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, and knowing where to turn for help can be a challenge. That’s added to your other bills and expenses you have to pay each month.

What’s more, sometimes medical bills are hard to decipher and can even be inaccurate, so it’s essential to be cautious whenever dealing with them. It’s also helpful to know what options are available to you to make it easier to manage your medical debt. We’ve got all the information you need below.

Make Sure the Charges are Accurate

When dealing with medical debt, 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.

For all these reasons, it’s crucial to be very careful and thorough when dealing with your medical bills to ensure that you aren’t paying more than you should be. 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 decided not to report any medical debt until 180 days, compared to just 30 days for other types of debt. This gives you more time to receive your medical bills, make sure they’re accurate, and work out a payment plan.

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.

But as lenders start to upgrade and the popularity of FICO 9 continues to grow, you can expect to see some improvement in your credit score.

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 outside of anyone’s reasonable budget, so one of the first things you should do is arrange for a good 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 aggressive about it and let them know that you intend to pay everything back, but you can only do it at a reasonable rate.

Avoid Missing Payments

When you’ve established what that is, avoid missing any payments if you want to remain in good standing and not have your debt sold to collections. If you discover that your medical providers sent your bills to collections, you should call the collection agency immediately and tell them that a mistake was made.

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 medical debts are just one debt among many, you’re not alone. It’s not uncommon for people to accrue other consumer debt as well, very often because of the circumstances of their illness. If you or someone in your family has had an illness or hospital stay, it’s commonplace for other debts to build.

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 debt within that time, it may be worth getting a medical credit card. Otherwise, it’s probably best to avoid them.

Lauren Ward
Meet the author

Lauren is a Crediful writer whose aim is to give readers the financial tools they need to reach their own goals in life. She has written on personal finance issues for over six years and holds a Bachelor's degree in Japanese from Georgetown University.