The Ultimate 10-Step Guide to Dealing with Medical Debt
1. Check the Bill for Errors
Many medical bills overcharge because of errors in the codes used by the hospital or clinic to bill the patient. But most people never check, and they end up paying more for services they didn’t get. If you find an error in your medical bill, call the hospital immediately so they can fix the mistake. Correcting a billing error can reduce your bill and even make the difference between an insurer paying for the bill or not.
2. Know Your State’s Balance Billing Laws
Balance billing or surprise medical bills happen when your insurance refuses to pay for a doctor or services at an in-network hospital or clinic because one or more of the doctors or services were not in-network. For example; the insurer will pay for the delivery of your baby, but not for the anesthesiologist because they were not in-network and you didn’t know about it. In an emergency situation, it’s impossible to figure out who if any of the doctors is out-of-network. As a result, some states have laws prohibiting balance billing.
California, for example, recently passed a law requiring out-of-network doctors and hospitals to accept in-network fees from insurers. Other states ban balance billing in emergency situations. By knowing if your state prohibits balance billing, you will be able to fight a surprise medical bill and negotiate a lower bill.
3. Negotiate with the Hospital
Most hospitals will negotiate with patients in order to lower their medical bills. The typical negotiation includes setting a payment plan so the patient can pay the bill in monthly installments. Some hospitals offer to lower the bill by paying the full balance after the discount upfront in cash. And some will lower the bill simply because the patient complained the price was too high, lowering by as much as 50%. However, most people don’t know this and they pay the full bill. Don’t. Negotiate first. A comprehensive guide on how to negotiate a medical bill can be found here: https://www.insedia.com/articles/how-to-negotiate-for-a-lower-medical-bill. And if you to get a successful negotiation with the hospital, make sure the agreement is in writing, so the hospital can’t deny the existence of the agreement later on.
And by the way: even when a medical bill goes to collections, some debt collectors are willing to negotiate payment plans or to lower the bill. But you have to ask them. They are not going to offer it to you. If you get them to agree to a lower bill or payment plan, get the agreement in writing before sending any payment. That way the collector won’t be able to back away from the agreement.
4. Ask for Financial Assistance
In some cases, because of a patient’s income, the hospital will be willing to offer financial assistance or simply write-off the bill. This is because not-for-profit hospitals, which are about 60% of all hospitals in the United States, are required by law to spend at least 3% of their revenue on charity care, which is free care for people who can’t afford to pay the bill because of income level. The hospital may ask for your financial information, but if you are below a certain income level the hospital may offer financial assistance.
5. Don’t Pay with a Credit Card
If you pay your medical bill using a credit card, the debt ceases being of a medical nature (which if unpaid or paid late doesn’t hurt your credit scores as badly) and becomes credit card debt (which if unpaid or paid late will damage your credit scores.) This is a problem because credit bureaus punish credit card debt with lower credit scores more severely than medical debt. So, unless you are 100% certain you will be able to pay the full balance of your credit card after paying a medical bill, don’t risk it. Many hospitals are willing to set up monthly payment plans for medical bills interest-free. Use one such plan instead.
6. Follow Up on Your Payment (in Case the Hospital Didn’t Get It).
Always follow up with the hospital and with the insurer to make sure the bill has been paid. Sometimes the hospital fails to submit the paperwork for the bill to the insurer. In some cases, years pass before they submit the paperwork due to clerical errors but the insurer won’t pay for a bill that’s more than a year old. As a result, you end up having to pay for the full bill. So, if you went to the hospital and you haven’t gotten your bill within three weeks, call the hospital and the insurer to inquire about the status of your bill. Keep doing this every couple of days until you get some indication that your bill has been taken care of. If you don’t and you simply assume the bill will be paid, the bill can end up in collections and damaging your credit score, forcing you to pay the full amount for the bill.
7. Know your rights as a debtor when dealing with collectors.
If your medical bill did go to collections, then know your rights. Federal law prohibits debt collectors from harassing you and misrepresenting themselves to you (in other words, they can’t lie to you in order to get you to pay). You also have the right to request proof of the validity of the debt. If the collector can’t prove the bill is valid, they must stop contacting you and the credit bureaus must remove the bill from your credit report.
8. Know your state’s statute of limitations on debt.
Sometimes hospitals, doctors and clinics sell their debt to debt collectors after they give up trying to collect it. The debt can be very old, but the collector may try to get you to pay it anyway. They have one problem: they can’t sue you for the debt if the statute of limitations in your state already expired. Statutes of limitations for debt vary from state to state. They go from a low of 2 years to a high of more than 10. In general, statutes of limitations on debt are about 6 years after the first delinquency on the bill. For example, if the bill was due on September of 2010, and it was never paid, and the statute of limitations is 6 years by December of 2016 the collector can’t sue you for that debt anymore. The only way he can sue you is if you send him payment, no matter how small. By sending payment the statute of limitations resets and you can be sued again. A list of every state’s statute of limitations can be found here.
9. Learn how to dispute a medical bill in your credit report.
If a medical bill got to your credit report even though you paid it, or because of a mistake (mistaken identity, for example), you can dispute the bill either with the credit bureaus directly or through the website for the Consumer Financial Protection Bureau, a federal agency that helps people deal with debt collections problems. You can find more information about it here.
10. Use an advocate.
If all else fails, you can try to negotiate a lower price for your medical bill through an advocate. Advocates deal directly with the hospitals on behalf of patients. They charge 30% of the savings they get for you, but any amount saved is important. You can find out more about advocates here.
BONUS TIP: Call Your Local Media Outlets
Sometimes people contact the local media about their medical bills when their hospital, doctor, clinic, insurer, or lab won’t be reasonable. If a local TV station, for example, finds out about a very high hospital bill as a result of a mistake, and the hospital doesn’t want to fix it, they may be interested in showing that story on TV. They’ll investigate to get more information. To avoid the bad publicity associated with an exposé airing on television, they may end up backing off and lowering the bill, if not dropping it entirely.
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