Table of Contents
Facing a mountain of medical bills can feel incredibly stressful and defeating. You did everything right – got health insurance, chose in-network providers, even tried to live a healthy lifestyle. But one accident or diagnosis later, you’re flooded with expensive medical bills that don’t seem to end.
You’re not alone. Medical debt affects over 100 million Americans. But there are solutions and sources of relief you may not realize are available to you.
In this article, we’ll walk through proactive strategies to deal with unaffordable medical bills, reduce what you owe, and find assistance. You’ll also learn about new laws that help protect your credit from being destroyed by medical debt.
Arm yourself with the knowledge you need to take control of your medical debt. Relief starts here.
Key Takeaways
- Medical debt is more widespread than you may think – it affects people of all ages and income levels when illness strikes.
- Ignoring medical bills can lead to collections calls, credit damage, lawsuits, and wage garnishment. Be proactive.
- Always check your bills thoroughly for errors – overbilling and duplicate charges are common.
- You have power to negotiate costs directly with healthcare providers – they want to help patients.
- Assistance programs, advocates and credit cards can provide medical debt relief if you qualify.
- New laws help minimize damage to your credit score from medical debt.
- With persistence and creativity, you can find an affordable way to resolve medical debt. Don’t lose hope!
Understanding Medical Debt and Its Financial Impact
Let’s start by clearly defining what medical debt is:
Medical debt refers to out-of-pocket healthcare costs that an individual is responsible for paying, but has not yet paid. These costs can include:
- Deductibles and copays for insurance-covered services
- Services not fully or partially covered by your health insurance
- Bills from out-of-network providers
- Unexpected emergency care
- Prescription medications
Even seemingly small copays and prescription costs can quickly snowball, especially with ongoing health issues or hospital visits.
You may think only the uninsured struggle with medical bills, but that is far from the truth. A Kaiser Family Foundation study found 1 in 5 insured Americans has trouble paying off medical bills and debt.
Out-of-pocket maximums on plans reset each year. So just when you’ve finally paid off last year’s expenses, new health issues can easily arise that again eat through your savings. It’s an endless cycle of paying for health costs.
When medical expenses and bills become unmanageable, the consequences can be severe:
- Collection calls from creditors
- Damage to your credit scores – unpaid medical bills can lower scores over 100 points
- Legal action from collectors – lawsuits and wage garnishment
- Debt spiraling into even higher amounts due to penalties and interest
- Difficulty qualifying for loans, credit cards, or adequate housing
- Bankruptcy – medical debt is the #1 cause of personal bankruptcy in the U.S.
As scary as this sounds, you have options. There are ways to reduce, negotiate, and get assistance with unaffordable healthcare costs. The key is being proactive, knowing your rights, and asking for help when you need it.
The next section walks through smart strategies to deal with expensive medical bills and debt.
Strategies to Reduce and Manage Unaffordable Medical Bills
Getting slammed with expensive medical bills does not mean you are powerless or doomed to be buried in debt. You have more options to handle unpayable medical costs than you may realize.
Here are proactive steps to take when medical bills become unmanageable:
Verify Your Bills Are Accurate and All Discounts Applied
It’s shocking how often medical bills contain errors. Duplicate charges, overbilling, and unapplied insurance discounts are common occurrences.
Always carefully review your itemized medical bills and compare them with explanations of benefits from your health insurance:
- Ensure you are not being double-charged for any services or procedures.
- Confirm you only see charges for care you actually received – billing departments can make mistakes.
- Check that any negotiated discounts from your insurer were properly applied to reduce costs.
- If anything looks incorrect or suspicious, contact both your healthcare provider and insurance company to dispute.
Getting billing errors fixed before paying can potentially lower what you owe significantly.
Request an Itemized Bill and Ask About Overcharges
If a medical bill seems excessively high, you have a right to request a full itemized medical bill detailing exactly what each charge is for.
Scrutinize the itemized bill carefully – were you billed the full undiscounted “chargemaster rate” that hospitals charge insurance companies before negotiating lower in-network rates?
Politely ask to only be charged the amount your insurance pays, or the Medicare/Medicaid rate for uninsured patients. Many hospital billing departments will work with you, especially if you are proactive about resolving your debt.
Negotiate Discounts and Payment Plans
Negotiating medical debt directly with your healthcare providers is an excellent way to reduce what you owe.
