Tips on avoiding medical debt

January 13, 2012 in Medical Debt

man with thought bubble: "Wait a minute, I owe that much for a few medical procedures? How can I afford to pay this bill?"

A few weeks ago you visited your doctor. Maybe you had a few tests run. Maybe you had an out-patient procedure done. Or maybe you even had a short stay in the hospital.

Then comes your bill. And it’s far more expensive than you’d expected. Now what?

Many people are surprised that the price tag on their medical bill isn’t set in stone. Between financial assistance programs and negotiating directly with your provider, there are strategic ways to avoid knocks from the collection agency.

Choices, Choices

First things first: You should deal with your medical bills as soon as possible. You have several options:

Option 1: Not paying

If you’re uninsured or financially struggling, the idea of paying a costly medical bill can be daunting. But not paying isn’t so much an option as it is a danger. Most unpaid medical bills will eventually be sent to a collections agency, and collectors often report medical bills to credit bureaus. If you want to spare your credit score a beating, move onto options 2, 3, or 4.

Option 2: Apply for financial assistance

Depending on your financial situation, you may qualify for various federal and state programs (such as Medicare and Medicaid).

If you don’t qualify for government assistance, you may still qualify for charity care programs offered by hospitals and doctors’ offices. Call the billing department and ask to speak with a financial counselor or a manager of patient accounts to see if you meet their qualifications.

Option 3: Negotiate a payment plan

Before choosing this option, you should decide how much you can realistically pay per month. Once you know that, speak with the manager of the billing department about:

  • Interest: Request an interest-free payment plan.
  • Written agreement: Be sure to get formal documentation of your agreed-upon payment plan.
  • Monthly statements: Request to receive statements that show your payments and your remaining balance.
  • Extended payments: You can request an extended payment plan if you are negotiating a bill or applying for assistance.

Option 4: Negotiate a discount

The charges on your medical bill may not be the same as the charges on your friend’s, even if the two of you had the same procedure. That’s because billing rates differ depending on who’s paying. One way to lower your bill is to request to pay the negotiated rate instead (the amount that private insurance companies or Medicare/Medicaid would pay for services). You can offer to pay the entire bill in full if they give you an affordable discount.

You can also ask to the hospital or lab to forgive the entire bill. It also won’t hurt to take a moment to explain the hardships you’re facing—a personal story can go a long way.

Sometimes it’s best to make these requests in writing rather than over the phone.

General Need-to-Knows

  • If you’re dealing with a hospital, take a look at the American Hospital Association’s guidelines on hospital billing and collection practices.
  • When speaking with the billing department, ask that your bill be put on hold from collections and that your account status be updated to pending.
  • Request an itemized bill. If you notice you were charged for services you did not receive, be sure to dispute incorrect charges.
  • Don’t be afraid to climb up the administrative hierarchy. Build relationships with billing managers. You can even ask to speak with the Chief Financial Officer.
  • Keep comprehensive records of all your interactions with the billing department.

Thanks to Andrew Cohen for the content and Aayesha Siddiqui (@aayesha) for the presentation.

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