Millions of people in the United States are saddled with medical debt, with one in five Americans currently in collections for medical bills. Medical debt can cause financial hardship and emotional and mental distress. It can also negatively impact credit scores, making it more difficult for consumers to achieve financial stability in the future.
If you have unpaid medical debt, you should know there are strategies you can use to manage, reduce, and eliminate it. Here are our best tips for how to get out of medical debt.
Assess Your Medical Debt
To make a plan on how to get out of medical debt, you need to make a full assessment of where you stand. Here’s what you need to do to assess your medical debt:
Gather all bills and documentation
Make sure you have all your paperwork in order. Collect all your medical bills and documentation, including:
- The summary bill from the medical provider with the amount owed.
- The itemized bill from the medical provider that lists every service and all the supplies you received, along with diagnosis codes and billing codes.
- The explanation of benefits (EOB) from your insurance provider that explains what was covered by your health insurance, and what you are responsible for paying.
Review the bills for accuracy
Review your bills for discrepancies that could cost you extra money, with an eye for the following:
- Verify your personal information and insurance information is correct.
- Verify the dates of service to ensure they are correct.
- Review each item on your bill. Look out for duplicate charges and services or supplies you might not have received. Make sure the ICD-10 diagnosis codes (which you can look up here) match the reason you received medical service.
- Check that you weren’t billed for things you brought from home or picked up from the pharmacy yourself.
Check insurance
If you have health insurance, make sure your provider pays the correct amount.
- Ensure the medical bill matches up with the EOB. If there are discrepancies, they must be addressed by your insurance provider.
- If you went to an in-network provider, make sure that is reflected accurately in the EOB.
Get on the phone
If you need to dispute charges or need help understanding your bill, contact the medical provider and ask to speak with the billing department. Ask the medical provider to correct disputed charges, and get the changes explained in writing. If you find possible mistakes in your EOB, contact your insurance provider.
Prioritize bills
If you have multiple medical bills, you can arrange them in order of highest priority to lowest priority. Generally, the older bills should be addressed first, because those are the ones that are most likely to affect your credit the soonest. Alternatively, you may wish to pay the bills that you can more easily afford first to get them out of the way.
Negotiate Medical Bills
You can negotiate your medical bills with the medical provider, but the process can take time. Successful negotiation may depend on your medical provider, your insurance, your financial circumstances, and other factors. Here are some ways to negotiate your bills:
Contact the medical provider
Many medical providers have billing departments that can negotiate bills with patients. Nonprofit hospitals are required to provide free or reduced-cost care to patients who can’t pay. Call the medical provider to start the negotiation process.
Request a payment plan
Some medical providers offer repayment plans with no interest or deferred interest. These plans let you pay your bill off over time with a series of monthly payments.
Ask about financial assistance
Some medical providers have financial assistance policies for patients who can’t afford their bills. They may be able to reduce, or eliminate, your bill based on financial need or if you can agree to pay a reduced lump sum all at once.
Hire a medical billing advocate
Medical billing advocates can help review your bill for discrepancies and negotiate directly with the medical provider. Remember that these services cost money but could be worth the investment if you’re overwhelmed with medical debt.
Seek Financial Aid
There are other ways to seek financial aid for your medical bills:
Government assistance programs
Depending on your income, you may be eligible to receive government assistance. You might qualify for help with your bills through Medicaid, the Children’s Health Insurance Program (CHIP), or state and community medical assistance programs.
Charities and nonprofits
There are national and local nonprofits that provide financial assistance to help with medical debt. Eligibility for assistance may depend on income, financial need, family size, and other factors.
Crowdfunding platforms
Online crowdfunding platforms like GoFundMe allow you to raise funds from friends, family, and even strangers to pay for your medical debt. Keep in mind that many crowdfunding sites take a percentage of the donations contributed to your campaign.
Debt Consolidation Options
Debt consolidation won’t reduce your medical debt but can help make it more manageable in some cases:
Debt consolidation loans
You can take out a personal loan to pay off your medical debt, then pay that loan back off over time with interest. This method can help you consolidate multiple debts into a single loan with monthly payments, but you will owe interest on the loan, costing you more money in the long run.
Low-interest credit card offers
You can open a new credit card with a low introductory interest rate, then use that card to pay your bill and pay the credit card balance off over time. It is important to remember that if you don’t pay the balance off in the introductory interest period, the remaining balance is subject to the card’s regular interest rate.
