How To Get Rid of Medical Debt in 8 Steps

If there’s one truth about living in the United States, it’s this: Health care can be expensive. When you require treatment, you could be on the hook for a significant amount of money — even if you have insurance. In fact, the Consumer Financial Protection Bureau (CFPB) estimates there is $88 billion worth of outstanding medical bills in collections, impacting 1 in 5 Americans.

But there are options that can reduce your debt amount or make the payments easier to handle. The key is knowing which steps to take to explore those options and find the best for your circumstances.

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What to know about paying off medical debt

Medical debt is extremely common in the U.S., and many have difficulty paying those bills back. So you aren’t alone here.

If your medical debt is under $500 or is in collections, but is less than a year old, it should not be included in your credit report. And there are ways to deal with medical debt before it goes to collections — as well as after. The key is knowing the steps to take and making sure to explore every avenue until you find one that works for your circumstances.

1. Review and verify your medical bills

Medical billing is complex, and it’s not uncommon for there to be errors. Rather than just paying the bill when you receive it from your provider, you first need to carefully scrutinize every charge, and also compare it against your EOB.

Your insurance will send you an explanation of benefits (EOB), which details claims filed by your health providers. It will list out dates of service (which is the date you visited your health provider), copays you’ve made, what the claim was for, if your insurance approved it or not, and how much it cost overall. It’s important to understand that your EOB isn’t a bill, but a summary of what your insurance paid for and what you may still owe your health provider.

“EOB errors can include [the health provider] double-charging for a service, charges for a service that insurance should cover, and being charged for services you did not receive,” Sean Fox, president of debt resolution at Achieve Lending, said.

“Call the billing department of your provider or insurance company if you think there’s a mistake, or have a question. Also, match up the EOB with the eventual bill you get for the service. If something is not in sync, contact the insurance company.”

2. Dispute charges

According to the CMS, you can dispute false or inaccurate charges — as well as bills that are $400 or more than the good-faith estimate provided prior to receiving medical services if you’re eligible to do so. For instance, you may be eligible if you didn’t have or didn’t use health insurance and you didn’t receive the specific service prior to 2022. You’ll need to go through the patient-provider dispute resolution process to get those charges resolved. Once you dispute, a third party will review your bill. You may also want to check your billed amounts against the fair prices for those procedures and services as listed in the Healthcare Bluebook.

3. File an appeal

If you find that your insurer denied a claim that should be covered, you can file an appeal to get them to cover that expense. The process will vary depending on your insurer, but in general, you need to either complete the relevant form(s) or write directly to your insurer with your ID number, claim number, and proof or an explanation of why you’re appealing the decision.

Another important thing to note here is the No Surprises Act, which protects you from receiving surprise bills for out-of-network services in the following situations:

• Emergency services provided out of network, including air ambulance services (excluding ground ambulance services)
• Nonemergency services provided by an out-of-network provider at an in-network facility

In those cases, you are also able to file an appeal and ask for an external review by a third party.

4. Negotiate with medical providers

“As soon as bills arrive, contact doctor's offices, hospital administrators, or their billing departments, and ask about options they can offer,” Fox said. 

“Doctor's offices, hospitals, labs, and other medical providers may negotiate payment plans and the total amount due if you ask. It’s also possible to ask for a cash-payment price if you have a high deductible, need to see an out-of-network provider, or do not have medical insurance.”

However, as Fox notes, this is applicable only if you owe the provider directly. That’s because the debt is no longer considered medical debt if you put it on a credit card or use a personal loan to pay off the original charge. In that case, you’d lose the ability to negotiate — so it’s vital to try this before you pay any of that charge with a credit card or other means.

5. Explore financial assistance options

Hospitals that are nonprofits are legally required to offer free or discounted medical care, as well as have a financial assistance policy. But you’ll have to meet the requirements to get financial assistance (also called charity care). Those will depend on where you got your medical care, but in general the process works like this:

1. Request the financial assistance policy to make sure you qualify.
2. Fill out the application, which typically requires you to provide information like your income and expenses, including existing debts.
3. Ask your provider for a timeline on the approval process.
4. Notify the debt collector that the process has begun, so they can pause collections efforts.
5. Follow up about your assistance application as needed.

DollarFor is a company that can help you understand if you qualify for financial assistance and lead you through the application process for free.

6. Set up a payment plan

Many insurers will allow you to go on a payment plan through them or a lender they partner with, though there may be a limit on the minimum monthly payment amount and the term of that repayment. Here, your payments go to a medical financing provider, which then reimburses your medical provider.

If you can get a no-interest plan, or a deferred-interest one, that could save you money while parsing out that debt into more manageable payments. However, if you go with a deferred-interest plan, you’ll want to pay off the balance before that interest kicks in to save the most money.

7. Consider a medical credit card

A medical credit card is another potential option that may be offered by your doctor or a staff member at your medical facility. These can only be used to pay for medical costs, and credit-based approval is required to access this product. Typically, the interest on medical credit cards is deferred, meaning there is a potential to pay no interest if you can pay off the balance before the interest kicks in.

8. Consolidate medical debt with a personal loan

Similarly, you may also consider a personal loan. You can use a personal loan for almost any purpose, including debt consolidation. Expect APRs from 5.20% to 35.99%, depending on your credit and financial profile. Loan amounts typically range from $600 to $50,000, but some lenders offer loans up to or over $100,000. Repayment terms are often available up to seven years. You can usually prequalify for a personal loan without any impact to your credit. But prequalification is not an offer of credit, and your final rate could be different. Note that your credit score may lower a bit temporarily when you formally apply for a loan, as the lender will conduct a hard credit check.

Paying off medical debt in collections

Once your medical debt goes into collections, debt collectors are allowed to contact you to try to collect the money, sue you for the debt and, if they win the lawsuit, garnish your wages or place a lien on your home until it’s repaid. That’s a difficult spot to be in. But you still have certain rights in that situation, and there are restrictions on what debt collectors can do:

• Debt collectors can only verify that the debt belongs to you and is accurate.
• You have the right to tell them to stop contacting you.
• They cannot harass you with phone calls or make abusive calls.
• They can’t report a medical bill to credit reporting companies without trying to collect the debt from you first.

If you can't make your payments, consider working with a credit counselor. The National Foundation for Credit Counseling (NFCC) can help you find a reputable credit counseling agency, which can help you manage your finances and set up a debt management plan with your creditors. 

Debt settlement may be another options, but can be risky as it typically requires you to stop making payments to your creditors, which could lead to legal action and further hurt your credit. Bankruptcy is also an option, but one that should be considered only in extreme circumstances. Depending on your income, you may be able to clear your medical debt, but you're credit will take a severe hit for years.

Check Out: How To Negotiate Credit Card Debt: A Guide

Medical debt FAQ

Will having medical bills affect my credit score?

Not necessarily. For example, medical debt that’s under $500, as well as medical debt in collections that’s less than a year old, is not included in your credit report — if it is, you can dispute that information and get it removed. But missing payments and having debt that’s over $500 in collections can negatively impact your credit once it gets past that one-year mark.

What happens if you don’t pay medical debt?

In that case, the debt would go to collections, which can lead to a lawsuit, wage garnishment or even a lien on your home. However, if you received care at a nonprofit hospital, you can apply for financial assistance, and while your application is under review, you can stop collections.

Can medical debt be forgiven?

There are medical debt forgiveness programs out there, but the availability and requirements for those will vary depending on where you live. This may be provided by nonprofit hospitals, or via charities such as RIP Medical Debt.