Ask Bill your personal finance question

How to Handle Medical Bills Debt

I have high medical bills and more to come. What are my options?

I have medical bills I cannot repay, and need an expensive procedure I know I can't afford. I don't know what to do. What are my options?

Read full question
Bill's Answer
133 Comments
4.5
/5.0
(20 Votes)

Updated: Oct 23, 2014

Medical Office Insurance Card | Medical Debt

Medical bills are a big problem for many households. According to a 2013 study, medical debt is the No. 1 cause of bankruptcy. You might avoid a staggering medical bill if you qualify for a government, private, or hospital assistance programs. Make sure you understand your bill, and enlist the help of an advocate if you think a medical bill is incorrect. Learn your options if you cannot afford to pay your medical bills.

I’ll start with how you can avoid a large medical bill, and what to do if you are surprised by a large medical bill. Let’s look at what you can do to find payment help before you have a procedure.

The best time to deal with a large medical bill is before you receive the service. If the procedure is not an emergency, then take these three steps before you sign any contract with the doctor’s office, clinic, or hospital:

  1. If you have insurance, either call your insurance customer service people to learn if your procedure is covered, or ask your provider to obtain pre-approval. You may need to change doctors, or ask your doctor to perform the procedure at a different location to obtain the highest amount of coverage from your health insurance provider. Many hospitals will not perform a non-emergency procedure without determining how you will pay for it.
  2. If you do not have health insurance, learn if you qualify for Medicaid, Medicare or a private charity’s grant to pay for your procedure. In some areas, United Way’s 2-1-1 hotline can help you learn more about private medical payment assistance programs for in your area.
  3. Most hospitals provide patient financial assistance and charity programs to people with low or no income. Be prepared to share details about your household income when you apply for a patient financial assistance or charity program.

Patient Financial Assistance

Patient assistance programs vary, and each hospital calls their programs by a slightly different name. Generally, hospitals offer two types of assistance programs: Charity (no cost to you) and discount programs. Patient financial assistance and charity care programs are designed to be applied for before you receive the treatment, but there are no prohibitions to apply for them after you receive your first medical bill.

Medicaid and Medicare Eligibility

To be eligible for , you must be more than 65 years of age, meet income guidelines or have certain disabilities. Children and pregnant women may also be eligible for benefits. Contact your state Health Dept. about eligibility requirements for Medicaid and Medicare.

Charity programs vary, but often apply if you are uninsured and receive emergency treatment. Qualifications are based on a comparison of your financial resources and income to federal poverty guidelines. For non-elective care, you qualify and receive free care if your household financial resources or income is at or below 200 percent of the federal poverty level.

Discount programs, which are sometimes called financial assistance programs, apply if you are uninsured and do not qualify for Medicaid, charity care or other assistance programs. Your household financial resources and/or income may be greater than 200 percent of the federal poverty level.

Poverty Guidelines

The vary each year, where you live, and how many people are in your household. For most states, the 2013 poverty guideline for a one-person household is $11,490. Add $4,020 for each person in your household to learn if you are above or below the poverty guideline.

To qualify for charity or financial assistance programs, you will be asked to complete a form and include either your most recent federal income tax return (for example, a 1040, 1040A, or 1040EZ), or other documents listed in the hospital or clinic’s application form, such as your state tax return and pay stubs that verify your income.

Understand and Review Your Medical Bill For Errors

It’s no secret medical bills are among the most complicated and confusing most of us will see. The American Academy of Family Physicians published a . If it appears your medical bill contains an error, discuss the charges with the service provider. Alternatively, consider hiring a consumer advocate such as , or or . These three services work on a contingency basis, which means they cost you nothing if they cannot save money on your medical bill.

Negotiate a Settlement If You Cannot Afford to Pay Your Medical Debt

If you exhausted all the options mentioned above, you have four options:

Apply for Aid

Help may also be available though church, civic, social, and fraternal groups in your community, as well as Salvation Army, Catholic Social Services, United Way, Jewish Social Services, and others that can be found in the yellow pages. Your situation may seem dire, but you are not alone in facing these hurdles, so reach out these and other reputable organizations.

