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The three major U.S. credit bureaus (Equifax, Experian and TransUnion) have made changes related to medical debt: Paid-off medical collections no longer appear on credit reports. Unpaid medical collections with a starting balance of less than $500 are also excluded; larger unpaid medical collections do not appear until one year from when they were incurred.
Paying off medical debt isn’t as clear-cut as resolving other forms of debt, such as a loan or credit card. There’s generally more room to negotiate the terms of repayment — and maybe even to reduce the amount you owe. And you may have additional recourse conferred by the No Surprises Act on medical billing.
To start, look over your medical bill and compare it with your explanation of benefits, if you have insurance. Figure out what you’re expected to pay, but don't make the mistake of taking your bill at face value: You can always try to negotiate the total cost first.
When working with your provider, be upfront about what you can pay. If you don’t have insurance, you’ll likely be charged more than someone who does. Knowing there’s a price disparity can give you leverage.
“That can be useful for negotiation when you actually have to pay the bill,” says Chi Chi Wu, staff attorney at the National Consumer Law Center. “Tell them you’ll pay what BlueCross or Medicaid would pay.”
1. Set up a payment plan
Many medical providers, including physicians, dentists and hospitals, can work out a no- or low-interest payment plan for your medical bills. This is one of the simplest and most common ways to resolve a bill you can’t afford in one payment.
The minimum amount you can pay on your payment plan will depend on your bill amount and the terms you negotiate. You generally break the bill into multiple equal payments over a few months until the total is covered. Ask if there are billing charges or any other fees associated with the payment plan, so you can assess the affordability.
2. Apply for a medical credit card
Providers may also offer to help you apply for medical credit cards. While medical credit cards often have an interest-free period of six to 12 months, you can be hit with a deferred interest rate that can make your debt significantly more expensive if you don’t pay off the full amount within that period. Another risk attached to credit cards is that missing payments or paying late can have a negative impact on your credit score.
3. Consider other credit options
If you don’t opt for a medical credit card to help you chip away at your medical debt, you may be able to explore some other credit options. Be sure to shop around to compare rates, fees and repayment terms:
Personal loans: A medical loan for healthcare expenses can help you consolidate medical expenses or pay for emergency or planned procedures.
Getting a personal loan to help you pay your medical bills may be best after you’ve exhausted other options, such as a payment plan or medical credit card, but it also comes with risks of additional interest, fees and negative credit score impact if you miss payments. Loan amounts range from $1,000 to $100,000.
0% interest credit card: This could be a good option if you aren’t eligible for a payment plan or medical credit card. You’ll need good to excellent credit to qualify, though. Be sure to pay off your balance before the promotional interest period ends and an interest rate kicks in.
Dedicate the card only to medical bills if you do go this route. Otherwise it’ll be harder to keep records of the expenses for tax deductions or a medical savings account.
4. Hire a medical bill advocate
If you've had an extended stay in the hospital or an intensive procedure, you’re probably facing a mountain of medical bills.
You can hire a medical bill advocate to negotiate your medical debt on your behalf. Advocates are experts in medical billing who know how to read health care bills and understand common costs for procedures. They can spot potential errors or overcharging and help you reduce the amount you owe.
Groups such as Medical Billing Advocates of America can connect you with an advocate. Be careful when selecting a billing advocate because there are also predators out there who call themselves advocates but in reality steal your money or identity. Make sure you know who you are talking to and how they work before sharing any of your information. Make sure any fees charged by a medical bill advocate would be outweighed by the savings before signing up for a plan.
5. See if you qualify for an income-driven hardship plan
If you have low income and high medical bills, you may be eligible for an income-driven hardship plan.
Similar to a standard payment plan, an income-driven hardship plan can break up the total amount you owe into more manageable, regular payments or even forgive the debt altogether. Talk with your provider to see if it offers such a plan; all nonprofit hospitals offer some form of charity care. You may have to apply for Medicaid before being eligible.
6. Try negotiating costs on your own
If you have medical bills in collections you may be able to negotiate down the cost of your medical bills on your own.
For medical bills in collections, know that debt collectors generally buy debts for pennies on the dollar. That gives you some good leverage to negotiate to pay less than owed. Also, comb through your medical bills and spot any charges that seem wrong or too high, then be persistent in following up with customer service representatives.
You may have a choice between a lump sum and a payment plan. Make sure you can afford what you agree to do.
Summary of medical debt payoff options
Things to consider
You may be tempted to jump at a quick fix for your medical debt — or to ignore it entirely. But doing so could cost you more in interest and may put your credit scores at risk. Taking a proactive approach to paying off your medical bills can help you avoid delinquent medical debt on your credit report.