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New Study Shows Number of Americans with Past-Due Medical Debt Down 6%

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Fewer Americans are struggling to pay back medical debt.

The rate of American adults aged 18 to 64 with past-due medical debt dropped from 29.6% to 23.8% between 2012 and 2015, according to new study released by researchers at the Urban Institute.

Not surprisingly, people who did not have insurance were more likely to say that they currently had unpaid bills from a health care or medical service provider (a rate of 30.5%). But with the rise of high-deductible health plans, even people who have insurance find themselves in medical debt — 22.8% of insured consumers had past-due medical debt, according to the study.

When researchers looked at past-due debt by region, the differences were particularly staggering. There was “enormous variation across states,” according to Senior Research Associates Kyle Caswell and Michael Karpman, who authored the study.

Eight of the 10 states with the highest rates of past-due medical debt were in the South, including Mississippi, Arkansas, West Virginia, South Carolina, Kentucky, Oklahoma, Alabama, and Georgia. The other two were midwestern states Indiana and Missouri.

The researchers could not point to a solid conclusion as to why Southerners were harder hit by medical expenses.

“Of course we would like to understand better why, but it does give us a starting point for asking questions as to why the population differs from state to state,” said Caswell.

Why are rates of past-due medical debt dropping? It would be easy to conclude that the drop is due to the implementation of the Affordable Care Act. People today are simply more likely to have insurance, as the rate of uninsured Americans has fallen from 16.6% to 10.5% since the implementation of ACA in 2013, according to the Kaiser Family Foundation.

But Caswell and Karpman said it would be a stretch to give all the credit to the expansion of health care under the Affordable Care Act. The steady drop in unemployment and a general improvement of the U.S. economy over the last few years could also play a role, making it more likely that people can afford to cover out-of-pocket medical expenses.

As the Urban Institute’s report found, simply carrying health insurance isn’t enough to protect consumers against unexpected medical bills. Their findings are bolstered by a recent report by the Kaiser Family Foundation, which found 70% of people with medical debt also have insurance, mostly through employer-provided plans.

How to Tackle Unpaid Medical Debt

In just moments, an unexpected medical emergency can put the average American family in thousands of dollars of medical debt. That can pose a burden, considering about of 47% Americans would struggle to scrape together $400 in case of an emergency according to the Federal Reserve’s 2016 Report on the Economic Well-Being of U.S. Households.

Families with medical debt say the debt undercut their ability to save and afford basic household needs, the Urban Institute’s study found. To cope, families may rely more on credit cards and other forms of debt to make ends meet.

According to the Consumer Financial Protection Bureau, outstanding medical debt makes up more than half of all collection notices on credit reports. Past-due medical debt can seriously harm your credit score. If bills go unpaid for long enough, consumers may wind up facing a lawsuit or even bankruptcy.

To help avoid these types of consequences, follow these tips to tackle medical debt you can’t afford to pay:

Ask for a detailed billing statement and check for errors

You may receive a billing statement from your insurer or medical provider, but it may not give the full picture of services you received. Request a detailed, line item statement and review it carefully for any errors. It’s possible you could have received treatment from an out-of-network doctor without your knowledge. Or, there may be duplicate charges or charges for care you didn’t receive. If you find errors, contact the provider directly and have them corrected and a new statement sent.

Negotiate with your medical provider directly

You might be able to negotiate down your medical debt or arrange a payment plan with the medical provider, whether it’s your doctor’s office, a hospital, or your insurer. Along the way, keep careful records of who you talk to and what was said. Here’s a step-by-step guide on how to negotiate a medical bill with a health insurance company.

Try a 0% APR credit card

If your bill isn’t overwhelmingly large, you could try paying the debt off with a credit card with an introductory 0% interest period. Since you won’t be charged interest, you’ll pay less over the period. Before you apply, make sure you’ll be able pay off the balance before the 0% interest introductory period expires.

Pay off medical debt with a personal loan

If you’ve been unable to negotiate or you are struggling to find a 0% APR credit card deal, a personal loan may be another option. Depending on your credit history, rates on personal loans range from 4.7% to 36%. We’ve pulled together a list of six great personal loan options here.

Negotiate a settlement with a collection agency

Past-due medical debt eventually gets charged off and sold to a collection agency. But that doesn’t mean your window to negotiate has totally closed. If you have access to enough cash, ask if you can settle the debt for a lesser amount and forgive the remaining balance. Just be aware that forgiven debts can be treated as taxable income in some cases.

Seek help from a medical billing advocate

If you’ve been unsuccessful in trying to negotiate down your medical debt, the debt has significantly damaged your credit, or you are on the brink of filing bankruptcy, consider reaching out to a medical billing advocate. Don’t confuse these advocates with debt settlement or repair firms, which should be treated with caution.

You can find a medical billing advocate through the National Association of Healthcare Advocacy Consultants or the Alliance of Claims Assistance Professionals. These services aren’t free, and whether or not it makes financial sense to hire a pro depends on how much money you stand to save by lowering your debts. Advocates typically charge about $80 to $150 annually, a flat fee or a percentage of your savings says Denise Sikora, Secretary of ACAP.

Look for a charitable foundation that can help

You may want to consider reaching out to a nonprofit for assistance. If you were diagnosed with a particular condition, look toward organizations such as the Lupus Foundation of America for individuals with lupus or the American Kidney Fund for those with kidney disease. You can also apply for grants from nonprofits that provide more general assistance such as the Patient Access Network and the HealthWell Foundation, which may be able to grant funds toward medication assistance or other medical costs. With these foundations, limits for assistance may depend on your diagnosis and other factors.

Consider bankruptcy as a last resort

If the debt is more than 50 percent of your annual income, bankruptcy might be a viable move to make. Let the hospital know you’re considering bankruptcy first, as they may then be open to negotiation. Be aware the filing bankruptcy can adversely impact your credit for years after the fact.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Facing a Medical Debt Lawsuit? Take These 10 Steps First

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Facing a Medical Debt Lawsuit? Take These 10 Steps First

If you’ve ever been sued by a debt collector or service provider over medical debt, you know how stressful it can be. If you couldn’t afford to pay the original debt, you likely still can’t afford it. And if you want to defend yourself, you’ll have to face the additional time and cost of going to court, too.

You should know that you’re not alone. According to staff attorney Chi Chi Wu of the National Consumer Law Center, when you look at debt collection items on credit reports in America, “half of those items are from medical debt. Not credit cards. Not auto loans. Medical debt.”

You may be tempted to ignore the suit since you know you can’t pay, but Wu advises against inaction.

“Always show up,” she says. “Never ignore a lawsuit. If you ignore it, the debt collector or service provider on the other side automatically wins by default.”

What happens when you show up, though? Here are four steps to take if you’re facing a medical debt lawsuit.

1. Find Out Where the Debt Comes From

You cannot properly address your lawsuit if you don’t understand where the debt comes from. If you look back at your past bills, you should be able to find a date of service and itemized list of services rendered with associated costs.

