Getting Out of Medical Debt: Pay and Negotiate Your Way to Freedom

Medical debt can be devastating to your finances, credit, and peace of mind. Learn about your rights, responsibilities, and options.
Mature female patient in exam room with doctor
By Shannon Lee
Updated on: March 24th, 2022

To say medical debt is a serious problem in the U.S. is an understatement. According to the National Consumer Law Center, 66% of all bankruptcies in the U.S. are tied to the cost of medical care. What’s more, 58% of collection efforts reported on credit reports pertain to medical debt.

The fear of creating medical debt could have wide-ranging, serious consequences. Because of the fear of not being able to pay medical bills, 20% of Americans went without needed medical care in 2018.

If you need a medical procedure, have an acute or chronic illness that needs attention, or are suddenly saddled with a mountain of medical debt, this guide is for you. Learn about your rights as a patient concerning your medical bills, how to deal with crushing medical bills, and find resources that can help bring down that high price tag.

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Your Rights Regarding Medical Bills

When you are facing a mountain of medical debt, it’s important to know what your rights are concerning help for that debt.

If your debt was incurred at a non-profit hospital system, you might have legal remedies for extensive debt. These hospitals must have a written financial assistance policy that explains the following:

  • How patients are charged for care.
  • What financial relief might be available
  • Which doctors’ services are covered by the policy.

Though for-profit hospitals don’t have to legally provide this, many of them choose to do so.

Keep in mind that unlike other unsecured debts, such as credit cards, you’ve got extended time to pay off medical bills. Credit reporting agencies won’t report negative information on medical debts for 180 days. In some states, it may be longer. There’s time to wait and see if negotiation plays out in your favor.

Watch Out for Balance Billing

Balance billing, also known as surprise medical billing, happens when someone on your health care team is not part of your in-network system for your insurance company. This results in higher costs for the service provided by that particular individual.

Fortunately, Congress recognized the problem of balance billing and set out to rectify the issue by passing the No Surprises Act, which will go into effect on January 1, 2022. This will give consumers some valuable protections against balance billing.

Dealing With Medical Debt if You Can’t Afford to Pay in Full

If you can’t afford to pay your medical debt in full, there are some good options to try. Here are some of the most common.

Pay with a credit card

This can be a tricky way to pay off medical debt, as most credit cards have a high interest rate. However, it can help you avoid having a debt sent to collections, which can have a negative impact on your credit score.

If possible, find a credit card that offers an introductory APR of 0% for a period of time, such as 18 months. Use that credit card only for the medical debt and make regular payments to pay it off before that introductory APR runs out. This can work well for those who have thousands in medical debt and just need to buy some extra time to pay it down.

Use a personal loan

A personal loan might be a good idea if you have medical debts to consolidate, you want creditors to stop calling, and you’ve negotiated your medical debt down as much as you possibly can.

Personal loans are often used to pay off medical debt and get a handle on your financial life. Personal loans are available through a wide variety of lenders. People with a good credit score might be able to get a personal loan with a low-interest rate that can make the loan worthwhile. Those with not-so-good credit could wind up with a higher interest rate than they might get if they used a credit card to pay down the debt, so it’s important to look at all your options.

A personal loan works best for those who have good credit and want to save that credit with a personal loan rather than a default on medical debt. It can also be a good choice for people with medical debt from several different providers who wants to consolidate debt.

Offer to make monthly payments

Some medical facilities, doctor’s offices, hospitals, and medical systems will make arrangements that allow you to pay off your medical debt in regular monthly payments. This can work out well for those who can manage the debt but just need to spread it out a little.

The only problem is that some medical facilities will require payments that pay it down within six months to a year, and those monthly payments can still be unmanageable. This is good for those who can get an extended period of time to pay, such as 18 months to two years.

Negotiate a lower price

Sometimes simply explaining the situation to the appropriate person in the billing department of a hospital system can help set a potential negotiation in motion. Negotiating a better price is always worth trying. Read on to learn how to do it.

Steps to Negotiating Medical Debt

Negotiating a medical debt can seem daunting, especially when you have a pile of bills in front of you that don’t seem to make much sense. Here’s how to get it under control and work your way through a potential negotiation.

1. Negotiate before the procedure

Obviously, you can’t negotiate the cost of your care during an emergency situation, but if you have a planned procedure or hospitalization, you have some options. Get in touch with the billing department to find out how much your procedure will cost. You should also ask your insurance company what their plan will cover.

Insist on firm answers. Once you know what you will owe after insurance kicks in, talk with the billing office about how much you can actually afford. You might be able to negotiate the rate down, or at least get started on a monthly payment plan that lessens the burden.

