Negotiating and Settling Medical Debt Without Bankruptcy



Negotiating and Settling Medical Debt Without Bankruptcy

Medical debt is a huge problem in America. According to a CNBC article, it’s the number one cause of bankruptcy. It’s easy to feel overwhelmed when the medical bills start piling up. But there are options besides declaring bankruptcy. You can negotiate with hospitals and debt collectors to try to lower your bills. This article will explain how negotiating medical debt works and give you strategies to settle your medical bills for less.

Why Medical Debt Happens

There are a few main reasons people end up with large medical debts:

  • Health insurance doesn’t cover everything. You’re responsible for deductibles, copays, coinsurance, and anything your insurance doesn’t cover. These costs add up fast, especially if you have a chronic illness or serious one-time medical event.
  • Balance billing. This is when out-of-network providers bill you for the difference between what your insurer pays and their full charges. Balance billing isn’t allowed in some states, but it still happens.
  • High out-of-pocket costs. Even if you have insurance, you may have a high deductible or high coinsurance payments. These leave you responsible for thousands of dollars in medical bills.
  • No insurance. If you’re uninsured, you pay full price for medical care. A single hospital stay can result in tens of thousands in medical debt.
  • Medical billing errors. Mistakes happen, and you can get billed incorrectly. Always review your medical bills for errors.

The bottom line is healthcare is expensive in America. Even insured folks get stuck with medical bills they can’t afford. If this happens to you, don’t panic. You have options, including negotiating your medical debt.

Should You Negotiate Medical Bills?

Trying to lower your medical bills through negotiation makes sense in certain situations:

  • You don’t have the money to pay the full amount.
  • You have large bills from out-of-network providers.
  • You think there are errors on your medical bills.
  • The costs seem unreasonable to you.
  • You lost your job/income and can no longer afford the payments.

If any of these fit your scenario, negotiating may help reduce the bills to an amount you can actually pay. Just keep realistic expectations. Medical providers won’t lower bills to just $5. But you may be able to get 25%-50% knocked off.

When NOT to Negotiate Medical Debt

Here are some cases when negotiating medical bills won’t help:

  • The provider isn’t willing to budge. Some medical providers refuse to negotiate. You’ll have to pay in full or let it go to collections.
  • You can afford the payments. If the payment plan works for your budget, just pay it.
  • It’s a small balance. If the bill is only $100-$200, it’s not worth negotiating over a few bucks.
  • You have Medicaid/Medicare. They have set rates and usually won’t negotiate further.
  • The service was elective. Providers are less likely to negotiate bills for cosmetic or non-essential services.

If your situation doesn’t fit the criteria for negotiating, you may have to look at other options, like payment plans, loans, or bankruptcy.

Medical Bill Negotiation Strategies

If you decide to negotiate, here are some effective strategies:

Review Bills for Errors

Comb through your medical bills line by line. Look for:

  • Charges for services you didn’t get
  • Duplicate charges
  • Incorrect billing codes
  • Math errors
  • Unclear descriptions

If you find mistakes, contact the billing department to dispute them. Show proof if you can. This can potentially lower your bill by hundreds or thousands.

Ask for an Itemized Bill

Hospitals often bill services in bulk, like “Laboratory – $5000.” This makes it hard to verify if the charges are correct. Ask the hospital to provide an itemized bill that lists each test, supply, etc. individually. Then you can better spot errors.

Negotiate the Full Balance

Don’t automatically accept the “discount” or “adjusted rate” the provider offers at first. Negotiate down from the full billed charges. Many hospitals bill insured patients at inflated rates, knowing the insurance company will negotiate them down. You can negotiate them down further.

Offer to Pay in Full for a Discount

Providers often offer a discount for paying the entire balance in a lump sum. Say you’ll pay in full right away if they reduce the bill by __%. Get this offer in writing before paying.

Ask for Financial Assistance

Non-profit hospitals are required to provide financial assistance to lower income, uninsured patients. Ask if you qualify for their financial assistance program or charity care. This can significantly reduce your medical bills.

Appeal Insurance Claim Denials

If your insurance denies coverage for services, you can appeal. Provide evidence the care was necessary and covered. If approved, the insurer pays their share and you owe less.

Hire a Medical Billing Advocate

Medical billing advocates are skilled negotiators. They dig into your bills to identify errors, negotiate with the providers, and generally save clients 40-60% off their medical debt. Their services cost around $150-$300 but can be worth it if they significantly lower your medical bills.

Negotiating Medical Debt in Collections

If you ignore and don’t pay medical bills, they get sent to collections. This damages your credit score. Collections also makes negotiating more difficult – but not impossible. Here are some tips:

  • Get debt validation. When a collection agency contacts you, request written debt validation. This forces them to prove you actually owe the debt.
  • Offer a low lump sum. Collection agencies buy debts for pennies on the dollar. Offer something like 25% of the balance as payment in full. See if they accept it.
  • Ask about financial assistance. Even in collections, you can ask the hospital about financial assistance or charity care programs that can lower the debt.
  • Don’t pay without settlement terms. Don’t send any payment until you have their offer to settle the debt for that amount in writing.
  • Consult a credit counselor. Non-profit credit counseling agencies have experience negotiating with medical collections. They can advocate for you.

