Medical bills — whether the result of a high-deductible health plan, billing errors, out-of-network fees or uncovered expenses — burden millions of American adults.
According to the Commonwealth Fund 2023 Health Care Affordability Survey, 30% of people who have employer health coverage had medical debt, as did 33% percent with marketplace or individual-market plans, 21% with Medicaid and 33% with Medicare. So, if you’re swamped with bills, you’re certainly not alone.
The good news is that there are effective ways to handle those bills. Here’s how to create a financial plan when medical debt seems out of control.
Obtain Estimates Before Accepting Treatment
If you’re already swamped with overwhelming medical debt, the last thing you want is to add to it. Whenever possible, communicate with the provider before you accept the treatment, especially if you go to a doctor, dentist or hospital that does not accept your insurance plan. When those providers are out of network, you may be responsible for the entire bill.
Obtain estimates for your area with online research, so you can shop around.
For example, maybe you need a dental crown. According to Delta Dental estimates tool, if you live in Detroit, the average out-of-network price would be between $1,402 and $1,620, whereas in New York City it would be $2,400 to $3,090.
By understanding what your obligation will be, you can better prepare for the upcoming bill, whether you need to save for it or explore financing options like 0% APR credit cards.
Negotiate Medical Costs
Don’t hesitate to discuss the costs with the provider and attempt to negotiate the medical bill for less than the amount due.
[Read: How to Negotiate Your Medical Bills.]
Adria Gross, founder and CEO of MedWise Insurance Advocacy and MedWise Billing Inc., says that patients should discuss price details in advance, a process that can also help you avoid unexpected extra charges.
“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,” she adds.
Medical providers may be willing to accept a lower amount paid in a lump sum or 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.
Review Medical Bills for Errors
Depending on the provider, you can expect to receive a bill for the service within a few days, but sometimes it can take a few months. Once you get the bill, review it carefully to make sure it’s free of errors. Check for any unnecessary charges, look for erroneous hospital fees and double-check billing mistakes.
If anything seems amiss, immediately contact the health care provider and ask for more information. According to Gross, it is not uncommon for procedures to be miscoded, resulting in incorrect bills that can be costly.
[Related:9 Questions to Ask Before Paying Any Medical Bill]
Be sure you’ are calling the right number to discuss the situation, though.
“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,” Gross says. “Go right to the provider and discuss it.”
Understand What Happens When Medical Bills Go Unpaid
So, what happens if you ignore the correspondence? The billing department will continue to contact you regarding the balance due. The amount you owe will be in the provider’s internal collections department.
If you continue to not pay, the debt may be sold off to a third-party collector, typically one that works with unsatisfied medical bills.
[READ: What Is a Debt Collector, and What Do They Do?]
According to Amy Loftsgordon, an attorney and foreclosure, collections and debt management editor at Nolo, your debt will be sold to a medical collections agency that will attempt to recoup the money if it goes unpaid for around 60 to 120 days. At that point, you can expect to receive calls, texts, emails and letters from the debt collector.
Be aware that many third-party collectors are willing to accept less than the amount due to settle the bill because they purchased the account for a fraction of the price.
If the amount is very high, you may want to contact the company to negotiate a lessor sum. Just be sure to get the agreement in writing.
Know How Medical Bills in Collections Can Affect Your Credit
In the past, even small unpaid medical debts that were purchased by a collector would end up on your credit report. The fact that it went into collections would damage a credit score, even if you paid the debt.
However, because of the No Surprises Act, which went into effect in 2023, the major credit reporting bureaus (Equifax, Experian and TransUnion) made some key changes:
— All paid medical debt will be automatically removed from consumers’ reports.
— Medical debts less than a year old will be removed from consumers’ reports.
— Unpaid medical debt that is $500 or less will not be listed on consumers’ reports.
Check all three credit reports at AnnualCreditReport.com to make sure your reports are reflective of the changes. If they aren’t, file a dispute to have them updated.
Get Professional Assistance
Hospital bills can be particularly high, so many hospitals offer financial assistance to qualified low-income patients who can’t pay their medical bills. Check with the hospital and consider applying for financial assistance even if you think you may not be qualified.
If you can’t pay the bill that and need help with settling it for less than the amount due, you may want to contact a company that will do it for you, for a fee.
There is special help for people diagnosed with a chronic, life-threatening and debilitating disease, too.
The Patient Advocate Foundation is a nonprofit organization that offers case management and educational resources, and offers help appealing health insurance denials, navigating Medicaid, Medicare and low-cost health care and medicine programs. It also provides support paying for necessities 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.”
And now, some local governments are taking steps to erase pressing medical bills by partnering organizations such as RIP Medical Debt.
These nonprofits use private donor funds to purchase and delete peoples’ health care debts. If your income is up to four times the federal poverty level, you may be eligible for relief.
Explore Bankruptcy in Some Circumstances
When medical bills are too high and you have no other option, you may consider filing for Chapter 7 bankruptcy.
If you qualify, you may have those bills as well as other unsecured debts forgiven in court. Weigh this decision very carefully, as the bankruptcy will remain on your credit reports for a total of 10 years from the filing date, and it can dramatically hurt your credit scores.
Contact a nonprofit credit counseling agency approved by the U.S. Department of Justice for bankruptcy counseling services. You’ll receive guidance on your budget and debt. If bankruptcy makes sense, they’ll discuss it as an option and you can make a decision from that point.
In the end, medical debt can be tough to deal with, but with the correct information and the right strategy, you can manage it.
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What to Do When Your Medical Bills Are Out of Control originally appeared on usnews.com
Update 01/30/24: This story was published at an earlier date and has been updated with new information.