Negotiate a Settlement With the Service Provider

A settlement is where you and the provider talk about what you can afford to pay, and what the provider is willing to accept as payment. See the Bills.com to learn the six rules to negotiate with a medical provider.

From a legal perspective, a medical debt is just like other unsecured consumer debts, such as credit card debt or payday loans. From a negotiating perspective though, medical debt is more complicated than credit card debt because a medical bill is usually includes services provided by several doctors, labs, and other providers. It is rare for all parties to accept less than the full amount due. If you make no headway by negotiating on your own, then you may wish to hire a provider to develop a you can afford.

Help for medical debt

Talk to a to learn your options to resolving your medical debt.

Consolidation Loan

There are two types of consolidation loans. The one that best suits your situation depends on whether you own a home and if your credit score is high. One option is a to consolidate debt. A Bills.com partner will give you a no-cost .

If you do not own a home or other property to offer as collateral for a debt consolidation loan, consider an unsecured loan. An unsecured loan is one not tied to (or secured) by something you own. Your ability to qualify for either a credit card or a personal loan that will actually save you money depends on your and the amount of your existing debt. If your credit history is less than perfect, you may have difficulty finding a lender willing to extend you credit, and if you do find a loan, you should expect a high interest rate.

A possible loan source you may want to explore is a . or offer peer-to-peer loans. Both Web sites put private lenders in contact with private borrowers. A private lender may be more willing to lend you money than a traditional bank.

If your credit is not excellent, but is improving, and you’re looking for an unsecured loan, speak with one of the consultants at

File for Bankruptcy Protection

is a last resort for resolving medical debt. It is, unfortunately, an option many people are forced to choose, and according to a recent study the No. 1 cause of bankruptcy in the US. Bankruptcy is not a good option if your medical bills are due to a chronic illness where medical costs are likely to continue after you file for bankruptcy. US bankruptcy law sets a minimum amount of time between bankruptcy discharges. Therefore, bankruptcy is good choice when the medical debt is due to a rare calamity.

Medical debt sends many households’ finances into turmoil, and is the No. 1 cause of bankruptcy in the US. Learn if you qualify for assistance in paying your bill. Contact your local government and charitable groups to learn if you qualify for assistance. Review your bill and dispute any errors. Consider negotiating a settlement to your delinquent medical debt. Enlist the help of a pro if negotiating is not one of your skills.

I hope this information helps you Find. Learn & Save.

Best,

Bill

133 Comments

Recent Best
1500 characters remaining
  • AL
    Apr, 2014
    Alyssa
    I am 23, a full-time nursing student, and mom who relies on financial aid, work-study, Medicaid, and food assistance to get by. I have a heart condition and in 2009, I had surgery for a catheter ablation (which they were unable to do and will require a different surgery at some point). At that time, my medical coupons I received after my dad died had ended (even though they weren't supposed to until I completed schooling) and my mother has felonies/substance abuse/homeless issues throughout the years since my dad's death, so I have been basically on my own. When I needed this surgery, my godmother had set up a private insurance plan for me so I could still have some coverage and what that wouldn't cover, my biological mother had a medical card/coverage plan that would cover the remainder. Yet, I was the one that is receiving calls for over $4,000 balance that started in 2011, I believe... I have explained over and over I cannot afford to pay this -- I am a single mother, full-time student. This debt on my record has hurt me over and over, with trying to get into apartments/rentals, small loans for a reliable car because mine always breaks down. My question is, it's been 5 years now, do I keep telling the collectors I can't pay and set up a payment plan when I graduate and get a job? Is it true after a certain point I can no longer be held responsible to pay the debt?
    0 Votes

    • BA
      Apr, 2014
      Bill
      Were you 18 when you had the surgery? If not, you may have no liability for this medically necessary procedure.