2. Don’t pay anything yet

Don’t pay a dime on that bill until you’ve negotiated the final cost. If you’re worried about your credit, remember that nonpayment of medical debt isn’t reported to credit bureaus for at least 180 days, and in fact, most medical facilities will give you much more time, especially if you are actively negotiating.

3. Learn what those numbers mean

It’s not just about the bottom line. Go back up to the explanation of benefits, which describes what you were charged and what your insurance paid, versus what you are expected to pay. Look at the procedures, supplies, and other items that you were billed for. If your paperwork doesn’t have an itemized list, call the office that sent the bill and ask for an itemized one.

Now turn to an internet search. Figure out what the medical terminology means, as well as the insurance terms, such as deductible, coinsurance, co-pay, and the like. Then ask questions about everything. How much does your insurance say you owe? Were you billed for the right procedures? Check out the ICD-10 for procedure codes to be sure. Was something denied insurance coverage – and if so, why?

This is a very important step, as up to 80% of medical bills contain charging mistakes.

4. Figure out how much you can offer

Once you know that the bill is correct, look at what you can pay. Contact the billing department and ask if there are any hardship provisions or financial assistance programs available. All non-profit hospital systems must have them because the law requires it. Many for-profit organizations have them too.

When you call, have your most recent tax return at hand. If you make below a certain income level, you might qualify for a reduction in cost. Have a dollar amount in mind that you know you can afford by making monthly payments, and try to get the bill down to that.

5. Denied? file an appeal

If you are denied any assistance with your medical debt, or you feel even the reduced cost is truly egregious, you can file an appeal. To do so, make sure you are armed with information.

Provide information on what you can truly afford, as well as the average cost of the procedure or medical care in your area. You can find this through the Healthcare Bluebook. Also get information on how much your insurance company pays for the procedure, especially if that amount is much lower than what you’re being asked to pay.

Pay attention to the deadline for an appeal and provide all information requested to help assure no denial on a technicality.

When All Else Fails

If you just can’t pay a medical bill or make payments, you might feel as though you’ll be stuck with the debt forever. What other options do you have for debt relief?

Bankruptcy

Sometimes medical debt is simply insurmountable.

Before the Affordable Care Act, there were rarely any caps on the lifetime payments you might make for medical procedures or emergencies. But even now, the medical bills can add up year after year, often reaching tens of thousands for a serious medical issue.

In the event of debt that you simply can’t pay off in your lifetime, bankruptcy might be the only option. Keep in mind it should be used only as a last resort, as the impact on your credit can be significant.

Nonprofit Help

Sometimes your medical bills can be very specific, such as the costs incurred through treatment for chemotherapy, or a particular medical procedure, such as a kidney transplant. In this case, there might be nonprofit organizations that target those individuals who are facing a particular illness or procedure and simply can’t pay for it on their own.

The hospital or health system you owe money to might have a list of places that can help. You can also do an internet search to find non-profits that specialize in helping those with insurmountable medical debt. Some of the resources below might also be helpful.

From the Expert

Michael Arrigo, CEO of No World Borders, is an expert in federal and state court in litigation regarding the value of medical bills. His firm reviews medical bills and advises clients on usual customary and reasonable charges and the customary amount that a health care provider will accept as payment in full. Michael is trained as a certified professional medical auditor and has worked for the U.S. Department of Justice reviewing hospital bills.

Arrigo offers tips and ideas for understanding and negotiating medical bills.

What are some medical bill negotiation tips you suggest?

Seek to become a better-educated health care consumer by understanding what other providers charge for the same service in the same market.

First, understand what the common medical codes are that describe your treatment. Just as there are many parts for a car that depend on the year, make and model, there are thousands of medical codes.  You need to know the specific code that describes the specific condition you have and what procedure you received to be a better health care shopper.

You can use these for comparative purposes to shop around before you receive care or, potentially after you receive a bill to ascertain whether the bill you received is inflated and unreasonable. Seek to understand your ICD-10 diagnosis code. The medical bill should include this. Also, understand what the billing codes, generally expressed as a CPT code are as well. This will also be on your medical bill.

These medical codes are a specific way to compare services.

For example, you have an ICD-10 diagnosis code of S82.141B – Displaced bicondylar fracture of right tibia, initial encounter for open fracture type I or II.

The billing includes an orthopedic surgeon’s bill for the repair of a fractured tibia, CPT code 27536 – “Open treatment of tibial fracture, proximal (plateau); bicondylar, with or without internal fixation.”

You can then ask other health care providers, “If I have the following diagnosis of S82.141B and I receive a surgical procedure from an orthopedic surgeon represented by CPT code 27536, how much do you charge?”

