Medical Debt: What to Know and How to Handle It

Medical bills can be confusing, stressful and expensive, often arriving at a time when you’re already dealing with an illness or injury. The good news is that you have more options and protections than many people realize. Here’s how to handle medical bills calmly and avoid paying more than you owe.

Don’t pay right away

When a medical bill arrives, it’s natural to want to pay it and move on. But medical billing errors are common, and it’s worth taking a few steps before sending money. Paying first and disputing later is much harder than getting the bill right from the start.

Check the bill carefully

Start by asking your provider for an itemized bill, which lists every service, supply and charge individually. Then compare it with the explanation of benefits, or EOB, from your insurance company. The EOB shows what was billed, what your insurer paid and what you’re expected to owe.

Look for duplicate charges, services you didn’t receive, incorrect dates and charges that your insurer should have covered. If something doesn’t match, call your provider’s billing office and your insurer. Sometimes a claim was denied because of a simple coding error that can be fixed and resubmitted.

If your insurer denied a claim, you have the right to appeal. Ask for the reason in writing and follow the appeal process described in your plan documents.

Ask about financial assistance

Nonprofit hospitals are generally required to have written financial assistance policies, sometimes called charity care. Many hospitals offer free or discounted care based on income and household size, and eligibility can extend well above the poverty line.

Ask for a financial assistance application, even if you’ve already received a bill or the account is past due. Many people never ask because they assume they won’t qualify. Even for-profit hospitals and other providers may offer discounts if you explain your situation.

Negotiate and set up a payment plan

Medical bills are often more negotiable than people expect. If you can pay in full, ask whether there’s a discount for prompt payment. If you’re uninsured, ask about self-pay rates, which are sometimes lower than the listed price.

If you can’t pay all at once, request an interest-free payment plan. Many providers offer these, and agreeing to a manageable monthly amount can keep the account from going to collections.

Be cautious about putting medical bills on high-interest credit cards or taking out loans to pay them. Doing so turns flexible, often interest-free medical debt into costly consumer debt and can mean giving up the chance to negotiate or qualify for assistance.

How medical debt affects your credit

The three major credit bureaus, Equifax, Experian and TransUnion, changed their policies in recent years. Paid medical collections no longer appear on credit reports, medical collections under $500 aren’t reported, and unpaid medical collections generally don’t appear until they’re at least a year old. That one-year window gives you time to sort out insurance issues, apply for assistance or set up a payment plan.

Check your credit reports for errors at AnnualCreditReport.com, the official site for free reports. If you find medical debt that should not be listed, dispute it with the credit bureau.

Protection from surprise bills

The federal No Surprises Act protects many people from surprise bills for certain out-of-network emergency care and for some services from out-of-network providers at in-network facilities, such as anesthesiologists or radiologists. In those situations, you generally can’t be billed more than your in-network cost-sharing amount.

If you’re uninsured or paying for care yourself, you also generally have the right to a good faith estimate of costs before scheduled care. If you receive an unexpected bill, you can learn more about your rights and how to file a complaint at cms.gov.

Dealing with collectors

If a medical bill goes to collections, you still have rights. Under federal law, you can request written validation of the debt, and debt collectors are prohibited from harassment and deceptive practices. Before paying a collector, confirm the debt is accurate and that insurance and financial assistance have been fully applied.

Get help when you need it

Complicated medical bills can be overwhelming, and you don’t have to handle them alone. Many hospitals have patient advocates or financial counselors who can explain bills and assistance options. Nonprofit credit counselors can help you build a plan if medical debt is part of a larger financial challenge. Some people also hire independent medical billing advocates, who review bills and negotiate on your behalf for a fee.

Prepare for the future

Once current bills are under control, consider building a dedicated savings fund for medical costs. If you have a high-deductible health plan, a health savings account lets you set aside money for qualified medical expenses with tax advantages. Reviewing your insurance options each year during open enrollment can also help you choose coverage that better fits your needs.