You may be in debt because you’re uninsured, but even insured patients end up in this boat thanks in part to a rise in high-deductible health plans. Mistakes can happen as well. If a patient visits an in-network hospital, but is unknowingly seen by an out-of-network doctor, they can be charged out-of-network fees. Doctors are independent contractors, so while the hospital may be affiliated with your insurance company, that doesn’t mean your service provider is inherently in-network.

2. Don’t ignore the lawsuit

In most consumer debt cases, consumers don’t have an attorney at all. But hiring an attorney to advise you can be a wise move. It doesn’t have to cost a fortune either, Wu says.

Most lawyers will provide a free consult before taking you on as a client. In this consult, they may be able to help you find your bearings so you can represent yourself.

Wu recommends seeking help from the Legal Services Corporation, a government-supervised nonprofit that provides legal representation at a low cost to low-income households. You can also seek help from nonprofit legal assistance firms in your area.

If you’re uninsured, one way to keep the case from going to court is to contact the doctor or debt collector immediately to negotiate your bill down to Medicaid/Medicare prices — which are often 2-3 times less than that of the gross price you were billed. When a provider refuses to negotiate down to these lower rates, it is called “discriminatory pricing,” and your legal counsel may recommend using it as a defense in court.

3. Prepare for Court

The first thing you must do is prepare an answer to the lawsuit, including any defenses or countersuits that you want to raise. This will involve filing paperwork at the court, mailing paperwork, and showing up on your initial court date. Again, it’s advisable to get a lawyer to help you through this, or at least get a consult. The National Association of Consumer Advocates has a helpful video explainer on preparing to defend a medical debt lawsuit.

It’s important to make this initial court date. It is very unlikely the judge will grant you a continuance that would move the court date further out.

There are some exceptions to this. If you are being sued in a state in which you no longer reside, it’s easier to mount a defense if you can’t appear in court. In fact, appearing in court could work against you, demonstrating to the court that you have no problem traveling to and from court out of state.

If you’ve been served in a state outside of your own, it is very important to get legal representation.

This is because you must answer the suit, but you must also do so in a way that does not imply that you are submitting to that court’s jurisdiction over you. The process is one that is best handled by someone trained in law.

After you answer the suit, the court will set a date for the discovery part of the trial. You will have to file more paperwork with the court before this date so that you are able to present evidence that you are not liable for the debt.

4. Understand Wage Garnishment

If you are found liable for the debt, or you fail to answer the lawsuit and the judge rules against you, the court may issue an order giving the lender or collection agency the ability to garnish your wages. By federal law, they cannot leave you with less than 75% of your income or $217.50 per week — whichever is greater. State law may protect you even further.

Medical debt collectors are able to garnish your wages, but they cannot garnish Social Security benefits, disability insurance payments, unemployment insurance payments, VA benefits, pension distributions, child support payments, or public assistance benefits. If you have any of these forms of income, it’s wise to set up a different bank account where those funds are deposited and keep all garnishable wages in another separate account.

You should do this because a court order can go after your bank account balances, too. While that doesn’t make it legal to take money that came from any of these protected sources, separate bank accounts will make the incidence of errors smaller — saving you headaches and potential victimization.

5. Know Your Rights

When it comes to medical billing and debts, you do have rights as a patient. Make sure you understand them so you can lower or eliminate your bill before or after you’ve been sued.

Were You Served Properly?

Sometimes wages are garnished before the plaintiff is even aware that there’s a lawsuit against them. This happens most commonly when you’re improperly served. Examples of using “improperly served” as a legal defense include papers being only mailed to you and not delivered in person, papers being left at an incorrect residence, or papers being mailed to an old address. Being “improperly served” does not mean that the papers were left with a family member or friend at your residence and they forgot to tell you about it. If that happened, you’re still on the hook.

If you have been improperly served, or if you find out that the court mistakenly started garnishing wages because you have the same name as an actual plaintiff, you should contact a lawyer immediately to figure out what possible recourses there may be for your specific situation.

6. Get Low-Cost or Free Help from Financial Assistance Programs

In 2016, about 58% of community hospitals in the U.S. were not-for-profit, according to the American Hospital Association. This gives them tax-exempt status, but also obligates them to give back to their communities. Under the Affordable Care Act, these hospitals must provide some type of financial assistance program to low-income patients. Even if you aren’t from a low-income household, you should apply, as some hospitals extend their programs far beyond the poverty line. Many hospitals also extend this program to insured patients.

These hospitals have an obligation to let you know about their financial assistance programs within four months of when your bill has been issued.

You have until eight months after the initial bill was issued to apply for financial assistance. You have the right to do this even if the debt has been sold to a third-party collector, and even if that collector is the one suing you in court.

7. Be Aware of Discriminatory Pricing

We’ve already touched on the fact that you can try to negotiate your medical bills down to Medicaid/Medicare prices. If you are being sued in court and are uninsured, discriminatory pricing can serve as a defense. If you qualify for the hospital’s financial assistance program, they legally must reduce your bill to the amount generally billed to insured patients.

8. Look Out for Balance Billing

Balance billing happens when your hospital or medical provider bills you instead of or in addition to Medicaid or Medicare. It’s a forbidden practice, and you are not responsible for any amounts due when this happens.

You may be able to identity balance billing if you receive an “Explanation of Benefits” from your insurer that states the amount they covered and the amount you still owe. If this does not match the bill your medical provider sent you, there is a cause for concern. Additionally, if the bill you receive does not show any payment from your insurance when you are, in fact, on Medicaid or Medicare, it may be a sign that you are a victim of balance billing.

9. Stop Lawsuits Before They Begin

If something about your bill doesn’t look quite right, there are ways to reduce it to its fair amount.

First of all, make sure the hospital didn’t make an error that resulted in a larger bill. One way this could happen is if something they did caused you to have to stay in the hospital an extra night, inflating your costs beyond what they should have been originally.

Another good avenue to pursue is to have your bill examined by a medical bill advocate. They’re familiar with coding and laws that you’re not, making them the perfect people to review your charges. You may find one in your community by asking around, or you can start your search with the National Association of Healthcare Advocacy Consultants.

Debt collectors, hospitals, and other medical providers don’t want to take you to court. It costs them money, and the odds of them actually getting a full payment at that point are very low. They are almost always willing to work with you before issuing a lawsuit. Negotiate. Apply for financial assistance. Set up zero-interest payment plans directly with your health care provider.

Keep the lines of communication open so that no one ends up with the additional costs of litigation.

10. Weigh Bankruptcy

At any point in this process, you can choose to file for bankruptcy. Filing for bankruptcy may alleviate the medical debt. Just be cautious. Bankruptcy is not a decision that should be made lightly, as it will remain on your credit report for up to 10 years and make it difficult to qualify for new credit.

There are two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 requires you to sell off all of your assets to settle what you can of your debt obligations. If you don’t have any or many assets, that aspect of it doesn’t matter much. What will matter is that the debt will essentially disappear after you file.

If you file for Chapter 13, you do not have to sell off any assets, but the debt won’t disappear either. Instead, you’ll be put on a 3-5 year payment plan in order to settle.

