What Is the Minimum Monthly Payment on Medical Bills?

There isn’t a set monthly payment for medical debt. The minimum monthly payment for your medical bills will depend on your agreement with your healthcare provider. Keeping up with the minimum payment and paying your balance on time prevents your medical bills from being sent to debt collection.

In this post, we go over how to handle your medical debt, your rights as a consumer and what payment options you have.

When does medical debt go to collections?

Beginning July 1, 2022, you will have one year before medical debt appears on your credit report. This new law is meant to give you more time to repay your debt before it impacts your credit.^[1]

But medical debt, if unpaid for several months, can still go to collections. Here’s how it happens^[2]:

1. Your medical provider bills your insurance.
2. Your provider bills you for the amount you owe after insurance.
3. Your provider will try to collect on what you owe.
4. Your medical debt may eventually be sold to collections if you leave the bill unpaid for several months.
5. Medical debt may appear on your credit report. Effective July 1, 2022, unpaid medical collection debt does not appear on credit reports for a year, giving you additional time to pay it off before it impacts your credit. In the first half of 2023, the credit bureaus won’t include medical collection debt under $500 on credit reports.^[1]

How to handle medical debt before it goes to collections

If you’re struggling with medical debt or worried about what to do with a large medical bill, there are a few steps you can take to get a handle on it before it’s sent to a debt collection agency.

1. If the treatment is non-emergent, shop around for providers and talk to your insurance

If you’ve suffered a medical emergency or sudden illness, you might not have had the option to shop around and compare medical costs prior to getting treatment. But in the case of non-emergent medical issues, you can take some time to look for providers that are in-network and consider the cost of your deductible or copays if you have health insurance.

For people who are uninsured, you can request a good faith estimate from potential health care providers, which estimates the anticipated hospital bill charges for the service you’ll be getting so that you have an idea, prior to billing, what charges to expect. If you’re charged more than $400 above the good faith estimate, you may be able to dispute the charge.^[3]

2. Check if you qualify for financial assistance

If you meet certain eligibility requirements, including where you live, your income and your medical expenses, you may qualify for financial assistance for your medical debt.^[4]

Some financial assistance options you may be eligible for include:

• Charity care, especially at nonprofit hospitals, by filling out the application and qualifying
• Consumer Assistance Programs provided by your state
• Centers for Medicare and Medicaid Services
• State agencies

3. Request an itemized bill and verify accuracy

An itemized list from your medical provider allows you to compare the specific services you received to what you’re being billed for as well as the amounts charged for each. That way, you can verify if what you were charged is accurate based on your insurance — for example, if they accidentally charged you an out-of-network fee when you were in-network — or good faith estimate.^[5]

You can compare this list to your explanation of benefits (EOB) from your insurer. An explanation of benefits explains all services provided, including charges, insurance coverage or non-coverage, how much insurance covered and what you owe. You should receive it from your insurance company around when you receive your medical bill.

Comparing these documents can help you identify errors, understand your bill better, and double-check the accuracy of in-network and out-of-network costs based on insurance.^[6]

4. Contact the provider or insurance to dispute inaccuracies

If you find inaccuracies on your bill, such as an out-of-network charge for a service you know was in-network, you should contact your health insurance company as well as the provider to be sure the charges were billed properly.

In the event of a dispute, you have rights to both an internal review — one where your insurance company reconsiders the bill — and an external review — one where a third party decides if your insurance company’s decision should be upheld. So, even if you’re unable to find support through your insurance company, escalating your claim may help it be decided in your favor.^[5]

5. Try to negotiate your bill down

You may be able to negotiate your medical bill down with your health care provider directly. Call your medical provider, like a doctor’s office, hospital or medical lab, and ask if there are any ways to lower the bill, like discounts or relief program options. Explain the financial hardship you are under and see what options they have that might provide you with some debt relief.^[5]

6. Set up a payment plan

If you can’t afford the bill and can’t negotiate it down, you can try discussing payment plan options with your medical provider. You can discuss your options for a variety of payment arrangements, including interest-free plans or income-driven hardship plans. You can also ask whether they know of resources that offer financial assistance on prescription drugs or other medical expenses to show you want to avoid collections. They may be willing to work with you.^[5]

