How to pay off medical bills

Understanding your medical bills

We’ve all been there: medical bills arrive in the mail, but you can’t make heads or tails of the information provided. Understanding health care costs can be one of the most frustrating things you’ll ever attempt to do, but it’s worth making the effort to contact medical providers, insurance providers and other involved parties to get clarity.

The complexities of the health care system in the U.S. ensure that you shouldn’t ever take medical bills at face value. Check for obvious errors or vague charges, such as:

• Incorrect dates of medical procedures
• Incorrect billing codes
• Wrong name on the account
• Unfamiliar charges, such as vague indicators like “equipment”
• Duplicate charges
• Overcharges

Dr. Virgie Bright Ellington, a medical billing expert at Crush Medical Debt, said it’s a “little-known secret in the American health care industry that all medical bills are negotiable.” She explains that whenever you receive a medical bill, it’s usually a general summary bill, but you should contact your health care provider to request an itemized bill including CPT codes. CPT codes provide a standardized way of identifying medical procedures and services, per the American Medical Association.

These codes are essential to your understanding of your medical bills, and since medical billing mistakes are common, getting your CPT codes can also help you identify those errors. One study by Becker’s Hospital CFO Report found that billing advocates estimated that 80% of hospital bills contain errors.

Ellington likens CPT codes to medical care price tags. While not all providers will easily give out that information, she said to “politely ask to speak with a supervisor and say that you’re making a request for your complete itemized bill with CPT codes as per HIPAA medical records access requirements.” Through the Health Insurance Portability and Accountability Act of 1996 (HIPAA), you have the right to key health information and billing records that apply to you.

You may need to contact your insurance provider as well as your health care provider to get the full picture of what you’re being charged. Locate insurance paperwork indicating the types of procedures that are covered and the extent to which they’re covered. Then check that information against the bills you receive.

What is the No Surprises Act?

The No Surprises Act protects you from surprise bills in certain cases of emergency services provided by out-of-network facilities or providers. Your bills should end up close to what they would be if you used an in-network health care provider.

You can contact the Centers for Medicare and Medicaid Services No Surprises Help Desk at 1-800-985-3059 or submit a complaint online if you think the provider hasn’t followed the law in your billing situation.

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Negotiate your medical bills

You should attempt to negotiate medical bills before sending payment. This is because, unfortunately, medical billing in the U.S. is filled with inconsistencies and lack of transparency.

This is why obtaining CPT codes is so important, according to Ellington. Once you’ve received those CPT codes, you can search online for the Medicare rates for each service. This is the information you need to negotiate bills with providers; knowing exactly what the provider is trying to charge you versus what Medicare will pay offers you leverage in this situation.

Another aspect of negotiating is discussing your actual ability to pay. Blake Whitten, financial advisor at Whitten Retirement Solutions, said, “Start by contacting the billing department or health care provider directly, explaining your situation politely and thoroughly.”

Knowing the CPT codes, the dollar amounts you’ve been charged and the prices attached to those CPT codes can help you convince the billing department of what your billed amount should be. You may try offering an amount closer to what Medicare says it pays (which could be much lower than what appears on your bill) and see if the provider will accept it.

Whitten adds that in negotiation calls, “Providing proof of financial hardship, like pay stubs or tax returns, can strengthen your case. Persistence pays off.”

Keep in mind that it’s also wise to be proactive about medical care when possible to help avoid excessive bills. For example, the Patient Advocate Foundation says to always use in-network health care facilities and providers for nonemergency care, and check in advance whether they have a contract with your insurance company.

Check to see if you qualify for assistance

Government-run and other programs provide medical coverage and assistance with medical bills. Generally, you must qualify for assistance based on your income, age, employment status or health issues. Keep in mind that you must sign up for some of these programs prior to receiving care, not after you’ve received a bill.

Types of government medical care programs include Medicaid, Medicare, the Children’s Health Insurance Program (CHIP), the Affordable Care Act (ACA) and Consolidated Omnibus Budget Reconciliation Act (COBRA).

Medicaid

Medicaid and CHIP provide free or low-cost medical benefits to low-income adults, children, those over 65, those who are pregnant and those with disabilities. Income qualifications apply, and not all providers accept Medicaid, so you must be diligent in checking that information before using a particular provider.

Medicare

You’re eligible to apply for Medicare if you’re 65 or older or have a disability, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig’s Disease). Different parts of Medicare cover hospitalizations, prescriptions or other medical costs.