This may make sense if the court has already issued an order against your wages, but at any other point in your case, it would make more sense to try to set up a payment plan with the medical service provider or debt collection agency directly. Their last resort is wage garnishment. Don’t let it get that far. Know your rights so you can negotiate with them effectively rather than damaging your credit report through Chapter 13 bankruptcy.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne@magnifymoney.com

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3 Ways to Keep Medical Debt from Ruining Your Credit

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3 Ways to Keep Medical Debt from Ruining Your Credit

Turns out, your physical well-being isn’t the only thing at stake when you go to the hospital. So too is your financial well-being. That’s because no debt is more common than medical debt.

The numbers are staggering in their scope. According to the Consumer Financial Protection Bureau, more than half of all collection notices on consumer credit reports stem from outstanding medical debt, and roughly 43 million consumers – nearly 20% of all those in the nationwide credit reporting system – have at least one medical collection on their credit report.

Now, you might be inclined to think that because you’re young or have both a job and health insurance, medical debt poses you no risk. Think again. According to a recent report from the Kaiser Family Foundation, roughly one-third of non-elderly adults report difficulty paying medical bills. Moreover, roughly 70% of people with medical debt are insured, mostly through employer-sponsored plans.

Not concerned yet? Consider that a medical collection notice on your credit report, even for a small bill, can lower your credit score 100 points or more. You can’t pay your way out of the mess after the fact, either. Medical debt notifications stay on your credit report for seven years after you’ve paid off the bill.

The good news (yes, there is good news here) is you can often prevent medical debt from ruining your credit simply by being attentive and proactive.

Pay close attention to your bills

Certainly, a considerable portion of unpaid medical debt exists on account of bills so large and overwhelming that patients don’t have the financial wherewithal to cover them. But many unpaid medical debts catch patients completely by surprise, according to Deanna Hathaway, a consumer and small business bankruptcy lawyer in Richmond, Va.

“In my experience, it’s often a surprise to people,” says Hathaway. “Most people don’t routinely check their credit reports, assume everything is fine, and then a mark on their credit shows up when they go to buy a car or home.”

The confusion often traces back to one of two common occurrences, according to Ron Sykstus, a consumer bankruptcy attorney in Birmingham, Ala.

“People usually get caught off guard either because they thought their insurance was supposed to pick something up and it didn’t, or because they paid the bill, but it got miscoded and applied to the wrong account,” says Sykstus. “It’s a hassle, but track your payments and make sure they get where they are supposed to get. I can’t stress that enough.”

Stay in your network

One of the major ways insured patients wind up with unmanageable medical bills is through services rendered – often unbeknown to the patient – by out-of-network providers, according to Kevin Haney, president of A.S.K. Benefit Solutions.

“You check into an in-network hospital and think you’re covered, but while you’re there, you’re treated by an out-of-network specialist such as an anesthesiologist, and then your coverage isn’t nearly as good,” Haney says. “The medical industry does a poor job of explaining this, and it’s where many people get hurt.”

According to Haney, if you were unknowingly treated by an out-of-network provider, it’s not unreasonable to contact the provider and ask them to bill you at their in-network rate.

“You can push back on lack of disclosure and negotiate,” Haney says. “They’re accepting much lower amounts for the same service with their in-network patients. They may do the same for you.”

Work it out with your provider BEFORE your bills are sent to collections

Even if you’re insured and are diligent about staying in-network, medical bills can still become untenable. Whether on account of a high deductible or an even higher out-of-pocket maximum, patients both insured and uninsured encounter medical bills they simply can’t afford to pay.

If you find yourself in this situation, it’s critical to understand that health care providers themselves usually do not report unpaid bills to the credit bureaus – collection agencies do. After a certain period of time, most health care providers turn unpaid debt over to a collection agency, and it’s the agency that in turn reports the debt to the credit bureaus should it remain unpaid.

“If you can keep it out of the hands of the collectors, you can usually keep it off your credit report,” says Hathaway.

The key then is to be proactive about working out an arrangement with your health care provider before the debt is ever sent to a collection agency. And make no mistake – most providers are more than happy to work with you, according to Howard Dvorkin, CPA and chairman of Debt.com.

“Trust me, no one involved with medical debt wants it to go nuclear,” says Dvorkin. “The health care providers you owe know very well how crushing medical debt is. They want to work with you, but they also need to get paid.”

If you receive a bill you can’t afford to pay in its entirety, you should immediately call your provider and negotiate, says Haney.

“Most providers, if the bill is large, will recognize there’s a good chance you don’t have the money to pay it off all at once, and most of the time, they’ll work with you,” he says. “But you have to be proactive about it. Don’t just hope it will go away. Call them immediately, explain your situation, and ask for a payment plan.”

If the bill you’re struggling with is from a hospital, you may also have the option to apply for financial aid, according to Thomas Nitzsche, a financial educator with Clearpoint Credit Counseling Solutions, a personal finance counseling firm.

“Most hospitals are required to offer financial aid,” says Nitzsche. “They’ll look at your financials to determine your need, and even if you’re denied, just the act of applying usually extends the window within which you have to pay that bill.”

If all else fails, negotiate with the collection agency

In the event that your debt is passed along to a collection agency, all is not immediately lost, says Sykstus.

“You can usually negotiate with the collection agency the same as you would with the provider,” he says. “Tell them you’ll work out a payment plan and that in return you’re asking them to not report it.”

Most collection agencies, according to Haney, actually have little interest in reporting debt to the credit bureaus.

“Think about it,” Haney says. “The best leverage they have to get you to pay is to threaten to report the bill to the credit agencies. That means as soon as they report it, they’ve lost their leverage. So, they’re going to want to talk to you long before they ever report it to the bureau. Don’t duck their calls. Talk to them and offer to work something out. They’ll usually take what they can get.”

At the end of the day, according to Haney, most people can keep medical debt from ruining their credit by following one simple rule.

“Just be proactive,” he says.

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When Having a Baby Leaves Parents Mired in Medical Debt

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Medical Debt

As soon as my sister Melissa returned home from after giving birth to her son via cesarean section, the medical bills started pouring in. Even with her employer-provided health insurance, she was still on the hook for thousands of dollars. Like a growing share of American workers, her policy came with a hefty deductible. She had to pay $3,000 out of pocket before her insurance even kicked in. Once she hit her deductible, she was still on the hook for 20% of her remaining fees. When all was said and done, she owed $8,800.

When she was ready to have her second child two years later, Melissa thought she was ready. She planned for a C-section and braced herself for her first post-delivery hospital bill. But even using the same insurer, she was stuck with an even larger bill than her first delivery. Her total out-of-pocket costs after insurance: $12,700.

This time around, she requested an itemized bill. When she opened it, she found charges for everything from $80 for one dose of ibuprofen to $1,800 to cover an out-of-network nurse practitioner who assisted with the delivery.

“I could have brought my own ibuprofen to the hospital if I knew it was going to cost that much,” she said. “And I never even saw the out-of-network nurse who assisted with my delivery or gave my consent to use her.”

The financial blows kept coming. Melissa realized that her insurer had billed her differently this time. Rather than treating Melissa as an individual seeking care, they automatically added her daughter to the insurance plan and based their coverage off the plan’s much-higher family plan deductible. She knew the bill was incorrect and set out to challenge the charges.