Know your legal rights as a patient

Some federal laws are designed to support patients, either by protecting them from or reducing their existing medical debt. Two of the main ones are:

• The Affordable Care Act: This act was put into place to address the fact that many consumers need help paying for medical expenses. It helps make healthcare more understandable and affordable, with reforms like expanding Medicaid. Patients are entitled to several rights under this act, including the right to choose their own individual health insurance from the marketplace instead of what their employer offers, the right to appeal health plan decisions, the right to get health insurance coverage for pre-existing conditions and the right to free preventative care, among others.^[7]
• The No Surprises Act: This act protects consumers against surprise medical bills. A surprise medical bill is a bill for out-of-network services you received that you didn’t realize were out of network, like in the case of emergency treatment. Patients are protected from surprise bills from a variety of providers, including hospitals and doctor’s offices, and doctors and health plans are required to provide comprehensive cost information upfront.^[8]

Who can help you navigate medical debt?

Understanding the laws and options regarding medical debt can be confusing and overwhelming to tackle on your own. If you’re struggling with medical debt and need some extra support, here are some resources to consider:

• Help understanding medical debt: ^[4] The Consumer Financial Protection Bureau (CFPB) is a government agency designed to help make sure consumers are treated fairly. They offer many informative resources on how to handle a variety of personal finance issues, including how to navigate medical debt.
• Help paying medical debt: ^[5] Many states offer financial and legal assistance for consumers facing medical debt or disputes with their insurance companies, providing external support for their needs.
• Help managing collections: ^[9] A credit counselor helps you manage your credit better, including strategies like debt repayment.

Be careful using these payment methods

The payment method you use to pay off your medical debt may also create more problems down the line. Here are some common payment methods to use carefully, and the pros and cons of each:

• Credit card: While a credit card can be a convenient way to pay off a bill quickly, high interest rates on an outstanding balance can be costly and cause you to ultimately pay more than you owed in the first place. If you use this payment method, you might want to try negotiating your bill down first because you could lose the ability to negotiate if you begin making payments with a credit card.^[5]
• Medical credit card: Similar to a standard credit card, a medical credit card is also subject to interest and fees, and can also affect your ability to negotiate if you use it to make payments before talking to your provider.^[5]
• Personal loan: Personal loans may have less interest than credit cards, but taking out a loan to pay off medical debt isn’t always the best choice. Debt from a personal loan is viewed differently than medical debt by most credit scoring models. Once you’ve put the debt on a personal loan, it’s no longer considered medical debt. Keep in mind credit reporting agencies will not report unpaid medical debt for up to a year, which gives you ample time to explore other options to pay it with the provider, without possibly incurring high interest charges.^[10]

What to do if your medical debt is in collections

Having a bill go to collections can add anxiety to your debt repayment efforts. If you still find yourself unable to pay the debt you owe, debt collection agencies may be able to sue you, and if successful, garnish your wages from your paycheck or bank account to recoup the debt.

However, some debt collectors may be willing to negotiate a settlement with you so that you can make paying off the debt a priority. Although you may be able to settle for less than what you owe, if debt collectors won’t reduce the amount, you may be able to arrange a payment plan to spread your payments out in installments.^[11]

If you successfully negotiate different terms or a different amount for the debt you owe, make sure you get the agreement in writing, signed by the debt collection agency before you make any payments, and keep it in your records.^[11]

There is a statute of limitations for collections debt which differs by state, so once your debt is old enough to be considered time-barred, the debt collector may not be able to sue you for it. The negative mark of having an unpaid debt, however, may remain on your credit report for up to seven years.^[11] However, medical debt is considered differently on more recent scoring models, so a medical debt paid in full may not count against you.

How does medical debt impact your credit score?

