How to Deal with Medical Debt


Without or without health insurance, medical debt can be a considerable burden. Hospital and doctor’s bills can be extremely high and sometimes impossible to pay without a plan.

medical professional

Even if you have an insurance plan, you can quickly get overloaded with co-pays, deductibles, and prescriptions.

Unpaid Medical Bills

Unpaid medical expenses are one of the most significant debts that people can face in their lives. A further challenge is knowing where to seek help.

Additionally, medical bills can be hard to understand and even inaccurate, so you should always be cautious when dealing with them. It’s also helpful to know what options are available to you to make it easier to manage your unpaid medical debt. We’ve got all the information you need below.

Make Sure the Charges are Accurate

When dealing with a medical bill, it can be hard to determine what you’re being charged for. Depending on your health insurance (assuming you have insurance), it isn’t always clear in the first place just how much you might owe.

Services might sometimes overlap or be described in technical language. For example, there can be billing for various tests, medicine, use of equipment, or time spent with doctors or specialists.

Hospital bills can be particularly hard to break down. Sometimes insurance companies won’t pay what they said they would. Doctors or hospitals will also sometimes bill you for unexpected items you thought were supposed to be covered by your healthcare plan.

Duplicate Billing

There can also be issues of duplicate billing and other mistakes that are hard to track down. Plus, your bills might be staggered so that you don’t actually know the total cost of what you owe.

All of these reasons make it essential to be very careful and thorough when dealing with your medical bills. Unfortunately, this can mean a lot of time on the phone clarifying every potential issue as it arises.

Otherwise, these issues can be buried in paperwork. It’s also essential to keep thorough and accurate records, so you have a reference point whenever a new question arises.

Understanding Your Health Care Benefits

One of the best things to do is familiarize yourself with your health insurance plan’s explanation of benefits (EOB). This isn’t always clear, but you can get a better understanding of the types of procedures you’re covered for.

You can also find out what percentage you’re responsible for and what medical providers are considered in-network versus out-of-network or Tier 1 versus Tier 2. If you’re confused, call your healthcare company for clarity.

Do medical bills affect your credit?

In the past, credit scoring models treated medical debt just like any other type of debt on your credit report. Any relevant late payments, charge-offs, or collections surrounding medical bills were weighed the same as credit card or any other type of debt.

However, recently, both laws and credit scoring models have changed to benefit consumers dealing with medical bills. One of the best recent changes happened in 2015.

The three major credit bureaus have decided not to report any medical debt for 180 days. This is compared to just 30 days for other types of debt. This allows you more time to receive your medical bills, make sure they’re accurate, and work out a payment plan.

However, medical collections can still stay on your credit report for up to seven years.

See also: How Does Medical Debt Affect Your Credit Score?

FICO Score 9

Credit scoring models are also putting less emphasis on medical debt when it comes time to calculate your credit score. For example, FICO 9, the newest model, gives medical collections less weight than other collections or debts owed.

This provides some relief when you’ve had medical and, consequently, financial situations that are out of your control. The downside is that many lenders still use older FICO models where medical bills are treated equally with other debt.

In time, you can expect to see your credit score improve as lenders upgrade and FICO 9 becomes more popular.

How to Handle Your Medical Debt

Even with the proper planning and familiarizing yourself with your benefits, it’s easy to find yourself saddled with overwhelming debt. Whether you’ve had a major operation or your child broke his leg, receiving medical care is expensive.

Luckily, there are a few different ways to handle it, many that are more amenable than other types of consumer debt. Of course, the best thing is to address the debt as soon as you start receiving bills. Otherwise, you can set yourself up for expensive late fees and negative items on your credit report.

Interest-Free Payment Plan

The cost of medical debt can be well beyond your budget, so one of the first things you should do is arrange for a reasonable payment plan. Most medical bills should be interest-free. The healthcare industry is usually willing to work with you as long as you’re willing to pay something.

If you can’t meet the payments they request, be honest about it and inquire about special hardship plans. You can only afford to pay so much, and they’re going to have to accept that. Be adamant about it. Let them know that you intend to pay everything back, but you can only do it at a reasonable rate.

Avoid Missing Payments

To keep your debt from going to collections, make sure you do not miss any payments. If you discover that your medical providers sent your bills to collections, you should call them immediately. Ask them if they can get the debt back from the collection agency so you can deal with them.

Of course, if a medical bill is already in collections, you’ll have to deal with that differently. In either case, it always helps to talk to a free non-profit credit counseling service or debt consultant.

Debt Management

If your unpaid medical debt is just one debt among many, you’re not alone. As a result of their illness, people may also accumulate other consumer debt. You may have also accumulated credit card debt if you or someone in your family has been ill or hospitalized.

You or a loved one might be out of work or dealing with other expenses. When debts become out of control, debt counselors can help. They can create debt management plans specifically tailored to your unique situation.

Negotiate a Lower Payment

Depending on the circumstances, you might be able to negotiate a lower payment on your own or with help from a debt relief company. Sometimes hospitals are willing to work with you. Other times they’re more likely to negotiate with a professional who knows more about the system and has leveraging power.

You might even have luck asking your insurance company or medical care provider for financial assistance. Negotiations and even settlements can take place as part of a complete debt relief package or one specifically centered on medical debt. Talk to a debt counselor to find out more.

Medical Credit Cards

Some medical providers that don’t offer payment plans may instead offer medical credit cards. They typically offer a 6-12-month interest-free period. If you can pay off your medical debts within that time, it may be worth getting a medical credit card. Otherwise, it’s probably best to avoid them.

Medical Debt FAQs

What is medical debt?

Medical debt is debt incurred due to medical care, such as hospital bills, medical insurance premiums, medications, and other medical expenses.

How can I pay off my medical debt?

You can pay off your medical bills by setting up a payment plan with your hospital or doctor’s office, applying for a loan, or seeking assistance from a nonprofit organization.

Is there any way to reduce my medical debt?

Yes, there are several ways to reduce your medical debt, including negotiating with your medical provider, applying for financial assistance programs, and utilizing debt consolidation services.

How can I find out if I’m eligible for financial assistance to pay off my medical debt?

You can contact your medical provider to find out if you are eligible for any assistance programs or discuss payment options. You can also speak with a financial advisor or debt counselor to explore your options.

What should I do if I can’t afford to pay my medical bills?

If you’re struggling to pay medical bills, you should contact your medical provider as soon as possible. Most providers are willing to work with you to set up a payment plan that fits your budget.

Can medical debt be forgiven?

In some cases, medical debt can be forgiven. For example, if a person qualifies for charity care or Medicaid, the medical debt may be forgiven. In addition, some organizations offer medical debt assistance to those in need.

Lauren Ward
Meet the author

Lauren is a personal finance writer who strives to equip readers with the knowledge to achieve their financial objectives. She has over a decade of experience and a Bachelor's degree in Japanese from Georgetown University.