None. There’s no minimum monthly payment on medical bills.
If you think paying $10 monthly keeps you in the good graces of your medical provider, think again. You might be surprised by a phone call or email from a debt collection agency.
The truth is, you’re not the only one struggling to pay your medical bills.
- A 2023 survey conducted by The Commonwealth Fund showed that 57% of people with marketplace or individual-market plans experienced difficulty paying their medical bills.
- 2022 study by Affordable Health Insurance revealed that 23% of Americans owed more than $10,000 in medical debt.
Paying off your medical bills might seem an insurmountable task… but it’s not.
In this article, we’ll give you tips on how to manage your unpaid bills, avoid problems from a collection agency, and discuss how unpaid medical bills can affect your credit score.
How to Keep Your Medical Bills From Going to a Collections Agency
Your medical provider can have its in-house debt collector contact you about your unpaid bills or sell your debts to a debt collection agency.
The agency can serve you with a summons to appear in court. If there’s no resolution, the judge will schedule a hearing. If the judge rules against you, the agency can garnish your salary or bank account to settle the debt.
Imagine someone prying away your hard-earned salary from your hands or helping themselves to your savings account. You can’t do anything because the actions are authorized by the court.
If you act fast, you can keep your medical bills from going to a collections agency. The key is to work on your unpaid bills, not ignore them.
1. Review Your Medical Bill
In August 2024, the Commonwealth Fund published its report “Unforeseen Health Care Bills and Coverage Denials by Health Insurers in the U.S.”
The highlights of the report were as follows:
- 45% of insured adults reported being charged for a health service they thought was free or covered by insurance.
- Only 45% of insured adults challenged their bill by contacting their medical provider and insurer.
- 38% of the insured adults who challenged their bill, ultimately had the charges reduced or eliminated.
The first step to alleviating your situation is to review your medical bills.
- If you’re insured, ask your insurer to provide you with the Explanation of Benefits (EOB). The EOB summarizes the services provided and their respective charges. The EOB will identify which services are covered by insurance and the ones for your account.
- Ask your medical provider for an itemized bill. Compare the entries in the itemized bill with the EOB. Look for discrepancies in services provided and charges.
- Call your medical provider and insurer if you find errors in your medical bill. Ask them to explain and reconcile the inconsistencies.
If you’re uninsured, request a good faith estimate from possible healthcare providers. A good faith estimate summarizes the expected charges of the treatment including professional fees, facility fees, and room and board charges.
If the medical bill is $400 higher than the good faith estimate, you can challenge it.
2. Negotiate for a Lower Medical Bill
The Affordable Care Act and the No Surprises Act are federal laws that protect you from paying erroneous charges and allow you to negotiate your bill.
- The Affordable Care Act: The ACA also known as Obamacare, was designed to provide healthcare to uninsured Americans. The ACA has a built-in mechanism that allows you to challenge errors in your medical bill and negotiate for better payment terms.
- The No Surprises Act: The No Surprises Act protects insured Americans from being charged for services rendered by out-of-network medical professionals.
If you find errors in your medical bills and inform your medical provider, the next step is to negotiate for lower charges.
- Explain your current financial situation. Present proof of your financial status such as a bank statement.
- Find out if the medical provider has a special relief payment plan you can apply to.
- Ask if the medical provider offers discounts on specific relief cases.
There’s no harm in asking the medical provider if they can reduce your bill 🙂.
You’re probably not the only one who approached the medical provider and asked for financial consideration.
3. Propose a Payment Plan
If the medical provider doesn’t have relief programs and won’t offer discounts, your next option is to propose a payment plan.
- Come up with a proposed payment plan that you can afford. The amount you propose should be a number you can safely guarantee monthly.
- Ask the medical provider not to charge interest on your payments.
Proposing a payment plan is a negotiating process.
The medical provider might agree to a no-interest payment plan if the duration of the plan is shorter.
If you prefer a longer-term payment plan to reduce your monthly fees, the medical provider will add interest to your payments.
Once you’ve finalized the payment terms, put it in writing and have the medical provider sign.
That’s how you get your minimum monthly payment on your medical bill!
4. Ask for Financial Assistance from Organizations
If you still need help paying your medical bills, here are organizations you can approach for financial assistance.
- Consumer Assistance Programs (CAP): States have programs in place to help citizens manage their medical bills. Use the site map of the Centers for Medicare and Medicaid Services (CMS) to locate state agencies with CAP.
- The Consumer Financial Protection Bureau (CFPB): The agency was created to protect consumers from fraudulent practices.
- The State Health Insurance Program (SHIP): The agency assists Medicare-covered individuals.
Contact your medical provider and ask if they can recommend other groups that offer financial assistance.
What to Do if You Get a Call From a Debt Collection Agency
Showing good faith to your medical provider by actively addressing your unpaid bills isn’t a guarantee that they won’t sell your debts to a collection agency.
When an agency contacts you for the first time, their purpose is to inform you they’ve taken over the collection of your unpaid bills from your medical provider. Yes, the call can ruin a good day, but it’s also an opportunity to negotiate your debt.
