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To add insult to injury, your recent health care visit resulted in a hefty medical bill. Don't panic, though. While medical bills can be daunting, it's possible to understand your bill in detail, go over your insurance coverage and figure out financing on your own—even if you aren't a financial wizard.
Taking a methodical approach can help you minimize your bill and maximize your options without undue credit problems. Here's a step-by-step guide to medical bill triage.
1. Check for Billing Errors
Look through your bill and make sure your charges line up with the care you received. If you haven't already received one, request an itemized bill from your health care provider. Your bill may be straightforward and relatively easy to check, but certain terms can also be complicated and confusing, especially if you've had a complex procedure or hospital stay.
Here are a few things to look for when reviewing your bill.
- Incorrect charges: If necessary, look up medical codes online by typing "medical billing code" and the code number into a search engine to check the results. Not sure whether an item is correct? You can request your medical records and compare line items against the information in your records. You should not be billed for anything that is not shown in your medical record.
- Duplicate charges: You may be more likely to see duplicate billing if you received care from more than one provider. In any case, you don't want to pay twice for the same service.
2. Review Your Insurance Coverage
Request an explanation of benefits (EOB) that shows how your insurance benefits have been applied to your medical bill. Your EOB should detail how much you owe after accounting for your deductible plus coinsurance and charges that are not covered by your insurance. The "your share" amount on your EOB should match the amount you owe on your medical bill.
3. Contact Your Health Care Provider
Once you've reviewed your medical bill and EOB, contact your healthcare provider. You may want to do this if you're going to have difficulty paying your bill in full, even if you don't find errors in your billing or insurance payment. Here are a few things to discuss with your provider's billing department:
Financial Assistance Programs
Hospitals are required to have written financial assistance policies that provide free or discounted health care to people who can't afford care. If you think you might qualify, ask for program details, eligibility requirements and an application.
Payment Plans
Many providers would rather work out a payment plan than forgo payment or send your account to collections. Some providers offer formal medical bill payment plans that are similar to buy now, pay later programs: You can avoid interest charges by paying your bill in full within a specified timeframe when you finance through a third-party company.
Medical Credit Cards
Your provider may also offer to help you secure a medical credit card to finance your bill. These credit cards typically offer low or 0% interest for a period of time, after which your remaining debt is subject to regular interest charges.
Debt Reduction
You may be able to negotiate your medical bill. Address any errors or questions you've come across, but also ask whether any charges can be eliminated or reduced. If you're making a good-faith effort to pay your bill, your provider may be willing to make a few adjustments to help you out. Some providers offer discounted rates if you don't have insurance and are paying cash.
Grace Period
If you need time to resolve disputed charges or put finances together, ask how long your health care provider waits before referring your account to collections. Keeping your account out of collections will help keep your medical debt off of your credit report (more on this later).
4. Get Help From an Advocacy Group
If you've made it this far in the process and still feel like you need help, you may want to contact an advocacy group or patient advocate. Patient advocates can help you navigate the process of reviewing bills, negotiating with insurance or your health care provider and finding sources of financial help. Your hospital may have patient advocates on staff who can work with you on billing and insurance issues. If you or a family member are living with a chronic or serious health condition, the Patient Advocate Foundation may be able to provide free case management that includes help with insurance, financial aid and negotiating discounts.
Charitable patient assistance programs like the HealthWell Foundation may connect you with financial resources including grants that help cover deductibles and copays. Eligibility is based on your insurance, income and medical diagnosis.
State consumer assistance programs may help if you're having issues with your health insurance coverage. Use this state map to find help in your state. Additionally, the Centers for Medicare & Medicaid Services has a help desk for medical billing questions.
5. Decide How to Pay
When you're satisfied that the amount you owe on your medical bill is correct, consider your financing options. You may use one or several of the following options.
- Savings: General-purpose or emergency savings may cover all or part of your outstanding medical bills. You won't pay interest when you tap your savings, but be wary of depleting your savings too much.
- Health savings account: If you have a high-deductible health plan, you may be able to open, fund and use a tax-advantaged health savings account to pay your medical bill.
- Credit cards: Although high credit card interest rates make carrying a balance expensive, credit cards can help you pay your medical bills in a pinch. If you can, try to pay off your balance within your card's grace period to avoid paying interest on it.
- Personal loans: Using an installment loan instead of credit cards to finance your medical bills may save you money on interest. A personal loan also has a definite beginning and end point, making your debt finite.
- Retirement distribution: You may be able to take a hardship distribution from your employer-based 401(k) retirement plan or individual retirement account (IRA) if you're using the funds to pay for qualifying medical debt. You may owe taxes on your distributions, however, so check with your 401(k) provider or the IRS for more information.
Large medical bills may be tax-deductible. If you itemize your deductions, you may be able to deduct qualifying health care expenses in excess of 7.5% of your adjusted gross income on your federal tax return. Save your receipts and payment documentation in case you need it at tax time.
6. Check Your Credit Report
As you sort through your medical bills, keep an eye on your good credit. Starting in 2023, paid medical collections and medical collections under $500 no longer appear on your credit reports—and don't have an impact on your credit score. Unpaid medical collections over $500 won't appear on your credit reports for 365 days, which gives you some time to work through your medical bills without adverse effects to your credit.
Checking your credit reports periodically is a good practice in any case, but doubly so when you're dealing with medical debt. Not only do you want to make sure medical debt is being reported (or not reported) accurately, but you may also want to keep tabs on your credit in general if dealing with medical debt has caused you to miss credit card or loan payments, or increase your utilization of credit cards. You can see your credit reports from all three credit reporting agencies at AnnualCreditReport.com.
The Bottom Line
Receiving a medical bill doesn't have to be catastrophic for your financial health. Step by step, decipher the line items in your bill, confirm insurance coverage, discuss terms with your health care provider and seek out advocacy help if you need it. Think through your financing options to find the combination that works best for you.
To keep an eye on your credit as you go, consider free credit monitoring from Experian. You'll receive alerts whenever there's a change to your credit file and access to your credit score and Experian credit report whenever you need it, to help ensure your financial recovery is as smooth as possible.