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. The average hospital bill for a 3-day stay before insurance? $30,000.1
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. After your unpaid bills reach 60 to 180 days past due, providers will often sell your debt to a third-party collection agency.2 Once in collections, you could receive phone calls and letters requesting payment. Be sure to watch out for scammers posing as debt collectors, who may call at odd hours, pressure you to pay by money transfer or prepaid card, or threaten to tell your friends and family.3
As of April 2023, any medical debt sent to a debt collection agency that's less than $500 or less than a year old shouldn't show up on your credit report. (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 pay medical bills
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 of 2022 now prohibits some charges from providers you might not have realized were out-of-network. That means any unexpected out-of-network charges 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. See 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. Look for 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. Benefits.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 see 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 health care professionals—in many 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, contact the hospital or health care system to see if they have patient advocacy departments or reach out to your insurance provider or local health organizations. Look into 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, you could look into a credit card to help spread payments over time. You can speak to the bill issuer to see 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 avoid any debt settlement companies who offer to negotiate on your behalf for a fee. 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.
Using a personal loan could help you pay your medical bill and gain more time to pay your balance in full. 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.
Prepare for future medical expenses
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 FSA
Opening a health savings account or enrolling in a flexible spending account could allow you to set aside cash before it's been taxed to pay for qualified medical expenses. If you use the funds to pay for qualified medical expenses, any withdrawals are also tax-free. You can invest the money in an HSA to potentially grow your money over time without paying taxes on your earnings too. 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 allows you to carry money over year after year, while an FSA is typically an annual use-it-or-lose-it account offered by some employers. For both HSAs and FSAs, your employer may contribute for added savings.
Build an emergency fund
Even if you don't have an HSA or FSA, you can still set aside cash for medical costs by building an emergency fund. Having a rainy-day fund can help protect you through 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.
Can't make other payments? Get steps to help cover those bills and more in the Fidelity Smart MoneySM Playbook: How to help crisis-proof your life.