Some agencies would prefer to settle the debt amicably to avoid the inconvenience of going to court.
Thus, if you get a call from a collection agency, don’t ignore it.
Instead, follow our tips below.
1. Verify the Authority of the Collecting Agency
Run a check on the collection agency and find out if the company is legit. You can do some sleuthing by doing a Google search and checking the agency’s website and social media accounts. Call the contact number on the website and find out if anyone answers.
Ask for proof from the agency that they’re authorized by the medical provider to collect on their behalf. Get the name of the person who is authorized to receive your payments.
2. Check the Bill
Review the bill provided by the agency. Cross-reference their bill with the EOB from your insurer and the one from your medical provider. Look for errors and discrepancies on the bill.
If you find inaccuracies, address them to the agency and work toward a resolution.
3. Work Out a Payment Arrangement
Some agencies might offer a settlement amount that’s significantly lower than the total amount of your unpaid bills, but you have to pay the settlement amount in full.
If you can’t pay the full amount, propose a payment schedule. The agency might agree if the payment schedule is short. Likewise, the agency might add interest charges to your bill.
4. What if You Can’t Arrive at a Resolution?
Here are two things you can do If you can’t resolve the payment of your bills with the collection agency.
- Request the Debt Collector to stop contacting you: Under federal law, you can write a debt collector to stop contacting you. With this arrangement, the debt collector won’t contact you if they decide to file a case against you.
- Hire a Lawyer: If finances are still tight, at least have a lawyer on speed dial. Assuming the case goes to court, communication will only be between the collector and your lawyer.
Debt collection agencies don’t want to be stuck with a pile of unpaid bills. You might be surprised that some agencies are amenable to your terms under certain conditions.
When negotiating, try to operate from a win-win perspective. Don’t expect to get everything you want. Negotiation is a give-and-take process. The objective is to arrive at a middle ground.
Reducing your bills and getting extended payment terms is a win even if you have to pay a bit of interest.
How Medical Bills Can Affect Your Credit Score
The National Credit Reporting Agencies (NCRA) – Experian, TransUnion, and Equifax – have been working to help people cope with the difficulties of paying their medical bills.
- July 2022: Paid medical bills are no longer part of your credit report. The period before unpaid bills appear on your credit score was increased from six months to one year. The extension allows you to work with your insurer and medical provider to settle your unpaid medical bills.
- April 2023: Medical debt below a reported balance of $500 will be removed from your credit report. This credit adjustment reported is expected to remove 70% of collection accounts from consumer credit files.
- June 2024: The CFPB proposed to ban medical bills from appearing on credit reports. While the rule hasn’t been passed yet, once it’s enforced, you no longer have to worry about your medical bills affecting your credit.
Medical providers don’t report to the NCRAs. As discussed in this article, if the bills go unpaid, the medical providers can sell your debt to collection agencies that might report to the NCRAs.
If the balance of your medical bill exceeds $500, it will be included in your credit report even if you’re complying with a monthly payment schedule.
The unpaid amount of the collection can remain on your credit report for up to seven years from the original delinquency date.
The original delinquency date is the day the account became delinquent leading up to the sale of your debt to a collection agency.
Here’s something many people aren’t aware of.
Paying off your medical debts by accepting a settlement agreement with the agency is a good thing. However, because you didn’t pay the full amount, the settlement amount will negatively impact your credit score and stay on your report for up to seven years.
Once you’ve lowered your medical debt below $500 or if you’ve settled it completely, get a copy of your latest credit report to check if the amount has been adjusted or removed. You can get a free copy of your credit report from the Annual Credit Report website.
How NOT to Pay Your Medical Bills
Unless you’re Superman, you’ll get sick.
If your illness requires a visit to the doctor and hospitalization, be mindful of how you pay your medical bills.
Here are three payment methods that you must try to steer clear of.
- Credit cards: Your medical provider might not report to the NCRA, but the credit card company will. Also, the interest rates charged by credit cards can be quite high.
- Medical credit cards: Similar to traditional credit cards, the interest rate charged on your bill might be high and include other fees.
- Personal loan: The interest charged on personal loans might be lower, but the NCRAs view personal loans differently from medical debts.
Remember, the NCRA will give you up to one year to settle your medical bills before they appear on your credit report. Not so with personal loans.
Related Article: What Happens If You Don’t Pay Your Medical Bills?
Summary
There isn’t a minimum monthly payment for medical bills. If you can’t pay your bills, the medical provider will try to collect with their in-house collector or sell your debts to a collection agency.
If an agency collects on your debts, your situation can go from bad to worse in a heartbeat. Assuming that efforts to settle the amount are futile, the agency can go to the courts and force you to pay.
Try to settle your medical bills while they’re with your provider. Review your bills, look for errors, and negotiate for lower charges. Don’t stop there. Ask for help from local agencies that provide financial assistance to residents.
The NCRAs have instituted amendments in the reporting of medical bills to help you out. Capitalize on these amendments to actively clear out your medical debts.
Ideally, you want to be physically and financially healthy.
