How to Deal with Medical Debt

Healthcare is a necessary but sometimes overwhelming expense. While it’s important to be proactive when caring for your body, you may be afraid of what it’s going to cost if you need a medical procedure or treatment that requires a one-night or extended stay at the hospital, and for a valid reason. 

According to CNBC, Americans spend $3.4 trillion collectively on medical care. And in 2017,  the average American spent a little over $9,500 on medical costs. 

And what happens when individuals go in for services and are hit with a gigantic bill for the unmet portion of the deductible, copayments, coinsurance, or any line items not covered under their insurance policy? That’s when the medical debt begins to pile up.

Sound familiar? 

If you’re saddled down by medical debt and have no idea how to move forward, here are some tips to find relief: 

Step 1: Review your statements 

Considering placing the medical debt collector on your call block list and moving on with your life? It may be tempting, but doing so could have serious repercussions for your credit and overall financial health. More on that shortly. 

A better idea: gather the following documents: 

  • Any billing statements you’ve received from medical providers 
  • Any explanation of benefits (EOB) statements you’ve received from your insurance company 

Why so? Well, more than 80 percent of hospital bills contain errors, notes Healthline. So it’s best to review every line item on your billing statement to confirm it is accurate. If there are line items you don’t recognize, reach out to the medical provider to seek clarity and if necessary, have the item removed or updated to reflect the appropriate service(s) rendered. 

Billing Errors To Be On The Lookout For 

By conducting a simple review of your statements, you could find errors that are driving your costs of care up drastically. 

Common billing errors include: 

  • Incorrect codes applied to services rendered 
  • Charges for services not rendered 
  • Double billing for the same service
  • Upcoding or charging for a more advanced service than the patient received
  • Unbundling or assessing separate charges for a service that should be bundled together
  • Information omitted from the claim 

But if everything checks out, you’ll want to move on to the EOB statements from your insurance company. They should also be accurate and match the itemized billing statements sent over from your medical provider. (If you don’t have itemized billing statements on hand, now’s the time to request them as it’ll make your review much easier). 

If there are discrepancies between your original bill and what the insurance company has on file, you’ll need to reach out to the medical provider to seek additional clarity on what was billed to the insurance company. There’s a chance something could have been coded incorrectly and needs to be updated on their end. 

Review Your Coverages 

Once you’ve confirmed that the bill is correct and it matches the EOB, read the fine print on your insurance policy documents to confirm that you were assessed the correct amount for the services rendered.

Sounds a bit too complex? You can always call the customer service hotline listed on the back of your insurance card to seek additional assistance with claim-related questions.  

Health insurance companies aren’t perfect by a long shot. They make errors, like assessing a patient a fee that’s equal to 30 percent of the bill when the copay was only 20 percent. Or maybe they overbilled you for a deductible that you’ve already met. 

Negotiate a lower rate 

Medical practitioners and hospitals won’t come out and tell you this, but the rates on their services are negotiable. Think about it: the rates billed to insurance providers varies drastically from what private-pay customers (or those without insurance) are assessed. 

So whether or not you have insurance, it’s worth asking for a flat-rate discount on your entire bill. Or if you prefer to let a professional handle the legwork on your behalf, hire an advocate that will work to lower your bills. You’ll have to pay for their services, either as a flat hourly rate or a percentage of the money saved on the bill, but the cost savings could make it worthwhile. 

Request a Payment Arrangement

If you want to get the bill out of collections and back with the provider, reach out and request a payment arrangement. But make sure it’s for an amount you can afford to pay each month to avoid breaching the agreement. 

When you inquire with the medical provider, expect one of the following responses:

  • The medical provider agrees to pull the debt back from the collection agency only if you promise to pay a set amount on the same day each month until the bill is paid in full. Some medical providers go as far as putting your bank routing and account number on file and initiating automatic withdrawals to ensure you uphold your end of the bargain.
  • The medical provider tells you there’s nothing they can do to help and suggests you contact the collection agency. If this happens, ask the debt collector if they’d be willing to not report the collection account on your credit report if you agree to remit payment monthly. They could say yes or deny your request. But if they’re onboard, get the agreement in writing and request monthly billing statements as you pay down the debt. But if they say no and the item is already on your credit report, don’t pay it right away because doing so won’t make it go away. It may be a good idea to consult with a credit repair professional to determine the next best course of action. 

Inquire About Financial Assistance 

If a payment arrangement doesn’t work for you, there may be other options to get the medical debt reduced or off your hands. You may find relief from the medical provider directly or it may be necessary to seek outside help. 

In-house options

Call the billing department and request a meeting with an administrator. In preparation for the meeting, gather any applicable bills, EOBs, and financial data that proves you can’t cover the outstanding debt balances in the expected timeframe. 

They may request additional financial documentation to determine if you qualify for an in-house hardship program that will reduce or waive your medical debt. 

Outside help 

Still no luck? Inquire with local nonprofits to determine if they have programs that can lend a helping hand. 

Also, head over to and use their online search tool to explore federal programs that you may qualify for that can assist with medical debt. 

Medical Debt Management

Have you tried seeking debt counseling for your medical bills? Some nonprofits offer this service free of charge and if you have exhausted all other avenues, they can work with you to devise a debt-management plan that works for your finances. 

A Word of Caution: Don’t Ignore Medical Bills

Wondering what happens when you ignore medical bills? The outstanding balances won’t be reported to the credit bureaus right away as delinquent accounts. But after 180 days have passed, they have the option to do so unless you work out some form of payment arrangement beforehand. And once it’s reported, your credit score could take a major tumble.

The good news is by taking action, you may be able to get the account removed from your credit report. But if not, keep in mind that FICO 9, which is the most recent credit scoring model, does not place as much emphasis on medical collections as other forms of bad debt. Not all lenders use FICO 9 but as time progresses, they’ll come around and the score lenders see will be higher. 

The Bottom Line 

Dealing with medical debt can be frustrating and time-consuming. But by exhausting all your options and seeking professional assistance, there’s a chance you’ll find the relief you need sooner than later.