Affordable Care Act (ACA)

If you’re uninsured, you may be eligible for insurance through the ACA’s Health Insurance Marketplace. You must live in the U.S., be a U.S. citizen or national and not be incarcerated. Start at HealthCare.gov to determine your eligibility and apply during open enrollment.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

COBRA provides insurance coverage to those who have recently left an employer. You must have a group health plan covered by COBRA, and there must be a qualifying event for which you are a qualifying beneficiary. Qualifying events include termination of employment, divorce or separation from a covered employee and other life events.

Charity care

You may also look into charity care, which is an assistance option available after the provider applies insurance or Medicaid payments. Ask the hospital or other provider for its Financial Assistance Policy, or FAP. You’ll need to apply if eligible, and generally must either be uninsured or underinsured.

Other assistance programs

You might be eligible for other types of assistance. Some organizations to consider include:

• United Healthcare Children’s Foundation
• HealthWell Foundation
• Patient Access Network Foundation
• Patient Advocate Foundation

Use a medical card

Among the options for paying off medical bills, you may hear providers praising medical credit cards. These can help you pay your medical bills, but they come with significant downsides.

Health care providers once mainly promoted medical credit cards as a means of financing medical procedures not typically covered by insurance. Now, rather than mainly being used for health care items like hearing exams and cosmetic procedures, people are using medical credit cards for all kinds of medical care at hospitals and other providers.

The main benefit of a medical credit card is the deferred interest period, which is only temporary. You need to be prepared for when the interest-free period ends, and if it’s too brief a time to pay off the debt, you’ll be on the hook for additional fees and interest.

Whitten advises caution if considering a medical credit card. He said, “While they may offer low or zero interest rates initially, watch out for high rates after promotions end and potential fees for late payments or exceeding credit limits.”

Ellington also warns against medical credit cards. One problem is they can cause you to skip the steps of contacting providers to get CPT codes and learning the actual prices of services, which can lead to being overcharged.

“Medical credit cards can be included on your credit report, particularly if you miss payments on the card, and lower your FICO score,” said Ellington. The CFPB also mentions the loss of credit reporting protections as a downside of medical credit cards.

Besides the loss of protection for your credit score, you need to know that a medical credit card could lead to the loss of power to negotiate medical bills, and you may face aggressive calls from debt collectors if you don’t pay.

As if that isn’t enough, the CFPB also warns that health care providers may receive incentives for medical credit card signups, which can lead to them not adequately explaining your financial assistance options. CFPB Director Rohit Chopra said, “Financial firms are partnering with health care players to push products that can drive patients deep into debt.” All in all, these red flags for medical credit cards should make you approach them with caution.

Alternative credit options

If you’ve done your due diligence in requesting CPT codes and researching the prices of billed items, you can move on to considering how to pay off medical bills. It’s possible to pay off medical debt using a personal loan or a 0% interest credit card, but there are some risks involved in moving your medical debt.

Whitten explains that with a personal loan, you can often consolidate multiple bills and get fixed rates and predictable payments. However, be cautious about taking out new debt to pay off medical debt, as you may end up owing more than your initial bills thanks to interest charges and loan fees.

You might also look into a 0% credit card, but be sure to look into similar financing options through your provider first. Ellington cautions against using credit or loans to pay off medical bills. She said: “Bills and debts owed to medical providers have special protections that are lost if we transfer them to nonmedical consumer debt.”

Federal law has shifted: according to the CFPB, the three major credit reporting bureaus in the U.S. now no longer report medical debts of less than $500 or medical debt that is less than one year old. That’s a big reason to try to avoid putting your medical debt onto a credit card or personal loan — you could end up facing greater hassles, such as calls from debt collectors or damage to your credit report if you don’t pay off the loan on time.

A 0% interest credit card could be a good option if you’ve already put medical bills onto a high-interest credit card. If you qualify for a balance transfer to a 0% card, this can give you time to pay off the debt since you’ve already moved it from a medical debt to a consumer debt.

» MORE: What is debt consolidation and should I consolidate?

Bottom line

Medical debt can seem insurmountable, but assistance programs and strategies can help. You should first verify all bills, getting itemized bills from providers in order to compare the prices charged to what Medicare may pay.

You can also use health care assistance programs or arrange a feasible payment plan directly with the provider. Medical credit cards and other financing options should not be your first choice, as they can negate certain consumer protections.