Managing Medical Bills

The research shows that around four in ten adults in the US are living with debt from medical or dental bills, with nearly half owing at least $2,500 and one in eight owing $10,000 or more.

If you’re struggling to manage medical bills, here are six tips to help you prioritize payments, budget smartly, and get your healthcare expenses paid off.

1. Call Your Healthcare Provider (Immediately!)

Many people don’t know that medical bills can usually be negotiated. Call your healthcare provider as soon as possible and ask to speak with their billing department. Do this before unpaid medical bills have time to negatively impact your credit score! The sooner you can start negotiations, the better. A billing department should be able to check over your bill for costly errors; and even better, many billing managers are authorized to offer significant discounts to patients who call and ask. Start the negotiations high, by requesting 50-80% off your bill. The worst they can say is no!

2. Pay What You Can Now

Medical billing departments may offer a steep discount to patients who agree to pay a percentage of their healthcare bill immediately. If you are financially able to cover 30% of your expenses, in order to have the rest of the bill erased, this could be a good move. A credit card or personal loan may be helpful to make this up-front payment, if you don’t have an emergency savings account to dip into. Just make sure you’re choosing a credit card or loan with good rates from a reputable provider—avoid payday loans, which are quick to get but charge sky-high interest rates.

3. Get on an Installment Plan

Your medical provider may offer a payment plan option that spreads out your bill across multiple months or years, so that you can pay your bill in installments without seeing a negative impact on your credit score. Ask about installment plan options and be sure to read the fine print. You’ll want to know if any interest will be charged and how much. Depending on the plan, it could make more sense financially to pay your bill with a credit card or personal loan, particularly if you have a card with an interest-free introductory period or you are receiving cashback rewards on the card.

4. Find a Financial Assistance Program

Hospitals are actually required by law to have a Financial Assistance Policy for patients who need help covering their medical bills. If your healthcare provider didn’t give you a copy of this policy, ask for it. You will likely need to fill out an application to share information about your tax history, current salary, rent or mortgage payment, other debt and so on. There are also state-run financial assistance programs for patients, including the Health Safety Net in Massachusetts which can help qualifying low-income patients cover medical hardship expenses and some forms of medical debt.

5. Know Your Rights

One unfortunate side effect of medical debt is that it may negatively affect your credit score, making it more difficult to qualify for a mortgage or good rates on a loan or credit card. However, the good news is that in 2022, the federal government introduced new measures to reduce the impact of medical debt on consumers. Now, medical debt in collections should not appear on your credit report until a full year has passed, and medical debts under $500 don’t appear on your report at all. However, unpaid medical debt can still be assigned to a debt collection agency—so you could see wages garnished or even be taken to court. Therefore, it’s still important to get your debt settled as soon as possible.

6. Prepare for Next Time

The most successful way to handle medical debt is to avoid those bills in the first place. Easier said than done, but one actionable step to take for the future is to make sure you’re on the best possible health insurance plan. MassHealth has a wealth of online resources to help individuals and families understand what low-cost or free healthcare coverage they may be entitled to receive. On the other hand, if you’re on a workplace insurance plan that’s still leaving you with high out-of-pocket costs, speak with an HR representative about your options. Some employers offer alternative cost-sharing plans for workers facing particular healthcare challenges for which the standard policy isn’t the best choice.