Medical Debt: What to Do When You Can’t Pay

People often feel ashamed of their medical debt, seeing it as a personal failure. In fact, it's more of a mass affliction.

Americans are estimated to collectively owe at least $140 billion in outstanding medical debt. Lack of insurance and a steadily increasing cost of health care are the two main culprits behind the growing medical debt problem.

What if you can't pay your hospital bills? What if you have accumulated medical debt and have no way of paying it on time? On both accounts, the consequences can be serious.

People may forego the care they need, including doctor appointments, tests, treatments, and prescription medications, reports the Kaiser Family Foundation, a health policy analysis nonprofit. They may struggle to pay other bills, deplete savings, damage their credit, and even declare bankruptcy.

Medical Debt Is More Common Than You Think

In the U.S., many people are not paying their medical bills because they can't afford them. According to data from the U.S. Census Bureau, 19% of American households could not afford to pay for medical care they received right away. Households with children are more likely than those without children to have unpaid medical bills.

Lack of insurance is one key reason for unpaid medical debt. An estimated 27.3 million U.S. residents under the age of 65 in the U.S. are uninsured. They may not have the option to obtain insurance through the workplace, or may be self-employed and unable to afford steep insurance premiums. Regardless of the reason, a lack of health insurance coverage can quickly translate into an unaffordable financial burden for those who require medical care.

People commonly respond to medical debt by delaying vacations, major household purchases, cutting back on household expenses, working more, borrowing from friends and family, and tapping retirement or college savings accounts to pay those bills. And of course a lot of medical debt remains unpaid.

How to Manage Unpaid Medical Debt

When healthcare bills start piling up, it's important to be proactive rather than ignoring the situation. If you’re faced with medical debt you can’t pay, try these tips for reducing what you owe so you can minimize the effect of your bills on your finances, health, and future.

Check for Errors

Various sources will tell you that anywhere from 7.1% to 80% of medical bills contain errors. The true percentage is anyone’s guess, but the risk of a mistake is apparent.

So how do you find errors on your medical bills? Sean Fox, co-president of San Mateo, Calif.-based company Freedom Debt Relief, says to start by reviewing the explanation of benefit statements from your insurer, ideally right after you receive them.

Look for duplicate items, services you didn’t receive, services you don’t recognize, and charges that your insurance should have covered. Review your healthcare providers’ bills to make sure your insurance has paid them accurately. Call your insurance company or your provider’s billing department to clarify anything you don’t understand or to look into any possible mistakes, he says.

A more advanced technique is to get copies of your medical records and attempt to compare them with charges for which you’ve been billed. You may need an expert’s help to secure those records and make sense of everything.

Negotiate Your Bill

If you want to negotiate your bill, speak with your healthcare provider’s medical billing manager—the person who actually has the authority to lower your bill. Don’t wait until your bill is delinquent or in collections, at which point your credit score may be affected. Talk to someone as soon as you receive your bill and have verified its accuracy.

If you have low income or are experiencing financial hardship—even if the hardship is due entirely to your medical bills—request hardship assistance. Hospital charity care may be available based on your income and savings. In fact, according to Fox, some hospitals are required by state law to provide free or reduced services to low-income patients. As soon as your bills arrive, let your providers know if medical problems have affected your income and ability to pay.

One strategy for justifying lower charges is to compare the price you were billed to those charged by other providers in your area. Use a website such as NewChoiceHealth.com or HealthcareBluebook.com to get an idea of what you should be paying. If you have health insurance, your insurer’s website might also have a tool that lets you get an estimated cost of care for various procedures.

Advocate for Yourself

One strategy is to ask for an aggressive discount in exchange for paying right away. For example, you could ask the provider if they'll write off the remainder of the balance, if you pay 30% of the bill right now. This strategy can work because your provider will save time and money if they don’t have to pursue payment from you for months or years.

If you can’t afford to pay even a percentage of your full bill immediately, try asking for a 25% discount if you make a large down payment now. A less aggressive strategy is to ask if the provider will charge you the discounted fee that Medicare or Medicaid pays.

If you can’t arrange a reduced payment, ask about a zero-interest payment plan. Whatever terms your provider accepts, make sure to get them in writing.

Get Outside Help

Few healthcare consumers are experts in medical billing. A savvy choice is to enlist the help of someone who is: a medical caseworker, debt negotiator, or medical billing advocate. These professionals might be able to reduce what you owe when you can’t or are too timid to try.

Medical billing advocates are insurance agents, nurses, lawyers, and healthcare administrators who can help decipher and lower your bills. They’ll look for errors, negotiate bills, and appeal excessive charges. Some charge hour rates which can be as much as $100 or more. Others will charge about 25% to 35% of the amount that your bill was reduced by.

You can also ask to speak with a caseworker from your hospital or insurance company if you need help understanding your bills and resolving payment issues, says Fox. A caseworker may be able to refer you to charities, churches, community organizations, and government agencies that can offer financial assistance.

Special Considerations

In March 2022, the major consumer credit reporting measures unveiled measures to reduce the effect of medical debt in collections on consumer credit scores. They included:

• Removing repaid medical debt previously in collections from credit reports
• Increasing the time before medical debt in collections appears on a credit report from six months to a year
• Ending credit reporting for medical debts in collections below $500

The first two measures were to go into effect on July 1, 2022, and the third in the first half of 2023.

In April 2022, the Biden administration unveiled a range of measures to minimize the burden of medical debt and abusive collection practices. These included barring the consideration of medical debt in assessing applications for federal loan programs.

The Bottom Line

The inequities of the U.S. healthcare system affect millions, while few can be sure they won't confront a medical issue beyond the scope of their insurance coverage and ability to pay. Control what you can by making sure your medical bills are accurate, negotiating for lower charges, and knowing your rights when it comes to medical debt collections. And if you can’t manage these tasks on your own, get outside help from an expert.

Unpaid Medical Debt FAQs