I recently read an article entitled “100 million adults have health-care debt — and 12% of them owe $10,000 or more.” This article was written by Sarah O’Brien, a reporter in the CNBC’s personal finance team. This article was eye opening to me because medical debt is very widespread, and I haven’t heard too much about it during these economic turbulent times. I’ve heard about credit card debt, student loan debt, and auto loans, but I haven’t heard that much in the media about health care debt.
In fact, one of the top reasons for an individual filing bankruptcy is due to medical debt. In the article Sarah mentions, “Overall, an estimated 41% of people — or about 100 million adults — currently face such debt, ranging from under $500 (16%) to $10,000 or more (12%),” according to a report from the Kaiser Family Foundation. Using $2,500 as a base level, 56% who carry medical and/or dental debt owe below that amount and 44% owe that much or more.
O’Brien also shared about the latest changes regarding how medical debt is reported on credit reports. She states, “As of July 1, if such debt shows up on your history because it went to collections, but you’ve since paid it off, the three big credit-reporting companies — Equifax, Experian, and TransUnion — will stop including it on your report. Under current practice, it can remain on your record for seven years.”
Another thing that stood out in this article was the federal law that took place earlier this year: the act against “Billing Surprise.” O’Brien shares “One thing that could help prevent consumers from facing outsized bills — at least in some situations — is a federal law that took effect this year. Historically, one of the biggest causes of unexpected large medical bills was out-of-network providers being involved in your care without you realizing it. Then the bill would come, and you’d discover that your insurance didn’t fully cover those charges, if at all”
This news is huge for a lot of Americans that are looking for ways to pay down medical debt. Just know, if you’re struggling to pay off medical debt, you’re not alone. Medical debt is more common than a lot of us have realized, and it can be extremely difficult to manage without a plan. There are a few different options available to help pay off medical debt. Before we go through the list, please make sure before you pay off the medical debt that it is actually your debt. Medical Debt has been known to report inaccurately on credit reports, so take some time to review your credit report to make sure the debt being reported is accurate.
9 Effective Ways to Pay Off Unexpected Medical Debt
1. Negotiate with your creditor
One option for paying off medical debt is to try to negotiate with your creditors. This can be a complicated process, but it may be possible to get some relief if you’re able to demonstrate financial hardship. One of the best things we can do is be proactive. Familiarize yourself with your rights as a consumer. Under the Fair Debt Collection Practices Act, creditors are not allowed to harass or abuse debtors. They also cannot make false or misleading statements about the debt.
Prepare to negotiate by creating a plan and a realistic idea of what you can afford to pay and be willing to negotiate. Remember, the goal is to reach an agreement that is acceptable to both parties. If you are comfortable reach out to the creditor first. This shows that you’re serious about wanting to resolve the debt and that you’re taking responsibility for it. When you’ve reached an agreement make sure to get everything in writing. This can not be stressed enough. A phone conversation alone will not due. If it’s not in writing, it will be difficult to prove anything.
2. Set Up a Payment Plan
If you’re unable to negotiate a lower payment with your creditors, you may be able to set up a payment plan. This will allow you to make smaller payments over time, which can make paying off your medical debt more manageable. Be sure to get the terms of the payment plan in writing so that there’s no confusion about what you’re agreeing to. Make sure to pay your bill on time and as agreed. During the payment plan period, do your best to not miss payments to avoid any breach of contract.
3. Look into Consolidation or Settlement Options
Another option for paying off medical debt is consolidation or settlement. With consolidation, you’ll take out a loan to pay off your debts, and then you’ll make one monthly payment to repay the loan. This can help to lower your monthly payments and make paying off medical debt more manageable. With a settlement, you’ll work with a company that will negotiate with your creditors to try to get a lower payoff amount. This option can be risky, as there’s no guarantee that you’ll be able to settle your debts for less than what you owe.
4. Use a Credit Card With a 0% Intro APR
If you have good credit, you may be able to take advantage of a 0% intro APR credit card offer to pay off medical debt. This can help you save on interest charges, if you’re able to repay the debt before the intro period expires. Just be sure to read the terms and conditions carefully so that you understand the full cost of the offer. This option for those who can afford to make the payments needed each month to pay down the balance owed. If you are on a tight budget this option might not be the best for you in the long run.
5. Get a Personal Loan
As mentioned above if you have the budget to pay a fixed amount each month this is another option for paying off medical debt. This option is also great if you have good credit and can qualify for a low interest rate. Be sure to compare offers from multiple lenders to find the best deal possible. Going with the first choice isn’t always the best option. If you are unsure about what option is best for you, please reach out to a financial advisor to help walk you through your options.
6. Use Savings or Investments
If you have savings or investments, you may be able to use them to Pay Off Medical Debt. This can be a good option if you have the money available and you’re able to get a lower interest rate than what you’re currently paying. Just be sure that you understand the risks involved before using this method. Some of the risks include cashing in your investments, which can trigger taxes and other fees. Also, if you borrow from your retirement account you need to be aware that you may end up having to repay the loan with interest.
7. Borrow from trusted family or friends
If you have trusted family or friends who are willing to help, you can borrow money from them to Pay Off Medical Debt. This can be a good option if you’re unable to get a loan from a traditional lender. Just be sure that you establish clear terms and conditions before borrowing any money. Make sure that you abide by the agreement that is made. It’s not right to make an agreement and decide to use the money to go on vacation when it’s supposed to be used to pay back the friend or family member you borrowed from. Trust is not something to abuse or take lightly.
