The bill arrives in the mail, and you’re tempted to throw it away (again) without opening it. After all, you don’t have the money to pay for that trip you took to the emergency room.
But ignoring your bill isn’t going to make it go away, and the longer you wait — much like the cough that turned into pneumonia — the worse it’s going to get.
It’s probably of small comfort, but during 2017, more than one-fifth of adults had major, unexpected medical bills, with a median price tag of $1,200, according to a Federal Reserve 2018 report. And among that group, 37 percent had unpaid debt from those bills.
And those expenses aren’t limited to the uninsured — with co-pays and deductibles reaching four-figures, even people with insurance can face medical bills they can’t afford.
Craig Antico and Robert Goff, authors of the book “End Medical Debt: Curing America’s $1 Trillion Unpayable Healthcare Debt,” spoke with The Penny Hoarder about how to pay medical bills you can’t afford — the ones you’re scared to even look at — and how to pay them off before they do more harm to your finances.
How to Pay Medical Bills You Can’t Afford
As hard as it may be to believe, healthcare institutions aren’t out to intimidate you and take all your money. At least, not in the beginning. And almost all of them will accept less than the full amount owed.
“Any business would rather collect something — if you say something up front, you can generally work out an arrangement at a lower rate to pay it,” Goff said. “If you don’t, then the full maximum amount is pursued. And it’s pursued aggressively, and the damage and the cost is greater.”
Assuming that your bill is accurate — and considering that as many as 80% of medical bills contain errors, you should make correcting billing errors your first priority — the total owed may make you want to give up altogether. But that’s where these step-by-step strategies can save you and your wallet.
1. Stop Procrastinating
First of all, you need to open the envelope. Seriously. The clock is already working against you.
“What happens, unfortunately, is people don’t say something early,” Goff said. “The bills pile up, they get overwhelmed.”
But even if you walked out of the hospital without speaking to someone about your financial situation, you still have a window of time during which you can plead your case, according to Antico, co-founder of the national charity R.I.P Medical Debt.
“They’ve got about three or four months to talk to the hospital,” he said. “As soon as they get a bill from the hospital, a light has to go on that I must read this bill, as hard as it’s going to be.”
You’ll have a greater chance of obtaining financial assistance if you ask earlier rather than later — especially if you’re already struggling financially, according to Antico. Check out the hospital’s website for its financial assistance policy to find out if you qualify for a discount or charity care.
Pro Tip
If you make less than the federal poverty level, ask your hospital about its charity care program, which covers the cost of healthcare for low-income patients.
“They can switch a bill from being billed to charity care within the first 90 days, for sure,” he said. “Even if you make more than two to three times the poverty level, they’ll give you a discount — they’ll give you a 30 to 40% discount on the bill right off the bat.”
If you’re already past the point of friendly-looking letters and have moved onto the debt collector calls — or worse, a summons — you must respond immediately and attend any court hearings or face catastrophic consequences.
“If you don’t, they get a judgment on you,” Antico said. “And 7% of every employee in this country has a garnishment on their account… between 10 and 25% of their income is taken out to pay a bill that someone sued them on.
“That’s why you should always answer the call.”
2. Calculate What You Can Afford
Setting a goal to pay off the medical bills rather than avoiding them is the best way to help your financial situation longterm.
But when facing a bill — or pile of bills — that seems insurmountable, it’s easy to panic and whip out your credit card to make it all go away. That’s a big mistake, since there are alternatives to handling medical debt that don’t involve the double-digit interest rates that credit cards charge.
Instead, plan your payoff in a responsible way to determine how much you can afford to pay.
“There’s a rule of thumb that I have: Only pay about 3% of your gross income toward these bills,” said Antico, who added that if you live with your parents rent-free or don’t have a car payment or insurance, you can bump up that amount to as much as 15%.
Your gross pay is your pre-tax and pre-deduction income. It includes your regular hourly or salaried pay plus any overtime.
Additionally, medical debt doesn’t accrue interest, so making hefty payments beyond your means can leave you in more dire circumstances than if you paid off other debts you owe — like those pesky credit card balances.
Once you go above that percentage, you’re putting your ability to cover other basic expenses in peril. If you’re paying 10% to 20% of your gross income toward out-of-pocket medical expenses, “then you’re in material hardship, where you can’t even fix the car or you decide not even to go to the hospital,” Antico said.
However, deciding how much your budget can handle is essential before you call your medical provider.
3. Negotiate With Your Provider (or Debt Collector)
You don’t ask, you don’t get.
And the sooner you ask for help with your medical bills, the more chance you have of getting a receptive audience. Most providers are willing to work with a patient who can’t afford their services — even after the services have been rendered, according to Goff.
So once you’ve reviewed your bill and know how much you can afford to pay, it’s time to call your provider — typically an office manager at the doctor’s office or the billing department at a hospital.
Pro Tip
Even if you have multiple medical bills, avoid the temptation of a consolidation loan for the convenience of a single payment. Remember: Medical debt usually doesn’t accrue interest, but a loan will.
Speaking with a human being is the best way to present your case, whether it’s explaining you didn’t pay because the bill got lost in a move or proposing that you pay a portion of the bill in cash to have the rest of the debt forgiven, according to Goff. After all, it’s in the provider’s financial interest to talk to you, too.
“I’d rather collect half of this from you now than turn it over to collections and lose half of it to a collector — if I ever get that,” he said.
Even if you’ve heard from a debt collection agency, there is still hope to negotiate with the provider, according to Goff.
“The first level in terms of collection, the debt hasn’t been sold,” he said. The collection agency at that point is working on behalf of the provider, who may be willing to make a deal with you before it goes to the second level, where it sells off your debt to the collection agency at a substantial loss.
“I would start by going back to the originating provider, not dealing with the bill collector,” he said. “If [the provider] can’t or won’t, talk to the bill collector and say, ‘Can we settle this for x?’”
4. Set Up a Payment Plan
If you’re not in a position to make a cash outlay for a one-time payment to erase your medical debt, ask your provider about potential payment plan options.
Working directly with the provider to arrange a payment schedule is definitely in your best, ahem, interest.
“If you make a payment plan with a hospital, they don’t charge you interest — you just pay the principal amount that you owe the next two, three, four, five years,” Antico said. “And they’ll take almost any payment plan that someone wants to pay.”
In exchange for reliably getting paid on time, your provider might also agree to a further discount if you offer to put your installments on automatic payments.
5. Learn From Your Mistakes
Just because you’re in debt doesn’t mean it always has to be that way. You can learn from your mistakes and not put yourself further in debt.
Before your next trip to a medical provider, find out if you qualify for Medicaid or charity care.
“Thirty-three percent of the population in this country makes less than two times the federal poverty level,” Antico said. “So one-third of all people in this country qualify for charity care.”
If you do have health insurance, understanding your health benefit plan is essential to preventing unwanted surprises, according to Goff. That includes finding out what services you might not realize are covered.
If you make a payment plan with a hospital, they don’t charge you interest — you just pay the principal amount that you owe.
“We’re actually seeing people avoid going for preventative services, although it’s not even subject to even a copay or a deductible,” he said. “You’re losing out on the benefit, including an opportunity to avoid greater illness.”
More than anything, both Goff and Antico stressed that early action can make the difference between paying off medical bills and sinking into financial ruin.
“When a patient doesn’t pay attention and goes anywhere, does anything, and then wakes up to, ‘Oh my god, I have all these bills and they’re not going to be covered,’ they’re already behind the eight ball,” Goff said. “If you’re going to run into an economic problem, say something early to your physician.”
After all, it’s easier to feel better when you have the remedy for your financial health, too.
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.
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