Explore Your Options for Paying Medical Debt

Paying Off Debt, Personal Finance
Explore Your Options for Paying Medical Debt

The route to paying off medical debt isn’t as clear-cut as paying off a loan or credit card. There’s generally more room to negotiate the terms of repayment — and maybe even the amount you owe.

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 and know that you can try to negotiate the total cost of the bill before moving on to repayment.

Consider your options:

Payment optionBest if...Tips
Payment plan: Your bill is broken up into monthly payments.
  • Your doctor’s office offers payment plans
  • You can't pay in full or could more easily afford the bill in monthly installments
Ask if there are billing charges or any other fees, so you can assess the affordability.
Medical credit cards: A credit card you can apply for at medical offices upon receiving services. Generally for specific procedures.
  • Your provider doesn’t take payment plans but accepts medical credit cards
  • You can’t pay the bill in full
  • You likely can pay it off before the interest-free period ends
Many have interest-free periods of six to 12 months, then an expensive deferred interest rate kicks in. Know what extra costs you'd face.
Medical bill advocate: You hire a professional to negotiate medical bills on your behalf.
  • You have very high medical debt or you suspect errors in your medical bills
Understand the advocate’s fees and be sure the savings provided will offset them.

Resources like Remedy and the Medical Billing Advocates of America can connect you with an advocate.
Income-driven hardship plan: Some providers offer reduced costs to low-income patients who meet their criteria.
  • You have low income and you're struggling to cover your medical bills
You may have to apply for Medicaid before being eligible.
Negotiating costs: You may be able to find a middle ground between what you’re being asked to pay and what you want to pay.
  • Your bills are unaffordable or you think you're being charged above usual rates
  • May be the best bet if your bill was sold to collectors
  • Can be used to reduce your bill before pursuing one of the payoff strategies above
Don't be afraid to talk to your provider. Make sure you can afford what you agree to.

You may have a choice between a lump sum and a payment plan.

No matter what route you go, the most important thing is being upfront about what you can pay.

If you don’t have insurance, you’ll likely be charged more than someone with coverage. 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.”

What not to do

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 score at risk.

Putting medical debt on an existing credit card is an example. That will appease your doctor’s office, but you’ll have interest to pay if you can’t cover the balance at the end of the billing cycle. This can set up a cycle of debt.

Ignoring your medical bills can send you down a debt timeline that can include debt collectors calling you and could end in a lawsuit. As far as your credit report is concerned, there is a bit of good news: There is a waiting period of 180 days before an unpaid medical bill will show on your report. Further, medical accounts in collections that are paid by health insurers will fall off your report.

The best route to handling medical debt is one of open communication and compromise. Talk with your medical provider to find a path that works for both of you.

Sean Pyles is a staff writer at NerdWallet, a personal finance website. Email: spyles@nerdwallet.com. Twitter: @SeanLoranPyles.