      Regardless of your age at the time of the procedure, I want you to consult with a lawyer who has consumer law experience. I want you to learn your options for resolving this debt from someone who has a better understanding of your circumstances than I do. You indicated you reside in Washington. If you cannot afford a lawyer, contact the Washington Advocate Resource Center or another Washington pro bono program to find no-cost legal services.

      In the meantime, read the Bills.com article describing the Washington Collection Laws so you have a better understanding of your rights and potential liabilities. In particular, review the section on Washington's statutes of limitations.
      0 Votes

  • AM
    Mar, 2014
    Aaron
    I had an emergency appendectomy 3 years ago and at the time I was on unemployment but I was told that I made $4 to much a month to qualify for medicare so I was stuck with a bill over $20,000 after all my follow up appointments. Naturally I could not return to work until I got better from surgery and by that time my account was put into collections. It is completely destroying my credit and any chances of renting or owning a home. What are my options? I have considered bankruptcy but I am just wondering if I have any other options. Thanks.
    0 Votes

    • BA
      Mar, 2014
      Bill
      You could try to reach a settlement with the collector, paying only if you get a letter in writing that the debt will be settled in full when you pay. BK is an option, if you qualify. It will harm your credit, preventing a mortgage for a period of time and perhaps being a problem with potential landlords. But, it could save you a ton of money.
      0 Votes

  • DR
    Aug, 2013
    Diane
    I just received a bill from our hospital for a bone scan done over two years ago! It was the first bill I received! I was told at the time that this is completely covered by Medicare and you are eligible for one every two years! The hospital billed it wrong and never tried to bill it again. I called Medicare and they told me I wasn't responsible. Upon going to the billing office, the hospital informed me I was wrong and had to pay it. They said you signed a waiver to pay for this if your insurance didn't! However, they couldn't produce the waiver, but I know I didn't sign one! Anyway, they agreed to write it off. They also told me they are going over old bills that were billed wrong and re-billing people! My question.......is this lawful? If people have insurance in place and the medical facility bills it wrong and refused to re-bill, why is it my responsibility to pay? Also, I was told that when you go to a medical facility you do not have to sign a payment waiver if you have insurance, they can't make you!
    0 Votes

    • BA
      Aug, 2013
      Bill
      We receive a lot of questions from readers whose insurance would have covered a medical bill, if it had been submitted in a timely manner, but ended up as the personal responsibility of the patient due to a delay that was caused by the medical provider. While that seems quite unfair, it appears to be legal. I am glad that in your case, they agreed to waive the charges. Regarding the payment waiver, I am not sure if they can require you to sign one or not, or how not signing one could affect their deciding not to treat you.
      0 Votes

  • SH
    Jul, 2013
    Serena
    I am a full time student and I'm unemployed. I went to the ER twice and total I owe $458. The first visit to the ER, I didn't have an insurance and I was unemployed. The second one, I had school insurance, but it didn't pay off completely so I still owe them some money. How can I get through this?
    0 Votes

  • AV
    Jun, 2013
    Alex
    I'm getting bills for a visit almost a year later. In Missouri can they bill you >90 days after a clinic visit?
    0 Votes

    • BA
      Jun, 2013
      Bill
      The general rule is a creditor, including a medical service provider, may attempt to collect on an account until it is paid. That is not the case in two states, but Missouri is not one of the exceptions. I imagine two parties could place clause in a contract where the two would set a short time limit on making breach of contract claims against each other, but I have not seen such a clause in a consumer contract.

      Perhaps you are in a situation where a medical service provider failed to send its initial invoice to your insurance carrier a year or more after it provided its services. If this is your situation, it is likely your insurance carrier rejected the claim because it was not filed in a timely manner. If that is what happened here, consult with a Missouri lawyer who has consumer law experience. Ask him or her to draft a letter to the service provider stating that because it did not bill your insurance provider in a timely manner it violated the contract you two had where it explicitly or implicitly promised to submit its bill to your insurance in a timely manner. Because it failed to do so, it would be unjust and unfair to make you financially responsible for its negligence.
      0 Votes