“I spent a year fighting with them and writing them letters,” she said. “I spent every lunch break on the phone with them.”

When insurance isn’t enough

The cost of childbirth in the U.S. is notoriously difficult to predict. Prices can vary from state-to-state and even from hospital-to-hospital. A 2013 Truven Health Analytics report found that average total charges for women and newborns with employer-provided commercial health insurance was $32,093 for vaginal births and $51,125 for cesarean births.

The Affordable Care Act requires maternity care coverage for patients. But the new law does not state which services have to be covered. Individual states can decide what is actually covered and insurance plans tend to be vague about prices. Add that to the fact that deductibles and copays for employer-sponsored and individual plans have been increasing and you’ve got an expensive mess.

“It’s hardly a fair consumer market,” said Suzanne Delbanco, executive director of Catalyst for Payment Reform (CPR), a nonprofit corporation pushing for greater transparency in health care quality. “You would never go into a Best Buy and choose a TV without knowing the price first.”

In addition to the lack of transparency, Delbanco said that consumers often have to share a higher portion of the cost of medical services. Over a six-year period (2004-2010) the average out-of-pocket costs for vaginal and cesarean births nearly tripled, according to the Truven report.

Even if a family knows their policy by heart, some expenses are simply impossible to control in the middle of a delivery.

“One of the biggest pieces, which is not limited to pregnancy and delivery, is surprise medical bills when there are providers inside the hospital that are not in-network,” said Dania Palanker, a Senior Counsel for Health and Reproductive Rights at the National Women’s Law Center. This practice is called “balance billing” in industry speak.

My sister had no idea one of the nurses helping her was not covered by her insurance policy. Hospital staff don’t typically stop a woman mid-contraction to call the 800 number on the back of the insurance card. The consumer rarely finds out about the extra charges until they are at home and receive their bill in the mail.

Some states now have laws that protect consumers against some forms of balance billing and several others are currently working on passing such laws. Healthcare and women’s rights advocates agree that there is still work to be done.

Carol Sakala, director of childbirth connection programs at National Partnership for Women & Families, said the Affordable Care Act could have done more to protect women from exorbitant delivery costs. “Prenatal care is a plus. No cost preventive services is a plus,” Sakala said. “But we’re still not serving women during labor and delivery.

It took my sister one year to smooth out the errors on her hospital bill after her second delivery. Fortunately, she was not stuck with the $1800 bill for her out-of-network nurse. But she still owed a total of $10,000 in bills for both children. She negotiated a payment plan with the hospital’s billing department, paying $400 per month, but it would have taken three years for her to pay it off.

She decided to get rid of her debt and move on instead. Melissa negotiated a lump sum settlement — $7000 — and agreed to pay off her entire balance at once.

“[I wanted] to be done with it,” she said.

How you can avoid sticker shock

  1. Read your policy thoroughly. Do your best to be sure everyone working on your delivery is covered by your insurance plan. Review your policy carefully as well. Some insurance plans have a guarantee built into the contract so that even if an out-of-network nurse or doctor sneaks into the room, consumers won’t be stuck with the bill, Palanker said.
  2. Shop around if you can. If you and your doctors believe you might need a cesarean section, it is possible to find estimates of how much hospitals in your area charge for the procedure by going onto their website. Also, check your insurer’s policy. They may cover your C-section entirely.
  3. Don’t accept your bill if you think it’s wrong. Medical billing errors are increasingly common, with some advocacy groups estimating they are as high as 75 or 80 percent. If you receive a bill for services that you believe are not accurate, request an itemized bill. That way you know exactly what you are being charged for and you can contest any unwarranted charges.
  4. Don’t be afraid to negotiate. Regardless of what your bill says, negotiate. Some billing departments may be willing to settle your unpaid bill for a lower amount. Insurance companies negotiate costs with the hospital all the time. My sister saved $3,000 by negotiating her bill directly with the hospital.  “It’s worth it to negotiate costs,” Sakala said.
Amy Kraft
Amy Kraft |

Amy Kraft is a writer at MagnifyMoney. You can email Amy here

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College Students and Recent Grads, Pay Down My Debt

Student Loan Repayment for Health Researchers

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Student Loan Repayment

Did you know that if you’re a health professional with an advanced degree such as an MD, PhD, PsyD, or PharmD, the National Institutes of Health (NIH) may be willing to repay up to $70,000 of your student loan debt over a two-year period?

NIH, the U.S. government agency responsible for overseeing human health research, currently manages a group of eight Loan Repayment Programs (LRPs). These LRPs are used to repay lenders for the existing principal and interest on loans. The catch, si that your loans must have been obtained from a qualifying lender (more details below).

The LRPs are meant as incentives for professionals who demonstrate the commitment and expertise to pursue a career in biomedical or bio-behavioral research but still owe a substantial amount in student loan debt. NIH recognizes that the high cost of education may cause many highly qualified individuals to pursue more lucrative careers in industry or private practice rather than in research, and hopes that a reduction in student loan debt may turn the prospect of a research career into a more attractive option.

What happens when you receive an award

All awards last for two years. If you receive an award, you are contractually obligated to engage in an average of at least 20 hours of research per week, funded by a U.S. non-profit such as a university or hospital.

How much can you receive?

All awards last for two years and during that time NIH will repay 25% of your eligible education debt (up to $35,000) for each of those years. For example, if you have $40,000 of qualifying educational debt, the LRP will give you $10,000 per year (25% of your total debt), for a total of $20,000 over the two-year period. Awardees can also apply to have their awards renewed after the two years are up.

Types of LRPs

You must also choose which one of the eight LRPs you wish to apply for; this choice will depend on what type of research you are planning to pursue. You may either choose research within the NIH (Intramural) or outside the NIH (Extramural) Specific LRP areas of research include:

Are you eligible?

In order to be eligible to apply for an LRP, you must possess an advanced professional degree and have demonstrated the potential for a successful research career. Additionally, your student loan debt must exceed 20% of your base salary at the institution where you are employed at the time of the award.

Your loans must also be eligible for the repayment program.

Loans that are eligible

A majority of the loans you have likely taken out yourself from the government or a financial institution are eligible. Even loans taken out to cover cost of living while attending college may be eligible, if these loans are within a reasonable amount. According to the NIH website, the following loans are eligible:

  • Undergraduate, graduate, and health professional school tuition expenses;
  • Other reasonable educational expenses required by the school(s) attended, including fees, books, supplies, educational equipment and materials, and laboratory expenses; and
  • Reasonable living expenses, including the cost of room and board, transportation and commuting costs, and other living expenses as determined by the Secretary.

However, your loans will be ineligible if you’ve consolidated with another person such as a spouse or child. Loans will also be ineligible if you’ve merged with with non-educational loans.