8. Get Help from a Nonprofit Organization
There are several nonprofit organizations that help with Paying Off Medical Debt. These organizations can help you negotiate with your creditors or set up a payment plan. They may also offer other resources and assistance. There are a few ways to find a nonprofit organization that can help you with your medical debt. You can search online for organizations that offer assistance, or you can contact your local community center to see if they know of any resources. Once you’ve found an organization that can help, you’ll need to provide some information about your financial situation. The organization will then work with you to create a payment plan that fits your budget. If you’re struggling to pay off medical debt, don’t hesitate to reach out for help. With the right resources, you can get the assistance you need to get back on track.
Some examples of Nonprofits that help with debt relief.
National Foundation for Credit Counseling
800-388-2227
Home – NFCC – National Foundation for Credit Counseling
Financial Counseling Association of America
800-450-1794
FCAA – Financial Counseling Association of America – Debt Counseling Professionals
HealthWell Foundation
800-675-8416
https://www.healthwellfoundation.org
9. Refinance Your Home
If you have equity in your home, you may be able to refinance your mortgage and use the extra cash to pay off medical debt. This can be a good option if you’re able to get a lower interest rate on your mortgage. Just be sure that you understand the risks involved before taking this step. Refinancing your home to pay off medical debt can have some advantages.
First, you may be able to get a lower interest rate on your new loan, which can save you money over time. Second, by refinancing, you may be able to extend the term of your loan, which can help lower your monthly payments. Third, if you’re struggling to make ends meet each month, consolidating your debt with a home equity loan can give you some breathing room in your budget.
However as mentioned earlier there is some risk involved with refinancing your home to pay down medical debt. First, you’ll have to pay closing costs on your new loan. Second, if you extend the term of your loan, you’ll end up paying more interest over the life of the loan. Third, if you’re not careful, you could end up taking on more debt than you can handle. Everyone’s situation is different so before you decide to refinance your home to pay off medical debt, it’s important to carefully consider all your options.
Another medical debt relief option
Medical bill advocates
A medical bill advocate is a professional who helps patients navigate the complex world of medical billing and insurance. They can help you understand your options for paying off medical debt and can negotiate with your creditors to get you the best possible terms. If you’re struggling to pay off your medical bills, a medical bill advocate may be able to get you back on track.
Where can I find a medical bill advocate?
We can find a medical bill advocate online. Here are some websites for you:
Medical Cost Advocate
Reduce Healthcare Costs | Medical Cost Advocate
(201) 891-8989
Medical-bill-gurus
https://www.medicalbillgurus.com/patient-advocacy-services
1-800-674-7836
Patient Advocate Foundation
http://www.patientadvocate.org
(800) 532-5274
Here are some medical debt questions and some answers!
Can medical bills ruin your credit?
Medical debt can indeed have a negative impact on your credit score, but there are steps you can take to mitigate the damage. First, don’t just ignore the debt. That’s one of the worst things that you can do. Paying off your medical debt as quickly as possible is the best way to avoid long-term damage to your credit score. If that’s not an option for you right now, work with your medical providers to set up a payment plan that works for you. If you have other debts, make sure to keep up with those payments as well.
What is the No Surprise Act?
The No Surprise Act is a proposed law that would protect consumers from being surprised with unexpected medical bills. The act would require hospitals and other healthcare providers to give patients advance notice of any potential costs not covered by insurance. Under the No Surprise Act, patients would have the opportunity to approve or reject any charges before they are responsible for them. The goal of the No Surprise Act is to make healthcare more transparent and affordable for consumers.
How often do hospitals sue for unpaid bills?
Although hospitals may not like to admit it, they sometimes need to resort to legal action to get patients to pay off their medical debt. A study conducted by the American Hospital Association found that 26 percent of surveyed hospitals sued patients for unpaid bills in the last year. There are a number of reasons why a hospital might choose to sue a patient. In some cases, the hospital may feel that the patient can pay but is simply choosing not to do so. In other cases, the hospital may be trying to send a message to other patients who are behind on their payments that they need to act to avoid being sued themselves.
Is medical debt forgiven after 7 years?
First, it is important to understand that medical debt is treated differently than other types of debt in the eyes of the law. This is because medical debt is often incurred through no fault of the debtor. For example, you may have been in an accident or had an unexpected illness that resulted in large medical bills. Due to this reason, most states have laws that protect patients from being sued for medical debt. In many cases, these laws limit the amount of time that creditors have to collect on a debt. So, in general, medical debt is forgiven after 7 years because that is the statute of limitations in most states. However, there are some exceptions to this rule especially for those who file bankruptcy. If you need legal advice, please speak with an attorney to advise you on your specific situation.
Conclusion:
The average American family faces more than $8,000 in medical debt, and that number continues to rise. For those who are already struggling financially, unexpected bills can be the tipping point into bankruptcy or years of debt repayments. If you find yourself in this situation, don’t panic. There are steps you can take to get your finances back on track and start paying off your medical debt. Remember, if you need help on which strategy is right for you, please reach out to a professional for help. For those who had medical debt and found a way to pay down the debt, which strategy worked for you? Let us know in the comments below. Also feel free to share this post with friends and family and social media. Until next time! Check out my other blog 8 Ways We Can Pay Down our Student Loan Debt Faster