How to Handle Medical Debt in Collections

Medical care can be expensive, and sometimes all it takes is one unexpected hospital visit or treatment to put you into crippling debt. 72 million working-age Americans are facing medical debt. Furthermore, seven million elderly adults throughout the country are also dealing with this issue.

If you’re one of the 79 million Americans who are living with medical debt, it can be overwhelming to try and tackle it. It’s important to create a plan to pay it off so your debt doesn’t continue to negatively affect your financial future.

There are steps you can take to ensure you pull yourself out of this debt and get back on your feet. You can get back to being financially stable and striving to reach your financial goals.

What Happens When a Medical Bill Goes to Collections?

Even if you have health insurance, you may have sought treatment or medication that isn’t fully covered. Your insurance company may cover the majority of a bill, but the portion you’re responsible for can still be financially overwhelming. If you can’t pay your medical bills, your balance may go directly to a debt collection agency.

It can have negative effects on your credit when a debt collection agency begins to contact you. Your debt gets recorded on your credit report and can impact your score until it’s properly addressed. In some cases, debt collectors can be too aggressive in their efforts. As a result, their behavior can be classified as harassment and subject to legal penalties. Even if you legitimately owe a debt, you are still entitled to certain legal protections.

With a lower credit score and a higher debt-to-income ratio, you may find it hard to qualify for certain lines of credit. You may not be able to get mortgages, credit cards, and loans or offer these lines of credit. Even so, they will likely have unfavorable terms, such as a high-interest rate.

How to Remove Medical Debt From Your Credit Report

To get medical debt to stop negatively affecting your credit report, pay it off as soon as possible. Once your medical debt is gone, it’s removed from your credit report and no longer affects your score.

After paying off your debt, check with the major credit bureaus. You can generally run your report with these bureaus online or call them to review the debt that’s recorded:

• Experian: 1-888-397-3742;

• Equifax: 1-888-548-7878;

• Transunion: 1-800-916-8800.

You may need to provide proof to these credit bureaus that your medical debt has been paid off before it’s removed from your report.

Determine What You Owe in Medical Debt

Your credit report will continue to be negatively impacted if you ignore your medical debt. If your debt is extensive, a collections agency may have the authority to garnish your wages. To mitigate the effects this debt has on your future, assess the money you owe, and figure out how to pay it off promptly.

Verify Your Medical Debt Liability

Figuring out exactly how much you owe is crucial to developing an effective plan to address your debt. First, review your medical bills. Be sure you’re not simply looking at your Explanation of Benefits (EOB). An EOB should arrive from the insurance company to notify you that there was a claim made on your policy.

This statement is not a bill but will show if you have a balance with your medical provider. If so, you can expect to receive a bill directly from the medical provider shortly. The medical bills that come directly from your healthcare provider outline what you owe.

Before you begin adding up these bills, ensure the treatments you received are accurate. For each bill you receive, contact your insurance company to verify that the company has already contributed.

You can find your insurance company’s contact information on your EOB. Before paying anything, ensure your provider billed for the correct services and the proper insurance coverage applied. Clearing up these errors before paying your medical bills can reduce your debt and make it easier to tackle. If you are having trouble navigating debt validation, insurance payments, or contesting outstanding debts, you may need to seek legal help with your accounts in collections.

Address Medical Malpractice or Billing Issues First

If you suspect medical malpractice and want to address it, wait to pay your medical bills. You may need to consult with a medical malpractice attorney and file a lawsuit to pursue legal action against your medical provider. Your medical bills may go away if you win your case so it’s important to wait before paying.

If you suspect a billing error, don’t provide payment yet. Save the medical bills and EOBs you received so you can review them with a legal professional first.

How to Negotiate Medical Debt

Before you pay the amount you’ve been billed by your medical provider, consider negotiating the debt you’ve incurred. Your medical provider or the debt collection agency you’re dealing with may be open to providing you with a more realistic total or payment plan.

Negotiate for Better Rates

Insurance companies usually receive discounts on medical services. However, if you don’t have insurance and you’re paying for medical treatment out-of-pocket, it’s not likely your medical provider will offer you a deal. Full-price medical treatments can be astronomical. Nonetheless, you may negotiate for better rates on your treatment.

Research the fair market value of the procedures and other items. Use these prices when contacting your medical provider to negotiate. If you offer to pay cash or pay the entirety of your balance at once, your medical provider may be more open to giving you a better rate for your treatment.

If you don’t feel comfortable negotiating, consider enlisting the help of a legal professional and allowing them to negotiate for you.

Make Payment Arrangements

Before your debt goes to a collections agency, you may be able to make payment arrangements with your medical provider. If you can’t pay a lump sum to satisfy your balance, contact the provider to ask about a payment plan. Some doctor’s offices offer payment arrangements and most hospitals are willing to offer flexible payment options to get you out of medical debt.

Explore Medical Debt Resources

If you have medical debt through a hospital and can’t afford to pay it, you may be eligible for a debt forgiveness program through the facility. There are also local, state, and federal medical debt relief programs that can help eliminate some or all of your medical debt. To qualify, you may need to prove you earn a low income or meet other qualifications, such as being a veteran or over 65 years old.

If you have generous friends or family members, consider using crowdsourcing websites to ask for financial assistance. Provide information on your family’s story and the medical debt you’re in and ask your friends or family to contribute donations. If you raise money, you can use it to address your debt. If you’re having trouble paying your medical debt, explore these options to see if you can eliminate some of it.

Medical debt is not uncommon, and since treatments can be expensive, consumers may find themselves in debt after receiving care. By addressing this debt and exploring your options, you can take care of it and get back on the road to financial success.