How To Address Massive Medical Debt

How To Address Massive Medical Debt text overlaying image of a stethoscope laying on top of a pile of money a calculator and a medical bill Getting a large medical bill, or multiple bills can easily result in some serious debt. Healthcare services aren’t cheap, and if you don’t pay them off in time, you risk losing your assets, having poor credit, and possibly having to file for bankruptcy. In fact, medical debt is currently the leading cause of bankruptcy in the country today. When you get a medical bill, you typically have 180 days to pay it before it gets sent to collections. If you don’t pay the bill within that grace period your credit score will take a hit. A single bill sent to collections can drop your credit score by 50-100 points, and the unpaid medical bills stay on your credit score for 7 years!


Now say you use your savings to pay off your medical debt, you may not have the money to cover your other expenses, like bills or your mortgage. So now it’s a vicious cycle where one unpaid bill can turn into you falling into even more debt, losing your home, or worse. Not to mention, medical debt can then also affect your health. People with medical debt are less likely to seek medical care because they’re expecting even more debt from getting healthcare. As a result, not seeking healthcare causes your health to decline.  Unfortunately, medical bills get expensive quickly, but there are steps you can take to prevent it entirely. Below we’ll look at what you can do to make sure you avoid medical debt and the downward spiral it can cause in your life.

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Avoiding Medical Debt

The best thing you can do is avoid medical debt in the first place. We know sometimes that feels easier said than done, but it’s true. There’s plenty of ways you can avoid getting exorbitant bills and not have to worry about climbing out of medical debt.

Compare plans

Comparing your health insurance plan to make sure you’re getting the best coverage is the best place to start. Not all health insurance is made equal. There are plans that are better for people with less medical need and plans for people who need more medical attention. Choosing the right plan type is the key to avoiding medical debt. Afterall, you don’t want to be paying for services you don’t need or be paying for a health plan that doesn’t have nearly enough coverage. Every plan has different costs as well, so comparing prices is essential. Two companies can offer the same exact plan, but the prices can vary between a hundred dollars. 

Understanding your health insurance plan

Now that you’ve selected a health plan that you feel is best for you, get to know it. Read over your welcome packet, take note of what services are covered, which ones aren’t, and which ones are free. Every health plan will have some basic health services that are covered even before you meet your deductible. Knowing what benefits you have can keep you from suddenly getting a medical bill for a service you assumed was covered. Some plans will only cover certain types of testing, or certain doctors. Make sure you know which is which. 

Look at savings account options

If you choose a high deductible health plan (HDHP) you can actually also link a health savings account (HSA) to it. You can contribute money into your HSA tax-free. When you use the funds for qualifying medical expenses you can also withdraw the money tax free. This account can help you make sure you have money put away specifically for medical needs such as copays, coinsurance, prescriptions etc. Not to mention, the money in the account will never be taxed, even if it builds interest or if you invest it. That makes these accounts triple tax advantaged which is a benefit you can’t really beat.


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How To Handle Medical Debt

Now, we know that you can’t always avoid medical debt, and tips to avoid medical debt aren’t helpful if you’ve already got some. So let’s look at what to do if you already have some medical bills piled up. Don’t worry, there’s steps you can take before trying to find a second job or declaring bankruptcy. You have a few options here.


Make Sure the Charges Are Correct.

Errors happen, even in billing departments. Billing departments deal with a lot of data and it’s shockingly common for medical bills to have errors. In fact, 8 out of 10 hospital bills have errors. Your invoice should be itemized, with each service and its cost listed separately. If it’s not itemized you can request one from the billing department. Check your bill for possible mistakes, like charges for services or medications you never got. For instance, if you have a bill for a hospital stay, make sure you weren’t charged for a full day’s room rate if you were discharged in the morning. There can also be typos or other errors. Look at each one and verify that each item is accurate. You can call the medical department if you have any questions or corrections.

Don’t Ignore The Bill.

