How to Negotiate Medical Bills: A Step-by-Step Guide
The hospital 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.
Ignoring medical bills isn’t going to make them go away, and the longer you wait — much like the cough that turned into pneumonia — the worse it’s going to get. But there is some good news: You can negotiate medical bills so that you pay a fraction of the amount you were charged.
It’s probably of small comfort, but you’re not the only one facing steep medical costs. In 2019, a quarter of adults skipped medical care, such as a visit to a doctor or dentist, because they couldn’t afford it, according to a Federal Reserve 2020 report. And 18% of those respondents had unpaid medical debt of their own or from a family member.
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 negotiate medical bills you can’t afford and how to pay them off before they do more harm to your finances.
How to Negotiate Medical Bills That 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.
“If you say something up front, you can generally work out an arrangement at a lower rate,” Goff said. “If you don’t, then the full maximum amount is pursued — and it’s pursued aggressively.”
1. Stop Procrastinating
First of all, you need to open the envelope. Seriously. We understand that it’s easy to get overwhelmed after a medical crisis, but the clock is already working against you.
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.”
First, understand if this is a bill from your health provider or health insurance company. Health insurance companies may send scary-looking statements that indicate how much they paid and how much is still owed, but that amount is not necessarily how much you have to pay.
It’s best to reach out to your healthcare provider and ask them how much you still owe. You can also request an itemized bill. If you still don’t understand what you’re looking at, make them explain each charge in detail — you have the right to demand to know what you’re paying for.
2. Ask for Help (the Earlier the Better)
You’ll have a greater chance of obtaining financial assistance if you ask earlier rather than later — especially if you’re already struggling financially. If you owe a hospital money, check its website for its financial assistance policy to find out if you qualify for a discount or charity care.
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,” Antico said. “Even if you make more than two to three times the poverty level, they’ll give you a discount.”
3. Calculate What You Can Afford
Setting a goal to pay off medical bills rather than avoiding them is the best way to help your financial situation long-term.
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 by determining 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%.
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. If you don’t have one already, it’s a better idea to put at least some of that money toward starting an emergency fund.
However, deciding how much your budget can handle is essential before you call your medical provider.
4. Talk to Your Provider (or Debt Collector)
Most medical providers are willing to work with a patient who can’t afford their services — even after the services have been rendered.
So once you’ve reviewed your bill and know how much you can afford to pay, it’s time to call your provider. Typically, you’ll need to speak to an office manager at the doctor’s office or the billing department at a hospital.
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.
After all, it’s in the provider’s financial interest to talk to you rather than turning over your bill to collections and potentially losing even more money.
Even if you’ve heard from a debt collection agency, there is still hope to negotiate with the provider. The collection agency at that point is working on behalf of the provider, who may be willing to make a deal with you.
“I would start by going back to the originating provider — not dealing with the bill collector,” Goff said. “If the provider can’t or won’t negotiate, then ask the bill collector if you can settle the bill for a lesser amount.”
5. Set Up a Payment Plan
If you’re not in a position to make a huge cash outlay 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.
6. 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 — up to one-third of U.S. residents qualify for charity care, according to Antico.
If you do have health insurance, understanding your health benefit plan is essential to preventing unwanted surprises. That includes finding out what services you might not realize are covered.
A bit of good news: The three major credit bureaus recently announced that most medical debt will no longer affect consumers' credit scores.
“We’re actually seeing people avoid going for preventative services, although it’s not even subject to even a copay or a deductible,” Goff 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.