Have Medical Debt? Be Proactive

Going to the emergency room or having an unexpected illness can be expensive. And just like any other bill, you need to pay your medical bills.

Doctors and hospitals usually do not report debts to credit reporting agencies, but that doesn’t mean if you have unpaid medical bills you’re off the hook. Why? Because typically what happens is that they will turn over your bill to a collection agency that will report your medical debt. And that will negatively impact your credit score.

If you have medical debt, what if you could be proactive so that you don’t get turned over to a collection agency and your credit score doesn’t take a hit? Steps you can take include:

1. Review your bills. Gather up all of your bills and insurance explanation of benefits (EOB) forms and review them for duplicate billing, unauthorized charges, and errors. Make sure your insurance company has paid for all covered expenses and that your medical provider has accounted for their payments. Contact your medical provider or insurance company with any questions.
2. Negotiate your medical costs. The best time to negotiate your medical costs is before treatment, but you can always ask your medical provider to adjust your bill after the fact. Good to know: Hospitals and doctors’ offices may bill you at maximum rates, especially if you don’t have insurance. Ask if they can adjust your rates down to what an insurance company or Medicare would pay.
3. See if you qualify for an income-driven hardship plan. Some hospitals and medical providers make accommodations for patients with low incomes and high levels of debt. If this type of assistance is available, they may forgive a portion of your debt and divide the remaining balance into smaller, more manageable payments.
4. Look for financial assistance or charity care programs. Similarly, you can ask your medical care provider if it has a financial assistance policy or charity care program for people with low incomes. Nonprofit hospitals are required to have these plans in place; some for-profit hospitals have them as well. If you qualify, they may forgive part of your debt or erase it altogether. Also, search for local charity organizations that help low-income consumers with medical debt.
5. Consider a payment plan. You may be able to work out a payment plan directly with your medical provider, possibly even with low or no interest. Just be sure to get your repayment agreement in writing.
6. Use medical credit cards. Medical credit cards—available online and through some doctors’ offices—commonly offer 0% APR financing for six, 12, 18 or 24 months. They’re only to be used for medical expenses and not all medical providers accept them. If you can repay your balance before the introductory rate expires, medical cards can be a money-saving alternative to regular credit cards. Just make sure you don’t agree to transfer your balance to a medical credit card without reviewing your account and negotiating with your provider first. Once you put your charges on a medical credit card, your provider will consider the issue closed and your balance will become regular credit card debt.
7. Consider a medical bill advocate. A medical bill advocate can help you wade through the sea of information, file appeals with your insurance company and negotiate with your medical provider to lower your debt and create a workable payment plan. A professional advocate probably isn’t practical if your debt is a few hundred dollars, but for larger bills the cost savings even after paying an advocate can be substantial. Get referrals and check references.