You May Want to Think Twice About Charging Medical Bills. Here Are Options

An senior citizen's hands rest on their midsection as they wear a hospital gown.
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When Tina Ortega started experiencing mouth pain, she headed straight to a dentist. The Mississippi resident ended up needing a root canal. Even with insurance, she had pay $500 out of pocket.

She and her husband didn’t have the money — Ortega was without a job and has children, so funds were tight. To pay the bill, she opened a CareCredit account and took advantage of its deferred-interest period.  

She was confident she would pay it off before incurring any interest, so she thought it was the best option for her at the time.  

“People who say not to use credit cards –– they don’t understand because they’ve never been there,” she said. “Especially if they’ve never had to live without insurance. You have to do what you have to do.”

Medical Bills Are a Serious Source of Worry

In the HealthFirst Financial Patient Survey, conducted in 2017 by business intelligence firm ORC International, 1,011 adults answered questions about health care pricing and payment options.

The findings? Of the respondents, 42% said they “are very concerned or concerned about their ability to pay out-of-pocket medical bills in the next two years.” That number jumped to 54% among respondents who make less than $35,000 a year.

And they weren’t just worried about expensive surgeries. About 53% of respondents said they were concerned about their ability to pay a medical bill under $1,000, and 35% worried about whether they could pay a bill under $500.

CareCredit, or any credit card with interest-free or deferred-interest periods, might give peace of mind to customers who know that if a big bill from a doctor’s office comes up, they have a bit of breathing room to pay it back.

But with deferred interest, which is what CareCredit offers, if you don’t pay the balance in full by the time promotional period ends, you’ll be charged all the interest you avoided during that period, plus whatever interest you accumulate on the remaining balance.

Ortega’s interest-free period was for nine months — after that, she would have been charged an annual percentage rate, or APR, of 26.99%. If she hadn’t paid the account in full during the promotional period, she would have been charged all the interest she avoided for nine months.

Ruth Linden, founder and president of Tree of Life Health Advocates, says financing medical bills on a credit card –– including CareCredit –– should be a last resort.

Why? Because once the interest-free period is up, you’ll often pay “exorbitant interest rates.”

“The problem is that many people fully intend to pay off their balance during the interest-free window but life (and other health issues) may intervene,” Linden said.

3 Alternatives to Charging Medical Bills to a Credit Card

If Ortega hadn’t charged the bill, what would her options have been since she didn’t have the funds sitting in her bank account?

Here are a few other alternatives to charging medical bills to a credit card:

  1. Ask a Provider for Financial Help

Whether your bill is from a hospital, lab or physician, asking for help can go a long way.

“It can’t hurt, and it might make a huge difference,” Linden said. “Lower-income consumers may be eligible for financial assistance from hospitals and individual providers.”

To start the process, recommends contacting your hospital’s patient services department. After you explain your situation, the department will ask you a few questions about your income to determine if you’re eligible for assistance. If you are eligible, part of your bill may be forgiven.

If you don’t qualify, says you may be able to set up a payment plan through the hospital.

2. Negotiate the Balance

If your income is too high for the provider to offer a discounted rate, consider negotiating your bill. You can negotiate the balance with the provider and your insurance company.

Wondering where to start? First, contact the provider’s billing department. Tell the representative you’re connected with that you’ll pay a percentage of the balance now if the provider will forgive the rest.

If that sounds intimidating to you, consider looking up average retail prices for hospital procedures. You can use these numbers as a point of reference when negotiating, and they might be to your advantage if your balance is much higher than average.

3. Request Assistance From a Patient or Medical Billing Advocate

Linden said a patient or medical billing advocate can review your bills and the insurance company’s explanation of benefits — if you have health insurance. While reviewing them, the advocate will look for billing errors, such as duplicate charges or charges for services you did not receive, and work on your behalf to correct those errors.

If you don’t have help from a trained professional, you can still find these errors yourself. It’s worth the effort, too — it’s estimated that about 80% of medical bills contain errors.

Take a look at your bill and confirm that all of the items are correct. If a prescription is listed, did you actually get it from your provider, or did you pick it up from your pharmacy? Are there any duplicate charges? If you find errors, be sure to contact the provider’s billing services center immediately.

Meanwhile, consider building an emergency fund to cover future medical bills  –– you’ll thank yourself later.

Kelly Anne Smith is an email content specialist at The Penny Hoarder. Catch her on Twitter at @keywordkelly.