Beginning in the first half of 2023, medical bills less than $500 will not be reported on consumer credit reports. Also, paid medical debt will no longer be reported, and unpaid medical debt will only be reported as collections after one year rather than six months.^[1]

Bankruptcy as a last resort

Bankruptcy should always be considered a very last resort. If you are considering bankruptcy, find a bankruptcy attorney who can walk you through these bankruptcy options and help you consider your best option:

• Chapter 7: Chapter 7 bankruptcy may be used by people who can’t make regular, monthly payments towards their debts. A trustee sells non-exempt assets and uses the money to repay the creditors at least some of what you owe. The remaining eligible unsecured debt, such as from credit cards or medical bills, is discharged. Chapter 7 bankruptcy stays on your credit report for up to 10 years.
• Chapter 13: An alternative to Chapter 7, Chapter 13 bankruptcy is for individuals who have regular income and can afford to make payments towards a debt repayment plan. Also called a wage earner’s plan, it allows you to extend your debt repayment over three to five years, and protects your debt from going to collections. It does stay on your credit report and may negatively impact your credit score, but typically falls off faster than a Chapter 7 bankruptcy would, remaining on your credit report for just seven years.
  ^[12]

For any bankruptcy, the length of time this negative item remains on your credit reports begins on the date you filed for the bankruptcy, and all accounts associated with your bankruptcy that are included should also be removed 7 to 10 years after filing. How it affects your credit score depends on your unique credit history. Although as long as it’s on your report, it will be factored into your credit score, the longer it’s on your report, the less negative impact it will have on your score.^[12]

No matter where you are with your medical debt, Self is here to help you. If you’re struggling with your finances or credit, Self has the tools and information you can use to understand how best to handle debt and make financial decisions that help your credit-building efforts.

Sources

1. Equifax. “Can Medical Debt Impact Credit Scores,” https://www.equifax.com/personal/education/credit/score/can-medical-debt-impact-credit-scores/. Accessed October 21, 2022.
2. CNBC. “Medical Debt On Your Credit Report May Soon Disappear — Here’s Why,” https://www.cnbc.com/select/medical-debt-credit-report/. Accessed October 21, 2022.
3. Centers for Medicare & Medicaid Services. “Understanding costs in advance,” https://www.cms.gov/nosurprises/consumers/understanding-costs-in-advance. Accessed October 21, 2022.
4. Consumer Financial Protection Bureau. “Is there financial help for my medical bills?” https://www.consumerfinance.gov/ask-cfpb/is-there-financial-help-for-my-medical-bills-en-2124/. Accessed October 21, 2022.
5. Consumer Financial Protection Bureau. “What should I do if I can’t pay a medical bill?” https://www.consumerfinance.gov/ask-cfpb/what-should-i-do-if-i-cant-pay-a-medical-bill-en-2125/. Accessed October 21, 2022.
6. University of Utah Health. “EOB/Explanation of Benefits Meaning and Example Statement,” https://healthcare.utah.edu/bill/eob-explanation-benefits.php. Accessed October 21, 2022.
7. Health and Human Services. “About the Affordable Care Act,” https://www.hhs.gov/healthcare/about-the-aca/index.html. Accessed January 26, 2023.
8. Consumer Financial Protection Bureau. “What is a ‘surprise medical bill’ and what should I know about the No Surprises Act?” https://www.consumerfinance.gov/ask-cfpb/what-is-a-surprise-medical-bill-and-what-should-i-know-about-the-no-surprises-act-en-2123/. Accessed October 21, 2022.
9. Federal Trade Commission Consumer Advice. “Choosing a Credit Counselor,” https://consumer.ftc.gov/articles/choosing-credit-counselor. Accessed October 21, 2022.
10. Experian. “Can I Get a Loan to Pay Off Medical Debt?” https://www.experian.com/blogs/ask-experian/can-i-get-a-loan-to-pay-off-medical-debt/. Accessed October 21, 2022.
11. Federal Trade Commission Consumer Advice. “Debt Collection FAQs,” https://consumer.ftc.gov/articles/debt-collection-faqs#collection. Accessed October 21, 2022.
12. MyFICO®. “What Are the Different Types of Bankruptcy and How Is Each Considered by My FICO® Score?” https://www.myfico.com/credit-education/faq/negative-reasons/bankruptcy-types. Accessed November 8, 2022.

About the author

Ana Gonzalez-Ribeiro, MBA, AFC® is an Accredited Financial Counselor® and a Bilingual Personal Finance Writer and Educator dedicated to helping populations that need financial literacy and counseling. Her informative articles have been published in various news outlets and websites including Huffington Post, Fidelity, Fox Business News, MSN and Yahoo Finance. She also founded the personal financial and motivational site www.AcetheJourney.com and translated into Spanish the book, Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches Spanish or English personal finance courses on behalf of the W!SE (Working In Support of Education) program has taught workshops for nonprofits in NYC.

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