Explain your financial hardship and ask for:
- Discounts for paying cash upfront – sometimes up to 30% lower than your bill.
- Payment plans lasting 6-12 months with low or no interest.
- Options based on your income, like sliding-scale fees.
Non-profit hospitals are required to offer financial assistance programs for low-income uninsured patients. So if you meet eligibility criteria, you may qualify for significantly reduced, or even forgiven debt.
It always pays to ask. Many providers want to help patients and are willing to work with you. Going straight to a collection agency is actually a last resort for them.
Set Up Realistic Payment Plans You Can Afford
If you cannot pay off your full medical bills at once, setting up a medical debt payment plan is wise. Make sure any payment plan fits within your monthly budget.
When negotiating a payment plan:
- Be realistic about what you can pay each month. Consider your full financial situation.
- Opt for the longest term length you are comfortable with to keep payments low.
- Get all details in writing before starting payments.
- Pay on time each month to protect your credit scores.
- Keep communicating with providers if you need to adjust the plan later.
Payment plans allow you to resolve debt over time without high penalties or interest. They help avoid collections or legal action as long as you stick to the agreed terms.
Apply For Financial Assistance Programs
If a catastrophic diagnosis or medical emergency leaves you with insurmountable medical bills, financial assistance may be available:
Hospital charity care and income-based programs: Most non-profit and some public and private hospitals offer financial assistance and discounted care programs based on your income and expenses. Eligibility criteria varies by hospital. Ask your provider about available options.
Local nonprofits and government agencies: Organizations like the United Way provide emergency medical assistance funds and access to affordable care. Your state or county health department can refer you to low-cost community health clinics as well.
Medicaid: This government healthcare program covers individuals falling under a certain low income threshold. You may qualify for full coverage that helps pay for procedures, hospital visits, prescriptions and more. Visit healthcare.gov to check eligibility.
Crowdfunding: Turning to friends, family, social networks or crowdfunding sites for donations to cover medical costs is an option when all else fails. GoFundMe and YouCaring are reputable fundraising platforms.
Do not let perceived social stigmas stop you from getting assistance you are entitled to and need.
Additional Options for Medical Debt Relief
If trying to negotiate with healthcare providers directly does not sufficiently lower your costs, several other forms of relief exist:
Work With a Medical Billing Advocate
Professional medical billing advocates are experts in navigating healthcare costs and systems. They can audit your medical bills to identify errors, argue for valid reductions, and negotiate payment plans or settlements on your behalf.
A good advocate may be able to significantly reduce your medical debt burden. Fees vary, but advocates usually take a percentage of how much they save you. Groups like the Medical Billing Advocacy of America connect patients to reputable advocates.
Consider Medical Credit Cards or Debt Consolidation
Medical credit cards like CareCredit allow you to pay healthcare bills over time with fixed monthly payments. They generally come with 0% promotional interest for 6-12 months. This can help spread costs out, but make sure you pay off the full balance before interest kicks in.
Debt consolidation loans or balance transfer credit cards are another option to reduce overall interest payments on existing medical debt. Compare options to find the lowest rates and best terms.
Research Nonprofit Debt Relief Resources
Several national nonprofit organizations like RIP Medical Debt and Dollar For work directly with patients to settle medical debt through assistance programs and negotiations with providers.
Visit the Association of Community Organizations for Reform Now (ACORN) website to find charities offering medical debt relief and forgiveness programs. Their relief network can locate help available in your state.
Eligibility requirements vary, so check individual charity websites for details. Any assistance can make a difference.
Understanding Your Rights and Medical Debt Reporting
Unpaid medical debt can harm your credit if not addressed. But positive strides have been made to protect consumers:
How Medical Debt Impacts Your Credit Score
Medical debt that is sent to collections by a provider will appear on your credit report if unpaid. This damages your credit utilization and payment history factors when calculated into your credit scores.
Previously even paid medical debt collections remained on credit reports for up to 7 years. Fortunately, credit bureaus recently announced the following changes regarding medical debt reporting:
- Paid medical collections will no longer appear on credit reports
- Unpaid medical debt under $500 will be excluded from credit reports
- Unpaid medical debt will not appear until 12 months (one year) after being sent to collections, instead of 6 months
These powerful policies help protect credit scores by minimizing damage from medical debt.
