Medical Debt? Here’s How to Deal with It

We are living in tough times. One in five Americans struggles with medical bills, and over 60% of all bankruptcies annually are due to medical debt. Here is what you can do if you have found yourself in this position.

Minimize Medical Debt by Negotiating Before Treatment

In non-emergency situations and when an upcoming procedure is planned or known ahead of time, call all providers (which could include several entities – the surgeon, the anesthesiologist, and the medical facility, for example) to get an estimate and possibly negotiate a price. Discounts are often given on cash payments, sometimes as much as 40%.

Because prices among facilities vary widely, a 2019 law requires medical centers to publish online a list of standard charges for hospital items and services, called “chargemasters,” and update it at least once a year. Most of them could be looked up here.

Make Sure Your Bill Is Accurate

It is estimated that as many as 80% of medical bills contain errors. But if you don’t know what you are looking for, identifying those errors can be impossible. Medical billing advocates are professionals who, for a fee, will go over your bills with a fine-tooth comb to make sure everything is correct. If it’s not, they will advocate for you and even negotiate on your behalf. The Patient Advocate Foundation offers free assistance and can help you find a medical billing advocate. Visit Claims.org to locate one near you. A medical billing advocate may charge a small fee, but the money they can save you could be well worth it.

Negotiate Your Bill

Once you are sure your bill correct, try not to pay the sticker price! This is especially true if you don’t have health insurance. It is often the case that if you are someone without insurance, hospitals bill you based on a “fake” retail price that nobody pays. Talk to the hospital’s billing department about a discounted rate. Consumers are advised to be firm and to negotiate for around 20 cents on the dollar. That’s about what traditional health insurers pay versus “retail.” Be persistent!

Apply for Medical Financial Assistance

Also called “charity care,” financial assistance policies will vary from hospital to hospital but may allow you to receive free or discounted medical care if you meet certain requirements. Nonprofit hospitals are required by law to have these assistance policies. If your income qualifies you for this help, the hospital might cut your bill in half or even forgive it completely (often in the case of medical debt exceeding a quarter of your household income).

Don’t Put Medical Debt on a Credit Card

Paying by credit card shifts the debt away from the hospital — where your bills may have a low-interest rate or even none at all — and into a high-cost form of debt. You would be losing whatever protections you might have for medical debt, such as incentives to negotiate a lower bill or help you get on a payment plan.

Know How to Deal With Debt Collectors

If none of the above options work for you and your medical debt goes to collections, it’s important to know how to deal with debt collectors. You can get the debt collector to stop calling you by sending them a no-contact letter (sent via registered mail). You can also negotiate to reduce the amount of the debt and payment terms with collections agencies, but you have to be careful. Any agreement to settle a debt needs to be in writing. Never give anybody any money over the phone. Don’t give your checking account number or credit card number unless you have it in writing that payment of that amount of money is payment in full. Also, states have varying statutes of limitations for how long a debt collector has to sue you.

LIBRARY RESOURCES:

Solve Your Money Troubles: Debt, Credit, & Bankruptcy by Robin Leonard

Simplified Family Legal Forms by Daniel Sitarz.

Debt 101: From Interest Rates and Credit Scores to Student Loans and Debt Payoff Strategies, An Essential Primer on Managing Debt by Michele Cagan

Sources cited:

https://www.nclc.org/

https://www.kff.org/wp-content/uploads/2016/01/8806-the-burden-of-medical-debt-results-from-the-kaiser-family-foundation-new-york-times-medical-bills-survey.pdf

https://www.nytimes.com/2019/11/08/us/hospitals-lawsuits-medical-debt.html

https://www.aarp.org/money/credit-loans-debt/info-2019/paying-medical-debt.html

Magda Born

mborn@kckpl.org

Community Services Librarian