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How to Pay Medical Debt and Avoid Damaging Your Credit

If you're struggling with medical debt, you're not alone. As health care costs continue to rise and income growth fails to keep up, some Americans are left unable to afford their medical bills, even with health insurance. In fact, four in 10 insured people said they had trouble paying medical bills or couldn't afford premiums or out-of-pocket medical costs, according to a 2019 Kaiser Family Foundation survey.

Unpaid medical debt that's sent to collections can leave a negative mark on your credit report for years to come and make it harder to qualify for new credit or loans with favorable terms. But there are steps you can take to avoid this scenario, or to at least minimize its consequences.

If you're unable to pay your medical debt, give these strategies a try.

How to Get Rid of Medical Debt

If you're unable to pay for a medical treatment or need help paying a steep medical bill you've already received, here are a few options to consider.

Ask for a Medical Bill Payment Plan

If you receive a costly medical bill you're not able to pay off in full, ask your medical provider if it would be willing to work with you by putting you on a payment plan. Some providers will agree to this if the alternative is for them to not receive payment at all. Terms are decided on an individual basis, but medical payment plans typically will break your debt into fixed monthly installments.

Some medical providers may offer income-driven repayment plans that use your income to determine the amount of your monthly payment. This helps ensure your monthly payments are something you can actually afford.

If you haven't had treatment yet and are concerned about being able to afford it, you could ask your provider in advance if they can offer you a payment plan.

Look for Financial Assistance or Charity Care Programs

Many nonprofit hospitals and medical providers, as well as some for-profit ones, are willing to provide financial assistance for those with incomes below a certain level. Ask your provider's billing office if they offer any financial assistance options for lower-income households. You can also search online to see if there are any local charitable organizations in your area that work to help low-income consumers with their medical bills.

Negotiate Costs on Your Own

There's always the option to try to negotiate your medical costs. It's best to try to do this before your appointment or procedure, but you can try to do it after the fact. Ask for an itemized bill and make sure there are no unreasonable or duplicate charges. If you received any surprise charges, you can check to see if your state offers any billing protection laws. There are even some paid services out there you can hire to negotiate medical bills on your behalf.

Keep in mind that if you don't have health insurance and are paying out of pocket, you may have a better chance of lowering your bills by negotiating directly with your provider, since they don't have to go through an insurance company and abide by their policies and rates.

What to Do if Your Medical Debt Is Already in Collections

If you're already behind on a medical bill and it has gone into collections, don't ignore it—having an account in collections can take a toll on your credit.

First, make sure the amount they're saying you owe is accurate. It's wise to ask your medical provider or the collections agency if they will negotiate with you. Their goal is to get money back, so they may be willing to accept a lump-sum payment or repayment plan, and sometimes they will agree to let you repay an amount that's less than what you owe.

Another option is to work with a nonprofit credit counseling service. A certified credit counselor can work with you to come up with a debt repayment plan that fits in your budget.

If the amount you're being asked to pay is incorrect, you may need to file a dispute or otherwise sort it out with your medical provider.

How Can Medical Debt Affect Your Credit?

Just like any other bill, a medical bill on its own won't affect your credit negatively. You may also be fine if you've paid your bill a few days late. But medical debt could appear on your credit reports if you don't pay a bill over several weeks or months and your provider sends it to collections.

Each health provider has its own policy and practice for collecting debt, and some may be more generous with others. Most typically wait 90 days before sending your debt to collections, though it could range anywhere from 60 days to 180 days. The collections may be handled internally or handed over to a debt collection agency.

The good news is that the three major credit bureaus (Experian, TransUnion and Equifax) have a 180-day waiting period before any medical debt will appear on your credit report. This grace period gives you some wiggle room and time to correct any errors, pay the bill, negotiate a payment plan, or otherwise resolve the situation before it goes on your report.

If you don't take care of the bill by then and it goes into collections, unpaid medical bills can remain on your credit report for seven years after the original date of delinquency. Since your repayment history makes up the largest part of your credit score, having medical debt in collections can negatively affect your credit report for years.

The exception is if your insurer pays off a medical bill that went into collections; if the credit bureaus have proof from the collections agency that it's been paid, they will remove the collection account on your credit history.

Additionally, if your medical debt has gone into collections, it's advisable to make sure the charges are accurate. If your account has gone into collections by error or you've been charged the wrong amount, you can dispute the medical collections and may be able to have it removed from your credit report.

Keep an Eye on Your Credit

Checking your credit report regularly can help you spot any accounts that you may not realize have gone into collections, especially if they were sent to an old address. If you're able to successfully dispute medical debt in collections, it's also smart to check your credit report to make sure it was removed. Check your credit report for free on Experian and make sure medical debt doesn't weigh down your score.

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