Even with health insurance, a serious illness can leave you with a lot of debt. Medical debt affects millions of Americans each year. 

Americans owe $220 billion in medical debt. The increasing cost of medical care and lack of insurance contribute to the burden of medical debt. Many people forego doctor appointments, medications, treatments, and tests they need to stay out of debt, but the consequences can be very serious.

Instead of avoiding treatment, consider exploring ways to get rid of medical debt, such as setting up a payment plan or applying for financial assistance, which we’ve listed in this guide.

What Is Medical Debt?

Medical debt is any amount you owe for receiving healthcare services. It includes the amount that you have not paid yet, is past due, delinquent, or in collections.

In the U.S., half of all working-age adults find it difficult to afford healthcare costs. Two in five working-age adults also delay getting prescription drugs and healthcare because they can’t afford the cost. 

Lack of coverage is the leading reason for medical debt. Many people do not have insurance through their workplace or lost coverage due to unemployment during the pandemic. Others are self-employed and may find the cost of insurance premiums unaffordable.

Lack of insurance coverage can quickly turn into an unaffordable burden for you when you need medical care.

9 Tips for Paying off Medical Bills

Although outstanding bills can be intimidating, there are many medical debt relief options available to choose from.

1. Make Sure Your Bills Are Accurate

Medical bills can be inaccurate. Always check your bills for charges that you don’t recognize or understand. You should also watch out for any surprise medical bills if you have private insurance.

For example, you may find charges for procedures you haven’t undergone in your medical bill.

Surprise medical bills are usually from providers that aren’t part of your insurance carrier’s network. These bills can be unusually high, but some states do have laws to protect you from such bills. The No Surprises Act by the federal government also went into effect in 2022.

2. Set Up a Payment Plan

Many medical providers can give you a payment plan to pay off your medical debt in installments. This is a simple and easy way to pay off any large balances that you can’t afford to pay at once.

Depending on the amount you owe and the terms that you can negotiate with your healthcare provider, the bill will be divided into equal payments and spread out over a few months.

For example, if you have a medical bill of $8,000, you may be able to pay it off in eight installments of $1,000 each if your service provider agrees to not add any interest charges. 

There may be fees or billing charges associated with payment plans, so always check in advance.

3. Get a Medical Credit Card

Your healthcare provider may also recommend getting a medical credit card. These credit cards often have a 0% interest period of up to 12 months.

If you don’t manage to clear off your entire balance within that period, you may be charged a deferred interest rate, which can be very expensive.

Missing payments or making late payments can also impact your credit score. Make sure you are aware of all the extra costs involved before you sign up for a medical credit card.

For example, CareCredit offers 0% APR promotional financing for six to 24 months. If you don’t manage to clear your balance within that time, a regular APR of 26.99% applies.

4. Consider Medical Debt Consolidation

A medical debt consolidation loan can help you combine multiple medical expenses into a single monthly payment. 

Loan amounts for medical loans range from $1,000 to up to $100,000. Shop around and compare your loan options to get one with the lowest APR.

Another option is to get a 0% APR credit card if you have excellent credit. However, the 0% purchase APR rate is only available for a limited time, so it's best to pay off the balance before that period ends to avoid high-interest charges that can rack up credit card debt.

5. Hire a Medical Bill Advocate

If your debt is really high, work with a medical bill advocate. Advocates have experience and a deep understanding of medical billing. They can spot overcharging and negotiate on your behalf to reduce your healthcare costs.

Medical bill advocates will charge fees, so compare all your options to ensure that the fees you’ll pay are not so high that they’ll negate any savings you receive. 

6. Opt for Medical Debt Settlement

Another option is to consider debt settlement. This will allow you to settle your debts for less than what you owe. A settlement could help you save up to 50% of your debt before fees. 

For example, if you owe a medical bill of $10,000, you may be able to settle the bill for a lump sum of $6,000. The remaining $4,000 will be forgiven.

This can be a good option if your account is already in medical collections. Hire a reputable debt relief company to negotiate on your behalf with collection agencies, medical service providers, or hospitals. 

A professional can help you come up with a settlement amount that you would feel comfortable paying and will walk you through what happens after a mediation settlement.

7. Apply for Financial Assistance

Many healthcare providers also offer financial assistance to low-income patients who can’t afford to pay their bills. Some hospitals also offer charity care programs that provide free medical care to patients meeting certain qualifications.

The Affordable Care Act makes Medicaid and affordable health insurance available to more families.

Federal assistance programs like CHIP and Medicaid can be used to help with the cost of medical care. You can also send in applications to non-profit organizations such as Patient Advocate Foundation and CancerCare for financial assistance.

8. Income-Driven Hardship Plans

Like a payment plan, you can break up the amount of medical debt you owe into regular, manageable payments through an income-driven hardship plan. If you’re eligible, you may also be able to get the debt forgiven altogether.

Non-profit hospitals offer charity care, and many other providers offer hardship plans that you may qualify for if you have Medicaid. 

9. File for Bankruptcy

If you have no other option, you can file for bankruptcy. Although it has serious consequences that can affect your credit for years, it can wipe out your medical debt when you have no other options.  

If you consider filing for bankruptcy, you’ll have to complete a credit counseling session and get a certificate. Your counselor will also discuss alternatives before you proceed with bankruptcy. 

You will also need to hire a bankruptcy attorney if you choose to proceed. Your attorney can help you explore your options and find the cheapest way to file bankruptcy.

How To Know if You Have Medical Debt

If you have received any medical care, you can expect to receive the bill from the health care system or insurance company if you have an outstanding amount to be paid.

Even if you have health insurance, your health coverage will not cover all your medical expenses. Out-of-pocket expenses such as copays, coinsurance, and deductibles still need to be paid.

If you’re not sure how much medical debt you owe, you can also check with consumer credit reporting agencies specializing in medical records. These agencies can provide you with reports on your history, such as insurance application data, medical conditions, drug purchases, and more. You can receive a free copy each year from many of these consumer reporting agencies to check if you owe any outstanding medical bills.

How Medical Debt Affects Credit Scores

Medical debt will not affect your credit report if you pay bills on time. Medical debt is handled differently than consumer debt. Healthcare providers usually do not report to any of the credit bureaus. This means that it will appear on your consumer credit report only when it goes to debt collectors.

The three consumer credit bureaus, Equifax, Transunion, and Experian, will also give you a waiting period of 365 days to resolve any medical debt you have in collections before it appears on your credit history. If the collection amount is less than $500, it will not impact your credit score.

Unpaid medical bills may not show up on your credit report right away, but they have a negative impact. Debts in collections can remain on your report for up to seven years if you become delinquent.

Pay Off Your Medical Debt Before It Becomes Unmanageable

Resolve your medical debt before it goes into collections and affects your credit history. Fortunately, there are many debt relief programs to choose from to help you pay off your debts.

At TurboDebt, we can help you resolve your medical debt through strategic planning, advising, and consulting services. Connect with us for a free consultation today. 

Our team will be happy to help you find the right debt relief option to resolve your financial challenges.

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