How Can I Get Out of Medical Debt?

doctor handing out medical bill paper to patient

Managing medical debt can seem like a monumental challenge. These expenses are often unplanned, and can be sizable even with help from your insurance.

Still, managing your medical debt is possible—even while also juggling a full lineup of ordinary expenses. Unpaid medical debt can lead to collections and damage to your credit. There are ways to minimize debt, pay it off and avoid negative impacts, but you'll need a strategy and a systematic approach to get the best outcome.

7 Tips for Paying Off Medical Debt and Avoiding Collections

If you're facing medical bills that will be difficult to pay, your first objective is to keep your debt out of collections while you work to understand your charges, negotiate with your medical provider and figure out the best way to pay off your debt. Most hospitals and medical providers would rather work with you to help you find a way to pay than send your bill to collections.

Wondering where to start? Here are seven tips for tackling your medical debt and staying out of collections:

  1. Review your bills. Gather up all of your bills and insurance explanation of benefits (EOB) forms and review them for duplicate billing, unauthorized charges and errors. Make sure your insurance company has paid for all covered expenses and that your medical provider has accounted for their payments. Contact your medical provider or insurance company with any questions.
  2. Negotiate your medical costs. The best time to negotiate your medical costs is before treatment, but you can always ask your medical provider to adjust your bill after the fact. Good to know: Hospitals and doctors' offices may bill you at maximum rates, especially if you don't have insurance. Ask if they can adjust your rates down to what an insurance company or Medicare would pay.
  3. See if you qualify for an income-driven hardship plan. Some hospitals and medical providers make accommodations for patients with low incomes and high levels of debt. If this type of assistance is available, they may forgive a portion of your debt and divide the remaining balance into smaller, more manageable payments.
  4. Look for financial assistance or charity care programs. Similarly, you can ask your medical care provider if it has a financial assistance policy or charity care program for people with low incomes. Nonprofit hospitals are required to have these plans in place; some for-profit hospitals have them as well. If you qualify, they may forgive part of your debt or erase it altogether. Also, search for local charity organizations that help low-income consumers with medical debt.
  5. Consider a payment plan. You may be able to work out a payment plan directly with your medical provider, possibly even with low or no interest. Just be sure to get your repayment agreement in writing.
  6. Use medical credit cards. Medical credit cards—available online and through some doctors' offices—commonly offer 0% APR financing for six, 12, 18 or 24 months. They're only to be used for medical expenses and not all medical providers accept them. If you can repay your balance before the introductory rate expires, medical cards can be a money-saving alternative to regular credit cards. Just make sure you don't agree to transfer your balance to a medical credit card without reviewing your account and negotiating with your provider first. Once you put your charges on a medical credit card, your provider will consider the issue closed and your balance will become regular credit card debt.
  7. Consider a medical bill advocate. A medical bill advocate can help you wade through the sea of information, file appeals with your insurance company and negotiate with your medical provider to lower your debt and create a workable payment plan. A professional advocate probably isn't practical if your debt is a few hundred dollars, but for larger bills the cost savings even after paying an advocate can be substantial. Get referrals and check references.

How to Deal With Medical Debt Already in Collections

Your best defense is to engage with your provider early—before they send your account into collections. If a collection agency has already contacted you regarding your medical debt, follow this basic advice on dealing with collections:

  • Verify: A collection agency is required to send you a written explanation of your bill within five days of your requesting it. Consider following the steps above to make sure your bill is accurate and up to date on insurance payments. This step should also help you avoid scammers by ensuring your bill is legitimate.
  • Dispute: If you find errors in your billing or feel that you've been sent to collections in error, you can dispute the collections or contact your medical provider and/or insurance company to discuss the issue.
  • Negotiate: Collection agencies can work with you on repayment plans and may be willing to accept a reduced payout.
  • Resolve: Although you want to reach a resolution with collections as quickly as possible, don't pay more than you owe or incur high-interest debt that will be difficult to repay. Take the time you need.

What Not to Do When Paying Off Medical Debt

Don't avoid or ignore medical bills. You'll get the best possible arrangement by working proactively with your medical provider.

Don't agree to terms you can't afford. If your medical debt payments are going to make it impossible for you to cover your other expenses—including your mortgage, auto loan and credit card debt—you may put your financial health and credit at risk. Make sure your payoff plan is sustainable.

Don't rush to convert medical debt into high-interest credit card debt. Not only are you likely to pay double-digit interest on your balance, but you will lose your opportunity to negotiate a lower bill or a low- to no-interest payment plan. Once you and your medical provider have settled on what you owe—and you still need to secure financing—consider a medical credit card or personal loan.

Will Having Medical Bills on My Credit Report Affect My Score?

Unpaid medical bills won't affect your credit score unless they go to collections. And if they are reported to collections, all three credit reporting agencies (Experian, TransUnion and Equifax) won't add unpaid medical debt in collections to your credit report unless it's more than 365 days past due and the initial reported collection account balance is $500 or more. This should give you time to dispute billing, negotiate your balance and work out a payment plan without damaging your credit.

Unpaid medical collections debt that does end up on your credit report remains there for seven years from the date of the original delinquency. Paid medical debt in collections won't appear on your credit report at all.

Moving Forward After Medical Debt

Working through medical debt is a major challenge. Throughout this experience, monitoring your credit score and credit report can help you understand the impact medical debt may have on your credit as you work proactively to stay out of collections, maintain your best possible credit and manage your debt until it's finally paid.