Loans that aren’t eligible

  • Loans that are delinquent, in default or not on current repayment schedule.
  • Loans already paid in full, meaning you can’t get your money back retroactively for loans you’ve paid off.
  • Parent PLUS loans.
  • Loans consolidated with another individual such as spouse, child or those consolidated with a non-educational loan.
  • Loans not obtained for educational purposes, even if you used them for education, such as a home equity loan.
  • Loans not from the U.S. government, a U.S. academic institution, a U.S. commercial or chartered lending institution, such as loans from friends or family.
  • Loans without eligibility documentation that is submitted in PDF form or print outs. This documentation includes:
    • Account statements less than 30 days old. You can find a sample account statement here.
    • Promissory notes/Disclosure statements for non-consolidated loans and consolidated loans. You can find a sample note here.
    • Consolidated loans will also require a complete list of loans that were consolidated. You can find a sample note here.
    • National Student Loan Data System Aid Summary and Detail Loan information reports.
  • Loans that exceed the reasonable level for educational or living expenses. Reasonable level is determined by the standard school budget for the year in which the loan was made.
  • Loans or financial debts that you received as a result of failure to satisfy a service obligation including but not limited to: Armed Forces Health Professions Scholarship, Indian Health Service Scholarship Program and National Institutes of Health Undergraduate Scholarship Program (UGSP).
  • Loans you take out after accepting a LRP from NIH.

Learn more about loan eligibility here.

How loans get repaid when you have more than one

You probably have student loan debt from more than one source, so you may be wondering how these debts will get prioritized by the NIH? Unfortunately, you won’t be able to do what you want with the LRP money. Instead, the NIH will determine the order in which loans are repaid based on the following priorities. Unfortunately, this does mean you can’t make repayments based on interest rates or loan amount.

Priority One

Loans guaranteed by the U.S. Department of Health and Human Services, these include:

Health Education Assistance Loans (HEAL)
Health Professions Student Loans (HPSL)
Loans for Disadvantaged Students (LDS)
Nursing Student Loans (NSL)

Priority Two

Loans guaranteed by the U.S. Department of Education, these include:

Direct Loans
Stafford Loans
Consolidation Loans
Perkins Loans
Graduate PLUS Loans (on or after July 1, 2006)

Federal Family Education Loans (FFEL)
Stafford Loans
Consolidation Loans

Priority Three

Loans that have been made to you or guarnateed by your State, the District of Columbia, the Commonwealth of Puerto Rico or a territory or pession of the United States (for example, Guam).

Priority Four

Loans made to you by an academic institution

Priority Five

Private (Alternative) Educational Loans:

MEDLOANS
Private (non-guaranteed) Consolidation Loans

How to apply

You can register and start the application process by registering here on the NIH website. The application cycle is typically open from September 1 to November 15 of each year.

The application process is long, extensive and competitive. The NIH provides an outline of tips for how to write a strong application as well as a road map to follow to ensure you’re checking off all the steps.

What you’ll need

  • Letters of recommendation
  • A research plan
  • Mentor who provides a mentoring plan
  • Demonstrate your qualifications and commitment
  • Verify your research is within the scientific method of the NIH Institute or Center to which you are applying
  • Loan documentation
  • Estimate quarterly LRP repayment

Tax implications

Unfortunately, this isn’t like forgiveness programs and your LRP loan repayments will be counted as taxable income. This could, and likely will, have significant implications for your tax bill. You’ll receive a form 1099-G if you have an Extramural LRP and a W-2 if you have an Intramural LRP.

Fortunately, the LRPs do help offset this tax burden by making a tax payment to the IRS that’s equal to 39% of the annual LRP repayment. If you owe an additional amount, then it will be your responsibility to pay.

Who should apply?

So if you’re a young researcher who is interested in a career in biomedical or biobehavioral research but are concerned about whether such a career will allow you to pay off your student loan debt in a timely fashion, consider applying for an LRP. While these awards are considered to be competitive, NIH states that approximately 1500 individuals have received awards each year thus far. Additional information on eligibility and the application process can be found at the NIH Division of Loan Repayment website.

Sarah Noelle
Sarah Noelle |

Sarah Noelle is a writer at MagnifyMoney. You can email Sarah at sarah@magnifymoney.com

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Your Pregnancy Billing Questions, Answered

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Pregnancy Billing Questions, Answered

The other month I arrived at my doctor’s office for my 20-week prenatal check up and was presented with a (whopping) bill. “These will be your expenses for the entire pregnancy,” the woman at the front desk informed me. “Not including delivery. And not including any ultrasounds.”

The already-exorbitant bill was enough to send anyone into a tailspin, let alone the fact that it didn’t even include any ultrasound or delivery charges.

To put it another way — having a baby is way expensive.

The first thing any expecting mom should do when she finds out she’s pregnant is call up her insurance company and figure out some of the specifics. (What exactly is covered for the pregnancy, what will my overall out-of-pocket cost be, how can I find doctors in my network, etc.?). Even after doing so, though, there are bound to be some questions. To help, we tapped Adria Goldman Gross, FIPC, president of MedWise Insurance Advocacy and MedWise Billing, Inc., a company that helps patients handle their health claims and medical billing. We asked Gross to answer some of the more pressing billing-related questions that a pregnant woman might have.

MM: What are some of the common reasons that pregnant women come to you for assistance with their billing?

Gross: The cases the come to me are issues that occurred while the client is pregnant, and there are many reasons. They include a change of health insurance carriers while the client is pregnant, relocation of residence, a new employer and therefore new insurance, the loss of a medical provider or dissatisfaction with a medical provider, for example.

MM: How often would you say it’s possible for patients to haggle over maternity bills and/or work out some sort of payment system?

Gross: In New York State, with the Surprise Bill Law, there can be more haggling or negotiations due to the new law. If the patient was not informed ahead of time, it is easier to negotiate. [Although this is a New York specific law, you’ll want to do a little research to determine if similar laws exist in your own state to help you out when it comes to negotiating medical bills.] Plus, sometimes the doctor is willing to decrease the bill by 15 to 25%, especially if they are out-of-network. The percentage discount can be offered anywhere in the U.S. It’s much more difficult to negotiate once you have signed an agreement. If you have an out-of-network provider and are willing to pay upfront, many providers will give you a discount with pre-payment.

MM: What would your main advice be to women who are pregnant and dealing with a slew of confusing healthcare bills?

Gross: To help you negotiate medical bills, there are many resources I would recommend investigating, but before you can begin the research, you must determine the procedure code for the billed service(s). There are many websites that list the procedure codes in the area where services are rendered. If you’re trying to determine the usual, reasonable and customary medical fees for the procedures, try the Fair Health Consumer Cost Lookup tool or the Healthcare Bluebook site.

MM: Are there any specific negotiating tactics you would recommend once you’ve done your research?

Gross: If possible, negotiate the fees prior to having the medical treatment. Very often, providers will accept what is considered to be the usual, reasonable and customary medical fees. Any agreements should be in writing prior to the provider performing the medical services. Many doctors also accept a payment plan and are happy to arrange it, but you need to discuss it once you first start seeing the medical provider. It will be much more difficult if you attempt to do it later.

MM: Is there anything else patients should know about this topic?

Gross: Try to find a doctor you feel you can trust. Discuss financial arrangements as soon as you begin to work with your doctor. If you ever feel you are being overcharged, denied or that you’re going nowhere with your claims, fight for what you deserve.

