery as the patient moves from more expensive residential treatment to cheaper outpatient care, he says.
Some patients start treatment by going through detoxification, or “detox,” which is a medically supervised withdrawal that may be required for certain drugs or alcohol. Each case is different, and an assessment will determine whether detox is needed. Detox is the most intensive form of treatment, with 24-hour supervision, and can cost as much as $2,500 a day for seven days or longer, Jonas says. The bill for detox could easily reach $20,000 or more.
Know that there are state-funded programs available that can provide financial assistance or free treatment, depending on whether the patient qualifies. The U.S. Department of Health and Human Services’ Substance Abuse and Mental Health Services Administration publishes a directory of state agencies for substance abuse services.
After detox, a patient might stay a month or longer at a residential treatment facility, getting individual and group therapy, nutritional counseling, relapse prevention education and possibly doing wellness activities, such as yoga. The costs vary, from bare-bones facilities that may cost a little over $10,000 a month to well-known luxury centers that can set you back almost $100,000 a month, Jonas says. After completing residential treatment, a patient may continue with outpatient care and pay an hourly or daily rate for counseling.
There are many situations in which the patient or a family might have to foot all or a large chunk of the bill. The patient may not have insurance – for example, if they lost a job due to substance abuse, says Todd Crandell, a licensed chemical dependency counselor. Crandell is a former addict who founded Racing for Recovery, a nonprofit organization dedicated to helping people overcome addiction.
“Sometimes people see behavioral health treatment as more optional than medical treatment, but it’s really not.
In other cases, a patient may have insurance through an HMO that doesn’t cover treatment at the patient’s chosen facility, says Lyle Fried, CEO of The Shores Treatment and Recovery in Port St. Lucie, Florida. Or, insurance may cover only seven days of treatment when the patient needs a month. “The insurance company has a certain number of days it will authorize,” Jonas says.
In fact, the out-of-pocket costs of rehab can send some families scrambling to come up with funds. For example, Kent S. (who asked that his last name be withheld for privacy reasons) insisted his now ex-wife go to rehab after he found her passed out one afternoon near the couple’s baby daughter with two empty wine bottles nearby.
The couple, who lived in Orange County, California, at the time, dove into credit card debt to pay for two stints of rehab. They put $6,000, the total not covered by insurance, on a credit card for her first stay at a residential center. They paid $12,000, also with plastic, for her second stay. “There was a large gap between insurance coverage and the full cost,” the now ex-husband says.
In many cases, patients and their families would not be able to fund rehab without plastic. That’s partly because patients who have been spending their money on alcohol and drugs may have little cash in the bank, Jonas says.
“Credit cards are really critical to the industry,” Jonas says.
Should you pay for rehab on a credit card?
If you or a loved one needs treatment, you may want to make sure you have a credit card with plenty of available credit at the ready.
It’s common to check in to a rehab facility after hours when insurance benefits can’t immediately be verified, Jonas says. In that scenario, the rehab facility likely will require a credit card to pre-authorize before check-in.
Also, if your have an insurance policy with a high deductible you haven’t met, you could end up paying thousands of dollars out of pocket. For example, one young man who sought treatment at The Shores had a policy with a $17,500 deductible, Fried says. Treatment centers will almost always require payment upfront because they know they may not be able to collect later, says Ryan Potter, clinical director for Ambrosia Treatment Centers. Unless you’ve got a healthy savings account, this can mean pulling out your credit card.
If you have time to strategize, you may be able to save money and pay down your balance faster by applying for a credit card with a 0 percent interest deal on purchases.
If you don’t have time to apply for a new card, you could get 0 percent balance transfer card after the fact, if your credit is good enough to be approved. However, you’d probably have to pay a balance transfer fee of about 3 percent, which would be added to the amount of the balance you are moving over to the new card.
The treatment facility also may be willing to offer a payment plan in which the total cost gets divided up with an agreed upon amount charged to your credit card at regular intervals, Fried says. Depending on your financial situation, spreading out charges may allow you to pay your bill in full each month to avoid interest.
When you’re focused on getting treatment now, it can be tempting to just hand over a card. But first ask questions of the treatment center, Jonas recommends. Ask for the total cost, when billing starts, when a new day begins for billing purposes, whether medications cost extra and if there are any additional expenses. Also request to see a sample invoice.
“You need to see exactly what you’re signing up for,” he says.
Alternate ways to finance rehab
If you can’t or don’t want to use a credit card to pay for drug or alcohol treatment, you may have other options. Here are four alternatives to consider:
- Financial help offered by treatment centers. A treatment center may offer financial assistance, says Fried. For example, his facility offers a limited number of both full and partial scholarships, he says. “However, I wouldn’t bank on that,” he says, adding there’s a high demand for assistance. There are affordable state-funded treatment centers, and some centers charge patients based on sliding scales. You can call the help line run by the federal Substance Abuse and Mental Health Services Administration to get a referral to a treatment center that meets your needs.
- Medical loans specifically designed for rehab. Some lenders offer loans designed specifically to pay for drug and alcohol treatment. For example, My Treatment Lender offers loans for rehab through enrolled treatment centers. However, lenders geared toward financing rehab sometimes require a large payment upfront and interest rates can reach 25 percent or higher, Fried says.
- Personal loans. You may be able to get a better interest rate on a personal loan from a bank than on a credit card. For example, Lightstream, a division of SunTrust bank, offers loans with rates that vary based on the reason you’re taking the loan. Interest rates for medical loans vary from 5.99 to 13.34 percent.
- Tapping a retirement fund. Kent S., who used a credit card to pay for his ex-wife’s first and second stays in residential treatment, says his ex-wife’s parents ultimately cashed in a 401(k) to send their daughter to the Betty Ford Center in California, for $50,000. It’s not uncommon to tap a retirement fund to pay for rehab, says Potter, who says treatment for addiction is as necessary as treatment for cancer. “Sometimes people see behavioral health treatment as more optional than medical treatment, but it’s really not,” he says.