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I Can’t Afford My Medical Bills — Should I Put Them on a Credit Card?

July 1, 2014
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As the leading cause of personal bankruptcy in the United States today, medical bills are causing financial strain on many Americans, especially those who are uninsured. If you’re stuck with some hefty bills, you may wonder what’s the most cost effective and credit-friendly way to pay them off. Here are a few questions about your medical bills you may need answered and options for payment.

What happens if I don’t pay my medical bills on time?

Paid medical bills don’t show up on your credit report, and hospitals won’t report unpaid bills to the credit agencies. However, if medical bills aren’t paid after a certain period of time, they may be turned over to a collection agency. Accounts in collections will hurt your credit. Unfortunately, I can’t tell you exactly when the medical billing department will turn your unpaid bills over to collections. This will vary by hospital and region.

I have insurance but it wasn’t billed, what should I do?

Most doctor’s offices and hospitals will bill your insurance as a courtesy to you. However, in the end, the responsibility for getting your bill handled by your insurance provider first falls on your shoulders. If your medical expenses weren’t billed through your insurance, call up your insurance company to straighten out the situation.

Do I really owe this much?

Maybe, but maybe not. Like credit agencies, medical billing departments aren’t infallible, and there may be errors on your bill. If you haven’t already received one, request an itemized bill detailing exactly what you’re paying for. Watch out for the following potential errors:

  • Duplicates: Double check that you haven’t been charged more than once for a single service.

  • Clerical errors: Conditions are typically coded on medical bills. If a number is transcribed or omitted, you could be getting charged for a more expensive procedure or treatment. Ensure your codes accurately represent the services received.

  • General incorrect information: If anything looks out of place — like you were billed for extra days during a hospital stay or for services not used — your bill is likely more than you owe.

After identifying any errors on your bill, set up an appointment to talk to someone in the billing department to get those charges removed. And in the future, keep a list of all treatments received so you can spot billing errors more easily.

I can’t afford this, can I lower my medical bills?

Regardless of the payment option you choose, if you’re having trouble paying your bills, you should try to negotiate. After discussing and removing any errors on your bill, you can offer to settle the bill with a lower amount than you owe. If you can pay a lump sum of a reasonable amount, offer that. If not, ask for a lower price and a payment plan of monthly payments you can afford. For actionable steps to negotiate your medical bills, check out this NerdWallet Health article.

What’s the best method of payment for medical bills? 

The best way to pay your negotiated medical bill is with cash, check or credit card (that you can pay off before incurring interest). The majority of medical bills have a due date of 30 days from the date billed, so this is the safest time frame to pay off your bill or make a payment plan. Chances are, your bills won’t be immediately turned over to collection agencies after the 30-day period, but there’s always the risk they will be.

If you can’t afford to make a lump-sum payment, the next best option is a monthly payment agreement with your billing department. While a payment plan doesn’t legally keep your billing department from selling your bill to a collection agency, mostly on-time payments will likely prevent this from happening. As with anything else, communication is key. Instead of avoiding your hospital billing department, be proactive and make a plan.

You may be concerned that you can only put a small amount toward the medical debt each month, but you should still try to work out a payment plan. Bills that aren’t being paid in increments will likely be turned over to a collection agency and hurt your credit. When will this happen? It varies. Your best bet is asking someone in your hospital’s billing department.

Putting a medical bill on a credit card you can’t pay in full before it accrues interest should be your last resort. Credit cards are the most expensive form of credit, and you’ll still have to make monthly minimum payments while racking up interest. You might as well make monthly payments to the hospital; it will be much cheaper.

There are special medical credit cards that offer free or cheap financing for certain lengths of time (like six, 12, or 24 months). This option may be desirable, but only if you can realistically pay it off in full before the promotional period expires. Otherwise, you could get stuck paying high finance fees as well as the interest accrued during your promotional period.

I need insurance, what should I do?

The best way to keep medical bills from getting too out of control is by getting insurance. While often costly in the United States, this expense should be prioritized right after food, housing and transportation because your health is important for every aspect of your day-to-day well-being. For information about affordable health insurance, check out this NerdWallet guide.

If you can’t afford insurance coverage due to low income, Medicaid and CHIP (Children’s Health Insurance Program) are possible options. These programs are mostly used to cover future bills; however, you may be able to get assistance with doctor bills from the previous three months if you qualified for Medicaid at the time.

For more information on Medicaid, check out the eligibility requirements. If your child needs coverage, contact your state social service agency for more information about your state’s CHIP requirements.

Five takeaways: 1) While new unpaid medical bills won’t show up on your credit report, they will harm your credit if turned over to collections. 2) If your bill seems too high, make sure it has been billed through your insurance company and all charges are legitimate. 3) Always negotiate your medical bills. 4) If you can’t make a lump-sum payment, set up a payment plan with your hospital billing department. 5) Insurance is the key to keeping medical care somewhat affordable. If you can’t afford insurance, look into Medicaid/CHIP.

Pen and stethoscope image via Shutterstock