For more on pregnancy, check out this piece about what to do if you’re in debt and find yourself pregnant, and this one about five surprising financial things you’ll need to be ready for when you’re pregnant.

Cheryl Lock
Cheryl Lock |

Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at cheryl@magnifymoney.com

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Top 6 Personal Loans for Handling Medical Debt

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Personal Loans for Handling Medical Debt

With medical debt plaguing 26% of adults, it’s no wonder people are looking for an easier way to pay it back. According to a study by The Henry J. Kaiser Family Foundation, this problem isn’t exclusive to the uninsured, either. Those who have health insurance are struggling to afford crippling bills as well.

While there isn’t always an “easy” or quick solution, refinancing your medical debt with a personal loan that has lower interest rates and more favorable terms may help. However, before you consider refinancing, you should exhaust your options with your hospital first.

If you’re looking for help with affording medical debt, we’re covering how you can try to lower the amount of medical debt you owe, and which personal loan lenders are the best for refinancing medical debt.

Negotiating Medical Debt With a Hospital

Are you struggling to pay back any medical debt you owe? Your first stop should be the hospital at which you received treatment. You may be able to negotiate with the billing department or settle on a lower amount owed. The worst thing you can do is ignore your medical bills only to have them sent to collections. You want to do everything in your power to avoid that.

Plus, some hospitals, particularly non-profits, offer something called charity care for low-income families or those who are uninsured. You never know what financial aid programs your hospital has unless you ask.

Have you tried negotiating with the hospital to no avail? Then you might want to consider trying a professional service, such as copatient.com. Besides negotiating your medical bills on your behalf, Copatient also reviews your bills for any errors.

Hospitals aren’t exempt from making billing errors, and it’s important to ensure you’re on the hook for the correct services received, especially if you have insurance coverage. In fact, on its website, Copatient states that 80% of the billing statements it reviews contain errors. Unfortunately, medical bills can be hard to understand, which is why having a second pair of trained eyes to review it may help.

As Copatient doesn’t require you to pay for its services unless it’s successful at negotiating your bill, it could be worth a try. It charges you 35% of what it saves you, so if you were able to save $8,000, the fee would be $2,800.

Maybe you’ve tried negotiating your medical debt and either weren’t successful, or still can’t afford to pay. In that case, refinancing your medical debt is a solution you should look into, especially if your interest rates are high. Here are our top six choices for personal loan lenders for those with excellent and good credit.

1. SoFi

We recommend refinancing with SoFi for a variety of reasons, and medical debt is no exception. While it doesn’t have a specific program for medical debt, most personal loan lenders will allow you to use a personal loan for just about anything, medical expenses typically included.

SoFi has some of the lowest APRs of any lender, with fixed rates ranging from 5.49% to 14.24%, and variable rates ranging from 4.99% to 11.14%. You can refinance $5,000 up to $100,000 on 3, 5, or 7 year terms as well.

There’s no minimum FICO score you need to qualify, though higher is better, as is not having any negative marks. Having a stable employment and education history will help you qualify for a better rate, too. You must be employed to be approved for a loan, and SoFi’s personal loan isn’t available to residents of Mississippi or Nevada.

SoFi uses a soft credit pull to provide you with estimated rates, and if you want to move forward with the loan, then it will use a hard credit pull. That means you can see if the loan is workable for you before committing and before having the inquiry impact your credit.

There are also no hidden fees with SoFi, so what you see is what you get in terms of the loan amount as there is no origination fee and no pre-payment penalty.

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2. Earnest

Earnest is similar to SoFi in terms of its low APRs. Fixed APRs range from 5.25% to 12%, but terms are 1, 2, and 3 years. This makes Earnest a good option for those with less debt, though you can refinance $2,000 up to $50,000.

The only downside to Earnest is that it isn’t available in many states. You must be a resident of the following states to be approved: AK, AR, AZ, CA, CO, CT, FL, GA, HI, IL, IN, KS, MA, MD, ME, MI, MN, MO, NC, NE, NH, NJ, NM, NY, OH, OK, OR, PA, SC, TN, TX, UT, VA, WA, Washington DC, WI, WV, and WY.

If you don’t reside in a state on this list, check back often as Earnest has been adding several states to its roster over the last year.

You should have a minimum credit score of 720 to be approved for a loan with Earnest, though it also takes into account your savings, employment history, education history, and income. You can apply for a loan using your LinkedIn account (which pre-fills some fields for you), but it isn’t necessary.

Earnest doesn’t have origination fees or pre-payment penalty fees, though it does use a hard credit inquiry when you complete the application. According to its FAQ, it is working on building a tool that will give you preliminary rates and terms on a personal loan without a hard pull.

3. LightStream

LightStream is an online division of SunTrust and offers great deals on personal loans. You can refinance $5,000 up to $100,000 on terms ranging from 2 to 7 years. Fixed APRs range from 5.99% to 10.29%, and there are no origination fees. Rates do vary based on the term you select, so be sure to look at all your options here.

LightStream has one of the faster application processes – if you get all the necessary documents in by 2:30pm ET, you may be eligible for same-day funding. Additionally, if you’re unhappy with the services provided by LightStream, its customer service is backed by a $100 guarantee.

LightStream requires a hard credit inquiry, which makes it a slightly less attractive option. You might want to check with the personal loan lenders that use a soft credit pull first.

4. Upstart

Upstart and the following two lenders are better options for those with less-than-ideal credit, or those that haven’t been getting approvals elsewhere.

You can refinance $1,000 up to $50,000 with Upstart (be aware it says $35,000 on its FAQ page and $50,000 when you check your estimated rates). Fixed APRs range from 7.39% to 29.99% on its 3 and 5 year terms.

You need a minimum FICO score of 640 to qualify for a loan with Upstart, but that’s just one part of the equation. You should still have a clean credit report – no delinquencies, no collections, less than six inquiries on your credit report within the last six months, and you’ll also be required to verify your income.

Upstart has origination fees ranging from 1% to 8% of the loan amount, so take this into consideration when applying.

The good news is that Upstart uses a soft credit pull to give you estimated rates. A hard credit inquiry will happen should you choose to move forward with the loan.

5. Prosper

Prosper, like LendingClub below, is a peer-to-peer marketplace. That means investors (individual and corporate) can fund your loan request, giving you a slightly better chance of approval.

You can refinance between $2,000 and $35,000 on terms of 3 and 5 years, and fixed APRs range from 5.99% to 36%. That’s a high cap, and as with any loan, you should run the numbers to make sure consolidating your medical debt this way will save you money.

Prosper isn’t available to residents of Maine, North Dakota, or Iowa. You need a minimum FICO score of 640 to qualify, and Experian is used to run credit. A soft pull is used at first, and a hard pull will not be used unless your loan gets funded.

There are no fees at all to post a listing to the marketplace, but if you want to fund your loan through Prosper, you will face “closing fees” ranging from 0.50% to 4.95%, depending on the “Prosper Rating” your loan is given. This rating is Prosper’s proprietary grading system, mostly for the benefit of investors, so they can evaluate how risky your loan is.

