I’ve talked about expected loans in previous post.  You can expect a home mortgage, a home equity line of credit, a car loan, a student loan, credit card debt or a 401k loan.  But medical bills surprise you and even with health insurance you can get overwhelmed.  What if you can’t pay? The hospital doesn’t send an instruction manual. What should you do if you can’t pay your medical bills?

You are not alone.

According to CNBC, 56 million Americans struggle to pay medical bills each year.  That’s 20% of the population. 2 million Americans file for bankruptcy each year because of unexpected medical bills.  Medical bills are the number 1 reason for bankruptcy in the United States.  So you are not alone.  I struggled with medical bills in the past too.  One emergency room visit is all it takes to be in over your head.  But there is hope.

Don’t ignore your medical bill.

It is human nature to avoid conflict but the worst thing you can do is ignore your medical bill. This is a good rule for any bill but critical for a medical bill. Hospitals can work with you if you talk to them early and you may be able to save your credit score. If you wait too long, they will send your bill to a collections agency. The collections agency won’t work with you as well and will hurt your credit score.

Get the charges.

Call the billing department and get them to send you an itemized list of charges.  Get as much detail as they will send you.  Once you have this, you need to verify you are paying for only services you received.  You also need an idea of what’s a fair charge.  Thanks to the internet, you are not longer in the dark on what is a reasonable charge.  Go to Healthcarebluebook.com and click on “Try  Our Free Fair Price Search.”  Let it use your location and search for your charges.  Now you’re armed for the next step.

Negotiate your charges.

According to ACAInternational.org, hospitals only collect 15.3% of their outstanding debt. And non-hospitals only collect on 21.8%. This is low.  I bring this up for two reasons:

  1. Medical providers will build this low collection rate into their bills.
  2. Medical providers will be willing to negotiate if they know their chance of collection will go up.

Use Healthcarebluebook.com as your reference.  Negotiate your bill like you would negotiate buying a car using the Kelley Blue Book.

Establish a payment plan.

You beat down the bill as low as it will go.  Now you are ready to set up a monthly payment plan.  Only you know what you can pay each month so the amount is up to you.  But it is important to purpose a payment plan to the hospital.

  1. Figure out how much you can pay per month.
  2. Reduce this amount by 25%.
  3. Purpose this payment plan to the hospital.  Don’t ask them for a payment plan!
  4. Prepare to pay the original amount you calculated but hope for lower.

These payment plans are usually interest free.  This is the best part about establishing a payment plan with the hospital.  You could use a personal loan but that will cost you interest.  You can use Bankrate.com to compare interest rates but I would use that as a last resort.

Stick to the plan.

This is the boring part.  Now you just make the payments you agreed to pay.  You may want to pay off the bill early.  If you aren’t paying interest, it doesn’t make sense to pay off the medical bill early.

Do you recommend?  What should you do if you can’t pay your medical bills?

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