Unpaid medical bills — whether the result of a billing error, surprise out-of-network fee or COVID-19 diagnosis — burden millions of Americans.
Medical debts in the U.S. total around $140 billion, according to 2021 estimates from Stanford University economist Neale Mahoney. And researchers suspect medical debt tied to COVID-19 treatment or related job loss is also having a significant effect on families’ debt load, credit scores and budgets.
There are, however, options for families and individuals struggling with medical bills. Free patient advocates, financial assistance programs and negotiation strategies can help you manage your debt.
Here’s what to know if you have unpaid medical bills:
— Take preemptive steps when possible.
— Understand what happens when medical bills go unpaid.
— Understand how medical bills affect your credit.
— Check your medical bills for errors.
— Negotiate medical bills.
— Get help paying the medical bills.
— Consider filing for bankruptcy for medical bills.
— Know what to expect from medical bills during COVID.
Read on for more information about each strategy for tackling medical bills.
Take Preemptive Steps When Possible
To avoid accumulating further medical debt, there are a few steps you can take before receiving a potentially costly treatment to avoid any surprises.
Adria Gross, founder and CEO of MedWise Insurance Advocacy and MedWise Billing Inc., says patients should discuss price details in advance.
“If someone quotes you an amount of what it’s going to cost you, get it in writing,” Gross says. “They turn around and might charge you three times what they said it would cost you. A lot of times you go in for a surgery, you’re going to have an anesthesiologist, and they may be out of network. Make sure you discuss this.”
Understand What Happens When Medical Bills Go Unpaid
When medical bills go unpaid, your doctor’s office or hospital may make multiple attempts to contact you regarding the balance due.
According to Amy Loftsgordon, foreclosure, collections and debt management editor at Nolo, a publisher of do-it-yourself legal books and software, your debt will be sold to a medical collections agency that will attempt to recoup the debt if debt goes unpaid for around 60 to 120 days. At this point, you can expect to receive calls, texts, emails and letters from the debt collectors and you may have the opportunity to negotiate your debt payment.
If you continue to ignore medical debt, it may ultimately hurt your credit score and result in a lawsuit against you. But remember, you do have rights in these situations: Collections agencies can’t harass you, threaten to arrest or deport you, or call you in the middle of the night.
Understand How Medical Bills Affect Your Credit
Unpaid medical debt can significantly hurt your credit score. But beginning July 1, the major credit reporting bureaus — Equifax, Experian and TransUnion — will implement a few major changes to how medical debt affects your credit score.
First, paid medical debt will be automatically removed from consumers’ credit scores. Second, the current waiting period of 180 days before unpaid medical debt is added to credit reports will increase to one year. And finally, starting in 2023, if your unpaid medical debt is $500 or less, it won’t hurt your credit score.
“So, once all of these policy changes go into effect, unpaid medical debt in collection will only hurt your credit if one year passes, you owe over $500, and you don’t pay it,” Loftsgordon says. “The credit bureaus might potentially increase the $500 threshold. That’s something to keep an eye on.”
Check Your Medical Bills for Errors
If you are surprised by a medical bill or suspect your medical bill is the result of an error, start by contacting your doctor directly. Procedures are often miscoded, Gross says, resulting in incorrect bills that can be costly.
“The first thing you’re going to do is call the doctor,” she says. “The number on the bill is very often an outside billing company, and they’re not going to do anything for you because they are paid a percentage and want to get their money. Go right to the provider and discuss it.”
You have the right to view an itemized bill and to audit it for any unnecessary charges. Be on the lookout for erroneous hospital fees and double billing mistakes.
Negotiate Medical Bills
Your medical bill may be negotiable before and after it goes to collections. Medical providers may be willing to accept a lower amount paid in a lump sum or may offer a discount if you make a large down payment, then pay the remaining balance over time.
Hospitals and medical providers may be particularly willing to offer a discount for uninsured patients.
Get Help Paying the Medical Bills
Seeking out a patient advocate is a good way to start getting help with medical bills.
The Patient Advocate Foundation is a nonprofit that offers case management and educational resources. To take advantage of free case management, patients must be diagnosed with a chronic, life threatening and debilitating disease.
This support may include help appealing health insurance denials, help navigating Medicaid, Medicare and low-cost health care and medicine programs, as well as support in paying for things like food, rent, utilities and transportation.
“Appeals and denials can get very technical, but if you have good guidance, 40% of cases that are appealed are overturned in favor of the patient,” says Caitlin Donovan, senior director at the Patient Advocate Foundation. “It’s a process worth going through.”
There are also private patient advocacy and medical bill management companies that offer their services in exchange for a fee.
Hospitals themselves may also offer financial assistance to qualified low-income patients who can’t repay their medical bills, so check with your hospital and consider applying for financial assistance even if you think you may not be qualified.
Consider Filing for Bankruptcy for Medical Bills
In some cases, filing for bankruptcy for medical bills may be your best option to get this debt discharged, but weigh this decision carefully. Bankruptcies may remain on your FICO credit report for up to a decade and make it difficult for you to borrow in the future. Consult a bankruptcy attorney before going down this path.
Know What to Expect From Medical Bills During COVID
In early 2020, many health insurance companies waived copays, deductibles and other costs for COVID-19 patients, but many of the relief options offered early in the pandemic have stopped. As a result, many people have incurred coronavirus-related medical debt — with researchers estimating hospitalized COVID-19 patients without waivers could face out-of-pocket bills of about $3,800 for those with private insurance, and $1,500 for those with Medicare Advantage plans.
These ongoing medical costs and debt related to the pandemic pushed credit bureaus to make the changes taking effect this summer, Loftsgordon says, that would help limit the impact of COVID-related debts on individuals’ credit scores.
“Research shows that because medical debts are often the result of an emergency or an unexpected health situation, like COVID, medical debts aren’t necessarily a good indicator of someone’s ability to repay other debts,” Loftsgordon says.
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