6. LendingClub

LendingClub is another peer-to-peer marketplace and its loan offerings are similar to those of Prosper. You can refinance $1,000 up to $40,000 on terms of up to 5 years. Fixed APRs range from 5.99% to 35.89%, and there are origination fees ranging from 1% to 6% of the loan amount.

LendingClub will loan to those with lower credit scores – as low as 600 – depending on the situation. You should still have a good track record with limited missed payments in the mast. LendingClub does not make loans in Iowa or West Virginia.

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Shop Around for the Best Rates and Negotiate

If you’re one of the many people in the United States struggling to afford medical bills, then start working on a solution to overcome it. Try negotiating with your hospital’s billing department, review your statements for any errors, call your insurance company to see if anything can be done, and check to see if a personal loan will make things easier on you.

Depending on the interest rate your medical debt is at, a personal loan may or may not be the right fit for you. It’s important to get all the details so you can run the numbers to see if you’ll come out ahead with savings. That’s why it’s a good idea to shop different lenders, especially with the ones that don’t use a hard credit inquiry right off the bat. This allows you to get a preview of the types of rates and terms that are available to you.

Whichever route you decide to take, make sure you stay on top of your financial obligations. Don’t ruin your credit and your financial situation because you can’t afford to pay; this will only make things harder for you in the future. Take all the actions listed here instead of ignoring your bills, and you’ll come out ahead.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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How to Avoid and Fix Bad Medical Debt

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Couple Reading Letter In Respect Of Husband's Neck Injury

Medical debt is one of the leading causes of bankruptcy in the United States. It’s so prevalent that in 2014, three out of five bankruptcies were a result of medical debt, and this year 25 million adults will skip taking a prescription pill or take less than the prescribed amount to cut down on costs.

Whether you’re dealing with medical debt now or know there’s going to be a large bill in your near future, there are steps you can take to save money.

How To Deal With Nuisance Debt

A small bill might not lead to bankruptcy, but it can be costly in other ways. An unpaid medical bill may be turned over to collections or sold to a collections agency and reported to the credit bureaus – Equifax, Transunion, and Experian. The derogatory mark on your credit report can hurt your credit score, making it difficult to get a new line of credit, or resulting in higher interest rates on future loans. 

The healthcare provider and insurance company sometimes go back and forth on how much is owed and what will be covered. It may be months before you see a bill. If you move in the meantime, you might not receive a bill or realize you owe the money until a debt collector calls you.

Sometimes, the healthcare provider may have the wrong address on file, so even if you haven’t moved the bill still doesn’t get delivered to you.

What can you do to keep a small bill from turning into a major headache?

  • Understand the bill upfront and set calendar reminders: To avoid this scenario, try to understand what will and won’t be covered by insurance before going to the doctor. Then, mark your calendar with a reminder to check with the doctor and your insurance company in a few weeks. Do this every few weeks until the bill is resolved.
  • Repay the debt: If you owe the debt, the right thing to do is pay it. If the account goes into collections, there will be a negative mark on your credit report for seven years. However, the latest scoring methodology from Fair Isaac Corporation – FICO 9 – ignores paid accounts, even those that went into collections, when calculating one’s credit score. It also puts less weight on medical debt than other forms of debt and doesn’t consider debts of any kind under $100. One caveat is that lenders aren’t required to use FICO 9, and many rely on older or competing scoring systems. Previous FICO scoring systems treated medical and non-medical debt the same and considered accounts in collections as a negative mark, even after the balance due was paid.
  • Pay-for-delete: You may be able to pay a collection agency to settle the debt and remove the negative mark from your credit report – which could help you with lenders that don’t use the most recent credit scoring system. However, this arrangement may require the collector to break their agreement with the credit bureau or for you to claim the debt isn’t yours. In either case, it’s a shady practice that may be best to avoid. If the debt actually isn’t yours, there are free ways to dispute the error. 

Verify the Debt

Whether the bill is small or large, Pat Palmer, Founder and CEO of Medical Billing Advocates of America (MBBA), says, “No one can ask you to pay something without giving you details of what you’re being asked to pay.”

Start by sending a written request to the collector via certified mail and ask them to verify the debt. You may only have 30 days from the day the collector first contacted you to send this letter, but the Consumer Financial Protection Bureau (CFPB) has five letter templates you can use. Keep a copy of the letter you send for your records.

The collection agency has to send you the name of the creditor, the amount owed, and tell you how to dispute or verify the debt. If the collector can’t prove what’s owed, he or she isn’t allowed to try and collect the money from you. If the company continues to contact you, file a complaint with the CFPB. If the collections account is on your credit report, you can file a dispute with the credit bureaus.

Whether you’re dealing with a collections agency or not, you should also request an itemized statement of your bill. The collection agency shouldn’t have the information on hand as private medical information is protected by the Health Insurance Portability and Accountability Act (HIPPA) of 1996, but they may be able to get a copy once you request it.

Nicole Blair, an independent medical billing advocate, said the process can sometimes take a few weeks when working with a collections agency. You may want to request the itemized bill directly from a provider if you don’t want the collection agency to see your medical information or to expedite the process.

This is an important form to have as you may spot mistakes and over-billings that can be disputed (more on that below).

Dealing With Overwhelming Medical Debt

The large medical bills are likely the most disruptive. In addition to facing a mountain of debt, you may be recovering from a medical procedure and likely took time away from work. Whether or not you have insurance, there are ways to save money on large medical bills.

Before going in for a medical exam or procedure:

  • Ask for discounts: If you’re uninsured, you can ask to receive the same rate that insurance providers get – often much lower than the standard rate. Some providers also offer uninsured discounts.
  • Shop for the best rates: You can compare the costs of common procedures at different medical centers using New Choice Health or Healthcare BlueBook. The cost of the same procedure can more than double depending on where you go.
  • Negotiate a payment plan. You may be able to get a discount if you pay the bill in full upfront, or within a certain number of days. Alternatively, you can negotiate a payment plan and pay the bill over time. 

Sometimes you don’t have an opportunity to act before visiting an emergency room, or the bill is still overwhelming even if you got a discount. After a procedure:

  • Look for charity assistance: You may be able to find financial assistance from hospitals, government and private organizations, and charities. For example, pharmaceutical companies may offer free or discounted medication to those dealing with an ongoing condition. Nonprofits such as the Patient Access Network and HealthWell Foundation provide assistance to those with chronic or life-threatening illnesses.
  • Check the bill: The initial bill you receive from a hospital or emergency room is a summary. Pat suggests requesting a detailed statement because even to the untrained eye there may be errors or overcharges that are easy to spot. She says that in one case, correcting errors led to a savings of 70 percent. On average, she says, when there are mistakes the savings are about 40 percent.
  • Negotiate: “You should always negotiate medical bills,” says Pat. Even after the fact you might be able to get a discount or work out a repayment plan that works for both parties. Start by requesting a detailed copy of the bill and looking for mistakes. Next, call the doctor’s office or billing department, or debt collection agency. Dispute mistakes, ask for discounts, and see if there’s any way to get on a payment plan or pay a lower rate if you pay the bill in full over the phone.

