You are young. You are healthy. But that doesn’t mean you won’t have a medical emergency tomorrow and be stuck with huge bills. These bills can get huge very quickly and it can be tempting to just ignore them.
But let’s be clear here – you have to pay them. According to the Consumer Financial Protection Bureau, medical debt is the most common type of debt collection found on consumer credit reports.
If you have a large hospital or doctor bill, be sure to follow these steps.
Make sure payments are accurate
One of the reasons why medicine is so expensive? The system is kind of a mess and they make a lot of billing mistakes.
Some of the more common ones include paying for services you didn’t get and drugs you never took. If you have an extended hospital stay, sometimes you will be charged for a full day’s room even if you check out in the morning.
Here’s how to fix mistakes on your credit.
Don’t ignore your bills
This point deserves to be repeated. Whatever you do, don’t ignore your bills – it’s one of the worst things you can do. If you do this, your bills will end up being sent to the collectors and not only will you receive annoying phone calls, but your credit history will suffer greatly.
Connected: 5 ways to deal with an unexpected medical bill
Don’t use credit cards to pay medical bills
If you have endless medical bills, you might be tempted to pay them all off with a credit card to get rid of your doctor(s). But you should never use credit cards to pay medical bills.
As we have said in many of our posts before, having a balance on your credit card can lead to an endless debt cycle due to high interest payments. This can have a very negative impact on your credit score.
Unlike some other debts, there is more room to negotiate medical bills. As long as you pay something and set up a payment plan, you may receive smaller payments for a while. Medical payments are also made at a low or no interest rate, which is definitely not something you get with other types of debt.
Develop an interest-free payment scheme
One thing I learned when dealing with a huge hospital bill is that there are interest-free plans, but “it’s often in the fine print on the statement,” says Marcy Quatroci, financial advisory manager at NorthShore University HealthSystem.
Depending on the hospital or doctor’s office, the amount you pay each month may be negotiable. They will start with a number that might be too big for you. Don’t be afraid to persuade them.
Ask for a discount for fast payment
Some hospitals and doctors’ offices will give you a one-time discount if you pay your bill in one lump sum within 30 days. “We take a 10% discount,” Kvatroci says.
Some experts suggest asking for an even bigger discount. You can get arguments for your case by using the Health Blue Book to find out how much other nearby hospitals or doctors charge for the type of care you have received. If you were charged significantly more, you can claim that you deserve a price reduction.
Apply for financial assistance
If you can’t afford to pay anything at all, I suggest you seek financial assistance.
Luckily, most hospitals offer this option, but each has a different procedure. In some cases, you must first apply for Medicaid (you may be eligible if you are under 26 and earning less than $15,856). If you are denied, you go to the hospital for help.
In other hospitals, the process is easier, but still requires a lot of paperwork.
“We have an application for you to fill out by giving us your tax returns, bank account information, and paychecks,” Quatroci says. “After we review this, we will determine the discount.”
Here is a list of 35 other health care programs that can help you cover your medical bills.
Apply for a loan
Getting a loan should be the last resort because if you can’t repay it, you’ll be on the hook for an APR. However, you will pay less interest than if you had a credit card balance, so we encourage you to consider this option.
If you are at this stage, check Credible. They have a dedicated section for medical expenses and they will scour the market and find you the best rate for your specific needs.
Working with collection agencies
If the worst happened and your bills went to a collection agency, you need to deal with it. Fortunately, internal collection agencies (in a hospital or doctor’s office) are more likely to negotiate payment plans and delay sending information to credit bureaus than third-party debt collectors.
Here are some tips to help make dealing with collection agencies less painful:
Know what collectors can do
Believe it or not, collectors cannot call you an unreasonable number of times (including before 8 am or after 9 pm).
They also cannot:
- Report your medical debt to the credit bureaus if less than a year has passed since it was submitted to them.
- Report medical debts of less than $500 to credit bureaus.
- Call you at work if you have asked not to.
- They threaten to sue you for no good reason.
- Tell you that you committed a crime without paying.
- Threaten to tell others (other than your lawyer or spouse) about your debt.
- And more.
Record any phone calls and get everything in writing
Talking to debt collectors can quickly become annoying, but they are not allowed to threaten you. If they do, you have grounds for filing a claim. Therefore, be sure to record your telephone conversations with all collectors who contact you.
Once you have agreed on what you can pay, make sure you get it in writing. Don’t make any payments until you have a physical document.
Also, save all proof of payment so that if there is ever a question about your debt, you can prove that you paid what you promised.
Offer to pay something
It’s obvious that debt collectors want to get paid in full, but be firm and offer to pay as much as you can. It is likely that they will accept it.
You should expect a counter offer – or several of them. After all, that’s what collectors are supposed to do.
If you can pay off your debt in full it will look much better on your credit report, but chances are you can’t – that’s how you got into the situation in the first place. Just offer to pay as much as you can.
Summary
It can be tempting to ignore your medical bills because it won’t have immediate consequences, just like if you don’t pay your mortgage or credit card bill.
But like any business, hospitals and healthcare facilities end up turning over unpaid bills to collection agencies. And once they intervene, your credit history can deteriorate for up to seven years, and negotiations become much more difficult.