The Medical Debt Relief Act and Your Credit Score
Additional medical debt relief for your credit may come in the future if the Medical Debt Relief Act is passed into federal law.
This bill would remove paid or settled medical debt from credit reports and extend the grace period before unpaid medical debt appears to one year. The legislation is currently awaiting committee approval and passage in the U.S. House and Senate.
Awareness is growing around the need to separate unavoidable medical debt from traditional loan or credit debt. Progress is being made.
Create a Plan and Get Support to Address Your Medical Debt
Feeling overwhelmed by medical bills is normal. But avoiding the issue only makes things worse. You must be proactive.
- Gather all your medical bills and account for what you owe total.
- Make a budget to see what is realistically affordable for you.
- Prioritize getting on payment plans, negotiating costs down, and asking about assistance programs.
- If you need help, find a medical billing advocate to negotiate for reduced costs on your behalf.
- Keep meticulous records of all conversations, agreements, and correspondence.
- Consider finding free financial counseling through NFCC.org
Ignoring medical debt leads to collections calls, credit damage, lawsuits, and garnished wages. Don’t let things spiral. You have options for relief and support.
Final Thoughts
Dealing with medical debt is challenging, frustrating, and exhausting. But take hope knowing you have options, rights, and sources of relief. Don’t allow bills to intimidate you.
With persistence, creativity and support, you can negotiate costs down, set up affordable payment plans, find assistance programs, and protect your credit along the way.
Many Americans have found ways to pay off daunting medical debt through a combination of personal budgeting, provider negotiations, assistance programs, credit counseling, and in some cases, bankruptcy.
You have power – don’t be afraid to advocate for yourself. And know there are people willing to help you carry the burden, so you don’t have to go it alone. Relief from medical debt is possible.
Frequently Asked Questions
Does medical debt ever go away if you don’t pay?
Medical debt is like any other debt – it will not just disappear if unpaid. Debt collection agencies may eventually “write off” very old medical debt. But unpaid medical debt typically appears on your credit report for 7 years from the date it goes to collections. The debt can still be pursued through settlements during that time in most states.
Can medical providers turn you away for unpaid medical debt?
No, the Emergency Medical Treatment and Labor Act (EMTALA) prevents hospitals from refusing emergency care due to inability to pay. Once stabilized, however, patients may be discharged if they cannot prove they can pay.
Non-emergency care providers may refuse service due to outstanding debt, but many will still see patients and arrange payment plans.
Is negotiating or settling medical debt yourself a good idea?
Yes, negotiating medical debt directly with your providers is always worth trying first. Explain your financial hardship and ask about any available discounts, reductions, or payment plans. Many hospitals and doctors want to help patients pay what they can afford.
If you aren’t successful handling it alone, hire a professional medical billing advocate to negotiate on your behalf for a fee, usually a percentage of savings. An expert negotiator will have more success reducing your costs.
Are there free government programs that help pay medical bills?
Medicaid provides free or low-cost public health insurance in all states for low-income adults and children who meet eligibility criteria. You can apply and check if you qualify via healthcare.gov. Medicaid helps pay for hospital visits, prescriptions, and other care.
Community health clinics funded by the federal government also offer free preventive care and substantial discounts for treatment to uninsured patients, regardless of ability to pay. Search for clinics via findahealthcenter.hrsa.gov.
Can medical debt collectors take your tax refund?
If medical debt is turned over to the federal Treasury Offset Program, the government can seize your tax refund to pay towards the owed debt. This most often occurs for defaulted student, mortgage, or unemployment debts, but unpaid medical debt balances over $25 submitted by collectors can also trigger tax refund garnishment.
Disclaimer: The information provided in this blog post is for general informational and inspirational purposes only. We’re sharing this information to offer ideas, tips and motivation for starting a business, but this should not be considered professional advice. Starting a business is complex with many moving parts, and what works for one aspiring entrepreneur may not work for another. Before taking any action, please consult with legal, financial, tax and other relevant professionals to determine the best steps to take for your own specific circumstances. The financial estimates, costs, revenues, timelines etc. mentioned in this post are approximate numbers gathered at the time of researching & publishing this post and are subject to change. We do not guarantee any specific financial or other results/outcomes.