Never, ever ignore those medical bills. It’s one of the worst things you can do, it guarantees that it will only get worse. The bill will go to collections and you’ll start receiving all those annoying collections phone calls and letters. This is where your credit score will take a hit, and the longer that debt sits there the worse it gets. We know it’s tempting to just “whoops” those bills into the trash but you’ll pay severely for it.

Don’t Pay It Off with A Credit Card.

It might seem like a good idea to use your credit card to pay off a medical bill. However, this is another big no-no. You’ll just be giving yourself more debt and might actually end up paying even more for the medical bill than originally had. Credit cards have high-interest payments, so carrying a balance on your credit card can lead to a never-ending cycle of debt. In turn, this can also lower your credit score. Unlike other debts, medical debts typically carry low to no interest. So, putting them on your credit card actually adds to the debt you have to pay. 

Negotiate A Payment Plan.

Unlike other types of debt, there’s more wiggle room to negotiate payment plans for medical bills. Generally, as long as you’re paying something towards it they’re satisfied. You can even negotiate interest-free payment plans. Call the billing department and see if they’re willing to work with you, they’d rather get payments from you than go into collections. Even if they first suggest a payment plan that’s too expensive you can negotiate and talk them down to a more affordable number. This way they get paid and you avoid having this debt follow you for the next 7 years.

Dealing With Debt Collections

You know those unknown numbers that start calling and leaving voicemails and sending you letters about your bills being in collections? The last thing you want to do is deal with them, but you may have to. If the worst case scenario happens and your bills are turned over to a collection agency working with them is your best bet. It’s a lot easier to deal with internal collections, which are the ones that work at the hospital or doctor’s office. The internal collections departments are much more willing to negotiate payment plans, but we know more often than not, it ends up going to a third party collections agency. Here are a few suggestions to help make dealing with those agencies a little less painful.


Know What Debt Collectors Can Do.

Debt collectors actually aren’t allowed to call you an unreasonable amount of times, and they aren’t allowed to call at unreasonable hours like before 8am or after 9pm. Here are some of the debt collection rules.


    • Debt collectors are not allowed to report your medical debt to credit bureaus if they’ve only had the account less than a year. 
    • If your medical debt is under $500 they can’t report them.
    • If you’ve asked them not to call you at your job they are legally not allowed.
    • They can’t threaten to sue you without a significant reason
    • Debt collectors are not allowed to tell you that you’re committing a crime by not paying them
    • They can’t threaten to tell others about your debt (except for your lawyer or spouse)
    • Debt collectors cannot ignore your debt validation request either. If you send them a letter saying you want to verify that the debt is legitimate, they can’t contact you before responding to that letter.

Document Everything

Conversations with debt collectors can quickly get heated, but debt collectors are legally not allowed to harass or threaten you or use intimidating language. So, be sure to record all phone conversations with debt collectors. Once you reach a payment agreement, make sure you ask for it in writing. Don’t make any payments before you get the physical document stating exactly how much you have to pay. Then keep proof of payment. If your debt is ever questioned, you will be able to show that you paid the agreed amount.

Negotiate With Debt Collectors.

Obviously, debt collectors want full payment, but be firm and offer to pay what you can afford. They will likely agree. They will most likely have a counteroffer. Ultimately that’s their job- to get as much of this debt paid as possible. It looks better on your credit report if you can pay off the debt in full. But chances are you can’t. So, offer to pay what you can afford and don’t accept an offer that you won’t be able to meet.

Working With EZ

As we said in the beginning, avoiding medical debt is your best bet. And the best way to do that is to get the best health insurance plan for you. At EZ we can help you compare every plan available to you and find you the one that fits your needs and stays within your budget. We can actually save you hundreds of dollars a year by just choosing the right plan. To get started, enter your zip code into the bar below for your free instant quotes. Or give one of our licensed agents a call at 877-670-3557.

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About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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