Unplanned medical bills can be a shock. Not only can they be difficult to budget for, but they can also be surprisingly expensive, depending on your insurance coverage. A hospital stay can cost tens of thousands of dollars before insurance.1
Fortunately, you have options for dealing with medical bills and, if it gets to that point, outstanding medical debt. If you're worried about paying medical bills for yourself or your family, here's what to consider.
What happens if you don't pay your medical bills?
If you don't pay your medical bills, you'll first risk incurring late fees. If bills remain unpaid for an extended period—say, 60 days or longer—providers may transfer or sell your debt to a third-party collection agency.2 Once in collections, you could receive phone calls and letters requesting payment. Be alert for scammers posing as debt collectors, who may ask you for personal financial information, refuse to give you their phone number, or threaten criminal charges against you.3
The major credit bureaus generally don't include medical collections under $500, paid medical collections, or medical collections less than a year old on consumer credit reports. (But you may still want to check on that—just in case.)4 However, unpaid debt in collections that's $500, or more and over a year old will show on your credit report and could stay there for up to 7 years—potentially a serious hit to your credit score.5
How to negotiate and manage medical debt
When a big medical bill arrives, don't put it off even if you're unable to pay it. Instead, try one of these steps to lower or manage the debt.
1. Review your bill for accuracy.
The first thing you should do when you receive a medical bill is to make sure it's correct. Requesting an itemized bill can help you better identify mistakes, such as double billing, incorrect billing codes, inaccurate insurance information, and coverage disputes. For example, the No Surprises Act protects you from some charges from providers you might not have realized were out-of-network. That means any unexpected out-of-network charges that appear on your bill could be a red flag.6
Dispute inaccurate information or insurance issues with the provider's office or your insurance company. This may require a lot of time and effort, but it could save you from overpaying.
2. Ask to lower the bill.
Unlike many other types of debt, medical bills can often be negotiated. Ask if your provider offers any discounts for things like paying as a lump sum (provided you can afford it). Many hospitals also have bill relief programs that can help decrease your bill if you meet certain criteria for financial assistance. If you suspect you may have issues affording a bill, consider inquiring about these programs as early as possible.
3. Seek outside assistance.
Your provider and insurance company aren't the only ones who can help with your medical bills. Government and nonprofit organizations could also assist you in finding relief. USA.gov lists a vast number of federal and state resources and organizations that can help you manage and pay for your medical bills. Many nonprofits offer disease-specific funds that can help cover the costs of medical care. Check your work benefits to learn if your employer offers any medical assistance programs.
4. Request a medical bill payment plan.
A payment plan from your provider could help you break a larger bill into smaller parts over time. Plan details will vary, but some organizations have interest-free plans available. Always ask about plan terms and fees before agreeing to a payment plan.
5. Work with a patient advocate.
Patient advocates are professionals—in some cases, nurses—who can help you understand your bill and navigate payment options. These pros know their way around a medical billing statement and can help spot errors, overcharges, and ways to negotiate with a hospital or provider's office.
To find an advocate, ask the hospital or health care system if they have patient advocacy departments, or reach out to your insurance provider or local health organizations. Determine whether you could be referred to an advocate through your employer benefits as well. Many advocates are available at no charge directly through the hospital issuing the bill. Others work for patient advocate companies, and there may be a charge for their services. Asking about potential fees can help avoid surprises.
6. Consider a medical credit card.
If you need to finance your medical bills, a credit card might allow you to spread payments over time. Contact the bill issuer and ask if they have arrangements with any medical-specific credit card companies. Or you could research and apply for a credit card with a low-interest or even no-interest introductory offer. Be mindful of the promotional term and try to pay off your bill before the term ends to avoid interest charges.
7. Settle with debt collectors.
If your medical debt has been sent to a third-party debt collection agency, they may accept a reasonable repayment or debt settlement plan, such as a lump sum or set number of payments, even if the new total is less than the original balance. You can negotiate this yourself or with the help of a debt counselor or an attorney, but be cautious of debt settlement companies that charge fees to negotiate on your behalf. You may qualify for free legal assistance through government-funded or nonprofit programs. Just be sure you can hold up your side of the bargain and get any agreement in writing if you do make an offer.7
8. Think carefully before taking out a personal loan.
A personal loan could help you pay your medical bill or gain more time to pay your balance in full. But be aware upfront that personal loans could come with high interest rates, which will increase the total amount you have to pay in the end. Do the calculations and shop around for the lowest rate if you use this option.
Preparing for future medical bills
Getting caught off-guard by a medical bill can happen to anyone. But preparing ahead of time for unexpected health costs can potentially save you from having to resort to credit card debt or taking out another type of loan.
Open an HSA or sign up for an FSA
Health savings accounts (HSAs) and flexible spending accounts (FSAs) both let you set aside pre-tax money for health care costs. Withdrawals from these accounts used for qualified medical expenses are also tax-free. HSAs have an added benefit: You can invest your balance, and any earnings can potentially grow tax-free. That's why HSAs are considered "triple-tax advantaged."8
An HSA could be an option if you're enrolled in an HSA-eligible health plan and meet other eligibility criteria. This account is always yours and allows you to carry money over year to year, so you can build up savings for any expected or unexpected future expenses. Typically, an FSA is a "use-it-or-lose-it" account that some employers offer; what you don't spend each year may be forfeited to your employer. For both HSAs and FSAs, your employer may contribute for added savings.
Build up your emergency savings
Even if you don't have an HSA or FSA, you can still set aside cash for medical costs by building emergency savings. A rainy-day fund can help you prepare for all of life's curveballs too—not just surprise medical expenses. Start by aiming to save $1,000 and then continue working toward a goal of saving 3 to 6 months' worth of essential expenses.