The further along in collections the debt goes, the harder it usually is to negotiate a lower settlement. Act quickly if you want the best chance.

How to Approach Negotiating Medical Debt

When you’re ready to negotiate:

Gather Information

  • Make a list of all medical debts you want to negotiate with contact info.
  • Note any errors you found or questions you have on the bills.
  • Calculate a target settlement amount for each debt based on your budget.

Contact the Provider

  • Call the billing department or hospital financial assistance office.
  • Explain you’re having financial hardship and want to discuss lowering your bill.
  • Remain calm and polite. Anger or threats won’t help.

Make Your Case

  • Walk through any errors you found on the bills.
  • If no errors, explain the charges are unaffordable for you. Ask for their help.
  • Offer your target settlement amount and ask if they can accept it.


  • The rep may make a counteroffer. Negotiate politely back and forth until you reach an agreed amount.
  • Get all settlement offers in writing before paying anything.

Follow Up

  • If the rep won’t negotiate, ask to speak with a supervisor or financial assistance director.
  • Send a certified letter summarizing your negotiation attempts.
  • Complaint to regulatory agencies if you feel wrongly treated.

With patience and persistence, you can often negotiate medical debt down to more manageable levels.

Options Beyond Negotiating Medical Debt

If you exhaust all negotiation options and still owe unaffordable medical bills, look into:

Payment plans – Most providers will put you on an interest-free monthly payment plan. This helps break the bills into smaller chunks.

Medical loans – Specialty lenders like CareCredit offer loans for medical procedures. This provides financing but you have to repay with interest.

Crowdfunding – Sites like GoFundMe let you crowdfund donations to help cover medical costs. It’s not guaranteed but can help.

Credit counseling – Non-profit credit counseling agencies provide guidance on managing medical debts. They can set up debt management plans with lower interest rates and payments.

Debt settlement – Debt settlement companies negotiate with your providers to settle medical debts for less than you owe. But fees take 25%+ of savings.

Bankruptcy – Filing for bankruptcy legally discharges many types of debt, including medical debt. This provides a fresh start but damages your credit.

Ideally you can negotiate an affordable payment plan on your medical debt and avoid these other options. But know your rights and all possible avenues for relief.

New Laws Help Mitigate Medical Debt Issues

Thanks to recent laws like the No Surprises Act and changes in how medical debt is reported, having medical debt will damage your finances less than it used to.

  • The No Surprises Act bans most surprise medical bills from out-of-network providers. This helps limit how much you owe.
  • As of 2022, paid medical debts under $500 will no longer show up on credit reports. This prevents small medical debts from lowering your credit.
  • Unpaid medical debts under $500 will only stay on credit reports for 1 year instead of 7. After a year unpaid small medical debts won’t affect your credit.
  • The 3 major credit bureaus now wait 1 year before putting unpaid medical debts on your report. This gives you more time to work out payment plans before it impacts your credit.

While medical debt is still a leading cause of bankruptcy, these changes will help consumers. Negotiating medical bills remains important but new laws help reduce the long-term credit damage of an unpaid medical bill.

Key Takeaways on Medical Debt Negotiation

    • Review bills closely and dispute any errors
    • Negotiate from the full billed charges, not just the “discounted rate”
    • Offer lump sum payment in exchange for 25-50% off
    • Ask about financial assistance programs at non-profit hospitals
    • Act quickly to negotiate debts before they go to collections
    • Get all settlement offers in writing before paying
    • If negotiation fails, look into payment plans or other options
    • Research the hospital’s financial assistance policies – federal law requires nonprofit hospitals to provide discounts or free care to low income patients
    • Some hospitals are very aggressive about collections and lawsuits against patients, while others are more flexible – know the reputation of the hospital you owe
    • Nonprofit hospitals receive large tax breaks in exchange for providing community benefits – make sure they live up to this obligation before paying full price[1][2]
    • File complaints with state regulators if a nonprofit hospital refuses to negotiate reasonably or provide financial assistance you qualify for[3]
    • Nonprofit hospitals cannot require upfront payment for emergency services – this is illegal “patient dumping” under EMTALA
    • If sued for medical debt, respond to the lawsuit and raise any defenses like lack of proper notice, billing errors, or failure to provide charity care[4]
    • Be aware some hospitals sell debts or report patients to credit agencies very quickly – act fast to avoid credit damage[5]
    • Get written settlement agreements for any negotiated discounts – verbal promises may not be honored later
    • If all else fails, consult a lawyer about options like bankruptcy to discharge unpayable medical debts

The bottom line is nonprofit hospitals must provide financial assistance and should be willing to negotiate payment plans for patients in need. Fight for your rights and explore all options before paying unaffordable medical bills.

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