Your Guide to Paying Medical Bills

Benjamin Smith

Last Updated: May 20th, 2021

Do you have health insurance? If so, does it cover all of your medical costs? A shocking 15.5 percent of the population in the United States currently does not have health insurance. Though the other 84.5 percent living in the United States have insurance, close to half of them feel that it is insufficient to provide for medical care needs.

If you have ever had a seemingly insurmountable medical bill, you are surely not alone. A recent study estimates that over 42,000,000 people are struggling with medical debt across the country. Interestingly, 60 percent of them currently have health insurance. Some possible solutions may include mobile banking options, scheduling payments in advance, and transaction monitoring. 

What if I can’t afford my bill?

First and foremost, look at all of your options when working towards paying medical bills. Start by approaching your medical provider. Usually, they will do what they can to find the correct solution for your payment of what is owed. David Bakke of Money Crashers suggests that you ask for more time, set up a payment plan, or find some other agreement that will benefit you.

The last thing that you want to do is ignore an unpaid medical bill.

If you are unable to negotiate with the medical provider, you have other options. AJ Cohen, founder and CEO of BetterMed advises that some companies will act as your advocate to decrease the amount of your original bill by up to 90 percent.

How should I finance it?

If you decide to finance your medical bill, Cohen recommends looking for a reputable company that offers a long interest-free period of three years or more. You shouldn’t settle with a company that creates a payment plan based solely on your credit score. The company should look at your personal situation holistically in order to provide you the best service.

Something else to look out for is a compassionate grounds program. Cohen explains that “This is when a company is willing to pay part or even the entirety of your medical bill as a gift. This is done based on life circumstances after analysis by the company.”

counting cash

What should I look for?

Ruth Linden, Ph.D., founder and president of Tree of Life Health Advocates, recommends addressing the following points when establishing a payment plan for your medical bills:

  • Check for errors — It is estimated that billing errors are made in close to 80 percent of medical bills.
  • Get an itemized statement — If you have been hospitalized, ask for an itemized copy of the services provided. You may find procedures or medications that you never received. This is a great way to cut back on your bill.
  • Write a letter — If you were billed for out-patient services, don’t be afraid to write a letter asking for forgiveness of charges with explanations of why you cannot pay the bill. After 7-10 days, follow up with a phone call to see what happened. If the result is not favorable, ask to speak with a supervisor so that you can negotiate.

Should I get a medical credit card?

If negotiating is not your style, you always have the option of getting a medical credit card. Experts have given mixed reviews of investing in a medical credit card for a variety of different reasons. Greg Mahnken, Credit Industry Analyst for Credit Card Insider, feels that for the most part, medical credit cards should be avoided. If you were to choose one, he would recommend getting a medical credit card through CareCredit. He feels that promotional financing may be offered depending on your medical provider. Once these promotional periods have ended, there is a 26.99 percent interest charge on the entire balance.

It is important to be careful and very observant when looking into medical credit cards. A card may have a 0 percent APR, but if you fail to pay off the balance in the allotted time frame, interest might be applied retroactively. Bakke brings up a wonderful point. Medical credit cards do not provide rewards programs. If you are able to pay on-time, it may be better for you to use a regular credit card that still allows you to receive the benefits of rewards programs.

If you are interested in finding the best company to provide you with a medical credit care, you can find a list with specific details on each here.

Mastercard Credit Card

What should I know about medical debt?

Debt can be a scary word, but that is mostly due to a lack of knowledge. Here are a couple of key points from Mahnken to help take the “scary” out of medical bills and make them more manageable:

  • Avoid collections — Do all that you can to avoid letting the bill go to collections. Once your bills reaches collections, it will be on your credit report for seven years (even if you pay off your debt).
  • Negotiate — If you are concerned that the provider might send the bill to collections, you have the right to negotiate with them. Give them a call. Set up an in-person meeting.
  • Be wary — If you are contacted by a collection agency for a medical bill that you do not recognize, make sure to know your rights. You have the right to review the information presented against you to ensure its accuracy.

Why doesn’t insurance cover the cost?

Let’s say that you have health insurance and you get a bill in the mail. When you realize that the bill is from a recent procedure that you had done recently, you think, “Oh, this will be a small bill, insurance should cover most of it.” Unfortunately, when you open it, you realize that insurance didn’t cover any of it. Why? Isn’t that what health insurance is for?

Linden shares a couple of possible reasons behind the lack of coverage received from health insurance companies:

  • Your hospital, physician, or other provider is not contracted with your insurance.
  • Your physician or other provider does not contract with any insurance.
  • You must first meet your insurance deductible before your insurance kicks in.
  • The specific charges are excluded from coverage. For example, cosmetic surgery and eye refractions are excluded from most health insurance policies.
  • The procedure required insurance preauthorization, which was not obtained.
  • The medication is not included on your insurance drug formulary.
  • Your health insurance policy is not compliant with the Affordable Care Act.

Is there a way to pay faster?

So what is the moral of the story? Medical bills stink and nobody wants to pay them. That being said, it is important to take care of these charges in a timely manner in order to ensure that they don’t begin to duplicate with excessive interest or late charges.

Cohen gives a couple of tips on paying your bills faster to pay less in the long run:

  • Pay off the principal — To begin, it is important to pay off the principal. The “Principal” is the actual sum of money that you borrowed. It does not include the interest that will be accrued over time. It is helpful to find a company that will give you a very low payment so that as you start saving, you can put whatever extra you have towards the principal amount.
  • Application fee vs. interest — It may be to your advantage to do a cost-benefit analysis of the cost of a higher application fee paired with a lower interest rate compared to no application fee with a higher interest rate. Though it may sound like you are saving money, the lack of an application fee is usually made up (and some) with higher interest rates.
  • Find help — Yes, it may come as a shock, but there are companies out there that provide loans that genuinely want you to be able to get out of debt. Work with these companies.
  • Emergency fund — Create an emergency medical fund. If you have some money tucked aside, you will be more likely to be able to take out a smaller loan, or be able to pay off a larger loan more quickly to avoid compounding interest.

Is there light at the end of the tunnel?

Everyone dreads bills. This is a well-known fact. Hopefully with the help of these experts, you will be better educated and prepared to face your medical bills without fear. Seeking out help does not mean you are weak; it means you are smart.

Find the companies and organizations that have the resources to help you move forward on the right foot. Once you do, you can let go of some of the stress and work to reach your goals. This is the light at the end of what, for some, may be a dark tunnel. With time, dedication, planning, and patience, you can climb out of medical debt and be stronger for it.

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