Financial coaching
Financial coaches – also known as debt coaches and other titles –can work with you and negotiate with your creditors, including debt collectors pursuing payment of medical bills, to help put together a repayment plan. Click here learn more about financial coaching, or get started with a financial coach today.
Medical Debt and Credit Reports
According to the Consumer Financial Protection Bureau, debts under $500 cannot be included on your credit report and won’t affect your credit. Paid medical debts also cannot be reported.
Unpaid medical bills of $500 or over can be reported and could negatively impact your credit score, and medical debt collection can be a stressful experience. Once a medical bill gets sent to collections, you have 365 days to settle it before it can be reported and harm your credit. Once they get reported, they can remain on your credit report for seven years.
If you find a medical debt on your credit report that shouldn’t be there, you can dispute it with the credit bureaus, and contact the medical provider or collections agency, to get it removed. Open a dispute with the credit bureau reporting the information and make sure to include supporting documentation (such as a receipt or bank statement that shows you paid the bill).
💡Learn More: What Happens if You Don’t Pay Medical Bills?
Bankruptcy as a Last Resort
Bankruptcy should be a last-ditch effort to discharge medical debt when you have no other options because it has long-lasting consequences for your credit and finances. However, it can help you eliminate overwhelming debt.
If your only debt is medical bills, bankruptcy may not be the best option. You’re not guaranteed to be approved for bankruptcy, filing costs money, and the process can take a long time. Plus, bankruptcy stays on your credit report for seven to 10 years, depending on the type:
- Chapter 7 bankruptcy involves selling your nonexempt assets to pay off as much debt as possible before the rest is discharged. It appears on your credit report for up to ten years.
- Chapter 13 bankruptcy involves repaying your debts over time with a court-approved three-to-five-year repayment plan. It appears on your credit report for up to seven years.
💡Learn More: Bankruptcy: Everything You Need to Know
Tips for Avoiding Future Medical Debt
The best way to avoid unmanageable medical debt is to prevent it in the first place. But that’s easier said than done — a surprise diagnosis or a single visit to the hospital is enough to put financial pressure on many people. Here are some ways to avoid future medical debt:
- Get health insurance. Health insurance can help you cover the cost of medical expenses. You may qualify for coverage through your employer, purchase a policy from the Health Insurance Marketplace, or qualify for coverage through Medicaid or Medicare.
- Understand your insurance. Make sure you understand your policy, including your coverage, deductibles, out-of-pocket limits, and how in-network vs. out-of-network providers are treated.
- Preventive care. Invest in preventive care, including regular checkups, to avoid serious and costly treatments later.
- Visit in-network providers. When you can, visit in-network providers. Your insurance company has negotiated with these providers to keep costs down.
- Negotiate healthcare costs upfront. When you can, ask for estimated costs in advance and negotiate prices, or shop around.
- Save an emergency fund. Build up an emergency savings fund to cover unexpected medical bills.
FAQs About Medical Debt
Here are some answers to common medical debt questions.
Is medical debt being forgiven?
Medical debt is not currently being forgiven across the board. There are some state, county, and city programs that are buying and forgiving medical debt, and nonprofits like Undue Medical Debt have similar initiatives.
What happens if you don’t pay medical bills in America?
If you don’t pay medical bills, your bill could be sent to collections, which could negatively impact your credit. You could be sued for your debt. If you lose your case, the debt collector could pull funds from your bank account or garnish your wages.
Can medical debt affect your credit?
Unpaid medical debt that is $500 or above can be reported to the credit bureaus after it has spent 365 days in collections. These debts can remain on your credit report and negatively affect your credit score for up to seven years.
How can you negotiate a medical bill?
You may be able to negotiate your medical bill based on financial hardship, ability to pay, and other factors. Start by contacting your medical provider’s billing department to ask about repayment options.
Do unpaid medical bills ever go away?
After seven years, unpaid medical bills will fall off your credit report and no longer affect your credit. After enough time, unpaid bills may no longer be able to be collected under your state’s statute of limitations for debts.
What is a hardship letter for medical bills?
You can send a financial hardship letter to the medical provider or debt collector to explain why you can’t currently afford to pay your debts. The letter may contain details about your financial issues and request an alternative repayment solution.
Bottom Line
Medical debts can negatively impact your finances, credit, and even your mental well-being. To deal with your debt, you can collect all bills and review them for accuracy, attempt to negotiate your bills, seek assistance from third parties, and pursue debt consolidation options. As a last resort, you may even consider bankruptcy.
For guidance on how to get out of medical debt, consider working with a Credit & Debt financial coach to help you deal with medical debts, move toward repayment, and help protect your credit and finances.