There are other factors to consider that may cause these charges to vary, such as geography, place of service (i.e., hospital, surgical center, office, etc.), and type of coverage, but this will get you started.

What are mistakes to avoid when paying and negotiating medical debt?

You should always contest a high medical bill. Don’t wait to do so. Many providers will negotiate, but only if you exercise your right of due process early and often.  Don’t wait for the health care provider or hospital to file a lien and take you to court to get a judgment against you.  This gives the provider a legal right to collect from you, and in the process, the provider can damage your credit report by reporting that you have not paid a collectible debt.

If you cannot negotiate the bill satisfactorily, do not go it alone. Consider retaining an attorney who can in turn retain an experienced medical billing and medical coding expert witness who can provide an independent opinion regarding the reasonable value of your care.

Health care providers may try to argue that you entered into a “contract of adhesion.” This means that you are bound to accept whatever amount they charged and to pay it in full or to pay the amount not covered by insurance. Still, there’s a catch. If your bill is unreasonable or unconscionable, you can have recourse. Again, seek legal counsel because an attorney and an expert may be required to prove that the medical bill was unreasonable or inflated.

Even if you cannot secure a reduction in the amount of the bill and you do not choose to litigate, don’t stop negotiating until you have either achieved a satisfactory resolution or a payment plan. This will allow you to pay smaller amounts over time.

Is there any way to receive medical treatment without going into medical debt?

The most important thing to keep in mind with my answers is that are a number of situational things that can vary, so I would say it depends.  Let me start with a few assumptions:

  1. If you are insured, use your insurance.
  2. You may qualify for Medicaid if you can’t afford insurance. Medicaid is state-sponsored insurance available in every state in the U.S.  People with a low income below the Federal Poverty Level (FPL) can receive free insurance in some states.  In other states with Medicaid expansion, you can qualify for Medicaid even if your household earnings are up to 138% of the FPL.
  3. Use health care providers that are in-network with your health plan. This is because most health plans reduce or limit the co-pay amount that an insured patient has to pay when using a provider that is part of the insurer’s provider network. Under the Affordable Care Act, health care insureds are only protected with a cap on the amount they have to pay (called an out-of-pocket maximum or “OOPM”) when they are in-network.  You are not protected in out-of-network billing scenarios.
  4. Ask what the cash price is if you don’t have insurance. If you can’t pay the full amount upfront, ask if your health care provider will accept a payment plan. Consider using your credit card and paying down the amount as quickly as you can if you can’t arrange a payment plan.

Resources for Help Paying Medical Bills

  • NCLC Guide to Reducing Hospital Bills for Low-Income Patients. This guide offers a comprehensive review of your rights and tips for negotiation.
  • Alliance of Claims Assistance Professionals. ACAP provides fee-based help in resolving medical disputes and negotiating lower medical bills.
  • Patient Advocate Foundation. These professionals offer free, one-on-one support to guide patients through the complex world of medical bills and more.
  • FindHelp.org. The Find Help site is great for a variety of assistance, including potential assistance with bills or negotiation (specifically through the “social services” tab).
  • HealthWell Foundation. This service helps pay bills and negotiate rates for those with serious, chronic, or life-threatening illnesses.
  • PAN Foundation. Patient advocacy through this foundation can include help paying medical bills.
  • GoFundMe. This popular fundraising platform has a specific area for medical needs, including medical debt.
  • Medical Insurance Advocacy. Those who need a medical advocate to challenge their medical bills can find one here.

Frequently Asked Questions

Can Medicaid help me with my medical bills?

Possibly. When battling medical debt, you should always check to see if you qualify for Medicaid. If you do, in most states the Medicaid benefits are retroactive by three months; so if the debt is new, Medicaid might cover it.

What happens if you can’t pay a medical debt?

If you can’t pay anything at all on your medical debt and you ignore the bills, the hospital might refer your account to a collection agency. At that point, the agency will begin calling you. If they can’t get in touch, they might try to get a judgment against you for the bill plus fees. It’s always best to negotiate a lower price and avoid collections.

Do hospitals write off unpaid debts?

That depends upon the situation. If a person simply cannot pay anything at all, a hospital might write off their debt. But keep in mind that this is not guaranteed. Those who don’t pay are more likely to wind up with “bad debt” that is handed over to a collection agency.

How long does medical debt stay on your credit report?

Credit reporting agencies won’t report unpaid medical debt until at least 180 days after the date the charges were incurred. Once it does go on your report, however, it stays there for up to seven years.

Is a medical billing advocate a good idea?

If you aren’t sure how to negotiate debt on your own, you can turn to a medical billing advocate. This person can handle the negotiation on your behalf. Just be sure that the fee that person charges doesn’t drive up the costs so much that it negates the savings they might find for you.