Medical Bill Forgiveness: How to Get Out of Medical Debt

Nicolas Cesare  | 

About 40 percent of Americans owe debt related to some sort of medical expenses. This is probably no surprise, as insurance prices are skyrocketing and the cost of even routine services is well beyond the means of the average American worker. However, fair or not, medical debt is still debt, and that means that you must pay it or face the consequences. If you’re suffering from medical debt, here’s what you need to know.

What Happens to Hospital Bills When They’re Overdue

The first stage of medical debt involves having hospital bills that you haven’t been able to pay. By itself, this isn’t necessarily a bad thing. Debt is a regular part of our lives and, if you’re able to manage your debt and pay it down in a timely manner, carrying a little can actually help you by improving your credit score.

However, medical debt isn’t always easy to pay off. Unlike other forms of debt (like your mortgage or a personal loan for a new car), medical debt often comes as a surprise — a poorly timed accident, an unexpected ambulance ride, or a surprise bout of illness can land you in the hospital, with a huge bill looming over your head.

Paying your hospital bills might be no problem if you have the financial means to cope with this sudden and unexpected charge, if possible, set aside a portion of each paycheck that you get so that you can prepare for financial emergencies before they happen.

However, if you don’t have an emergency fund, then you might need to explore other means of paying down your hospital debt. The sooner you’re able to come up with a payment plan for your debt, the better. This is because late payments will start to rack up, making the debt more challenging to pay off and dealing a huge blow to your credit score.

What Happens When Your Hospital Debt Goes to Collections

If you fail to pay your hospital bills in a timely manner, then the hospital or other medical provider will probably send your debt to a collections agency. At this point you may be tempted to just ignore the collections agency, but this is actually one of the worst things that you can do. Debt collectors are remarkably persistent, and simply ignoring their calls and letters will not make your debt go away.

When your hospital bill goes to a collections agency, a mark is left on your credit report, lowering your credit score. When you don’t pay your debt, it often gets split up and passed around to multiple collections agencies and each new agency is a new demerit on your credit report. These negative marks can quickly rack up and you may find yourself totally unable to open a new credit card, refinance your mortgage, or take out personal loans without suffering huge interest rates.

If you continue to leave your medical debt unpaid in spite of multiple warnings and notices from collections agencies, you can be sued over your debt, giving the debt owners the options of garnishing your wages by taking a little off the top of your paychecks to pay off your debt.

How to Deal With Medical Bills

As we said earlier, paying off your medical debt is especially difficult because these charges can come up unexpectedly. If you don’t have enough in your emergency fund to cover a surprise hospital bill, here are some options to help you resolve your medical debt.

Negotiate a Payment Plan

If you have a huge hospital bill and your insurance isn’t covering as much as you’d like, it’s unlikely that you’ll be able to pay the whole thing off in one lump sum. As quickly as you can, contact your healthcare provider’s billing department and communicate your financial situation to them. Remember, they want to see you repay your debt — it’s not fun for them to deal with unpaid bills and send your debt to a collections agency. Together, you can reach a reasonable monthly payment that you can manage and that will satisfy the hospital’s accountants.

Double Check Everything With Your Insurance

If you’re not happy with how your insurance company covered (or didn’t cover) something, you don’t have to give them the final word. When you receive your explanation of benefits (not your bill), go through it item by item to ensure that the services your insurance is accounting for are services that you actually received. If you see items that you don’t recognize, it might be time to dispute your hospital bill.

Settle Your Medical Debt

If your medical debt has gone unpaid for quite a while and it’s unlikely that you’ll have the means to repay it anytime soon, you can try negotiating with the hospital to reach a settlement for your medical bills. Keeping in mind the principle that the hospital wants you to pay your debt, they might be willing to accept a portion of the total bill if it’s looking unlikely that they’ll ever collect the full amount.

Apply for Medical Debt Forgiveness

There are charities out there that recognize the high cost of medical services compared to what the average family makes. These charities will actually buy your debt from collections agencies and forgive it, freeing you from your overdue hospital bills. Read more about charities that forgive medical debt to find out if this is an option for you.

Medical debt doesn’t have to be the end of the world. Take care of your hospital bills sooner rather than later and work with your healthcare providers to find ways of repaying that work for all parties involved. By communicating early and often, you can avoid having your medical debt sent to a collections agency.

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Nick Cesare is a writer from Boise, ID. In his free time he enjoys rock climbing and making avocado toast.