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.
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.
But medical debt, if unpaid for several months, can still go to collections. Here’s how it happens:
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.
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.
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.
Some financial assistance options you may be eligible for include:
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.
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.
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.
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.
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.
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:
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:
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:
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.
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.
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. However, medical debt is considered differently on more recent scoring models, so a medical debt paid in full may not count against you.
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.
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:
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.
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.
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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