[How to Negotiate Medical Debt]

Options For Financing Medical Debt

If you’re facing a large medical bill, you may have several financing options to consider.

A credit card might work, but the high-interest rate makes that one of the most expensive options. However, if you have a card that offers zero interest on new purchases for a promotional period – often six to 15 months, and you can repay the debt during that time, this may a be a good option.

Alternatively, there are balance transfer credit cards that offer no interest on transferred balances for about 12 to 24 months. Be careful, if you don’t pay off the balance before the promotional period ends, then you’ll have to pay interest on the remaining balance.

Another option is to take out a personal loan. Although you’ll pay interest from the start and may need to pay an origination fee, which is a flat fee or percentage of the amount borrowed, interest rates for personal loans can be much lower than on credit cards. You should also shop around for personal loans without an origination fee and no prepayment penalty.

Some doctors may work with a financing department and offer you a loan or medical credit card. These can be appealing, especially if there is a no-interest promotion, but be certain you know when the promotional period ends and what the interest rate will be afterward. You may be better off with a standard credit card or loan from another provider.

Hire Professional Help 

If you’re having trouble working with your insurance company, the healthcare provider’s billing department, or a collections agency, consider hiring a professional medical debt advocate. The advocate can fight on your behalf to make sure you’re being treated fairly and paying as little as possible. They may also be called medical billing advocates or healthcare consultants.

Finding a medical advocate can be difficult, but there are a few guidelines and resources that can help guide your search. First, check with your employer as many companies offer advocates to employees as a benefit. If you need to hire an advocate independently, look for one who practices in your area as laws can vary between states.

Claims.org may be a good place to start. It’s the website for the Alliance of Claims Assistance Professionals (ACAP), a trade group, and the site has a directory of CAPs organized by state.

Advocates may charge an hourly rate or a percentage of the amount they saved you. Exact rates can vary, but you may have to pay $100 to $200 an hour or 25 to 35 percent of the savings. Some offer a free initial consultation and there are cases of advocates saving clients tens of thousands of dollars.

There’s Always Wiggle Room

With so many families and individuals dealing with medical debt, the good news is that along every step of the way there’s an opportunity to save. Compare financing options, healthcare providers, and always negotiate, whether it’s the upfront rate or the bill you receive after an operation.

Louis DeNicola
Louis DeNicola |

Louis DeNicola is a writer at MagnifyMoney. You can email Louis at louis@magnifymoney.com

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How to Negotiate Medical Debt

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Medical debt makes up the largest portion of consumer debt in collections, which can of course negatively affect your credit score. But most people don’t know is that in some cases medical bills can be negotiated.

Here are a few tips to help you successfully negotiate medical debt:

Check for Accuracy

When you receive your medical bill:

  • Check the dates of services
  • Look for overcharges and duplications
  • Look for charges for care or services you didn’t receive
  • Make sure charges weren’t added after treatment concluded

Erroneous billing practices and even fraud contribute to overpayments. Studies show that a large portion of consumers may be overpaying on medical debts.

If you find any errors on your bill, contact the billing staff immediately and inform them of the error so that it can be fixed promptly. After the adjustment has been made make sure you request to have an itemized statement forwarded to you. Despite the fact that you may receive a summary bill that lists the total amount owed, you’re entitled to an itemized statement.

If you think that you were wrongly charged, file an appeal to have the charges reassessed. If the findings are in your favor, you may be eligible for reimbursement if you have already made payments.

Keep Good Records

Make sure that you keep your bills and insurance paperwork organized.

Take down the names of representatives you speak to on the phone and be sure to get their name and ID number so you can follow up within two to three weeks of the initial call. Make sure you also do this when communicating with representatives from your insurance company. If it becomes a your word against theirs situation having this information will make your case stronger.

Negotiation 101

Negotiating medical debt can be an intimidating process but remain friendly and be honest about your hardship and the factors preventing you from paying the bill in full. If you feel as though things aren’t going smoothly or you aren’t being heard, don’t be afraid to ask for a supervisor or manager. Continue until you find someone who can help without being too threatening or harsh.

Repayment Options

  1. The first thing you should do is attempt to reduce the amount owed. Find out if they are willing to waive any unnecessary fees.
  2. Ask for a prompt pay discount. Hospital billing departments and providers are eager to collect and get charges of their books so start off with an aggressive offer when paying a lump sum, for example, suggesting to pay 30% of the bill to have the remainder written off. Even if your initial offer is turned down, the provider may counter with an offer that is feasible. The only disadvantage with these options is that it generally requires you to pay your bill in full within a certain time period. This could be difficult with larger amounts.
  1. If you don’t have the funds to pay in full, find out if your provider is willing to offer a payment plan. If they agree, depending on the plan offered by your provider, you will most likely be responsible for monthly payments of a certain amount with the possibility of accumulating additional fees and/or interest charges. Try to work out an interest free arrangement.
  1. If these attempts are unsuccessful consider hiring a medical billing advocate to stop the clock from ticking. This person’s job is to save patients money and work out a solution between them and the provider. The advocate understands the actual costs of procedures and is able to leverage competitor pricing and Medicare to lower bills overall.
  2. You could go the crowdfunding route, but don’t anticipate it to complete save you from your debt. Several people have found success covering medical bills by using sites such as GoFundMe to fundraise for their medical bills. Even if you don’t successfully raise enough money to cover all of your medical expenses, everything counts.

What Happens If You Aren’t Able To Negotiate and Your Medical Debt Goes to Collections

In most cases, once an account has been delinquent for several months the medical debt will be sold to a collection agency.

Allowing your medical debt to go into collections will most likely harm your credit score. The debt will appear on your credit report as unpaid and remain on your credit report for up to seven years even if you pay the bill in full after it was placed on your report. Some companies will accept a pay for delete offer. This is one of the only ways to have the debt removed from your credit report. A pay for delete occurs when a company agrees to stop reporting a negative item on your credit report in exchange for immediate payment of the debt.

Although the collection process can be intimidating, The Fair Debt Collection Practices Act (FDCPA) outlines specific regulations that must be followed by medical debt collectors. If you believe a debt collector has violated the law, take action to report unfair practices within one year from the alleged violation however, keep in mind that the law does not apply to the original creditor.

It’s okay to trust your gut if you get a phone call about a debt in collections that you don’t think is yours. It’s within your rights to get a collection agency to verify that the debt is indeed yours before you proceed. Never divulge personal information over the phone, especially not until you get written verification that the debt belongs to you. Learn more about how to verify a debt in collections here.

Preventing Medical Debt

If you have insurance, make sure that you review the Summary of Benefits and Coverage for your plan. Familiarize yourself with your deductibles.

If you do not have insurance, look into signing up for health insurance through the health exchange. Health insurance is a costly expense, but medical expenses while uninsured are will land you in significant debt.

THE ONLINE GUIDE TO BECOMING DEBT FREE FOREVER

Tonya Rapley |

Tonya Rapley is a writer at MagnifyMoney. You can email Tonya at tonya@magnifymoney.com

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