How to Negotiate Medical Debt

How to Negotiate Medical Debt

Special thanks to Meghan McGrath for her insight on this topic!

Do you know how to negotiate medical debt? Think you’ll ever need to? With rising healthcare costs, it can be all too easy to have your life turned upside down by medical debt. Sometimes all it takes is one major health problem and the medical bills that come with it create a situation where you have insurmountable debt.

In fact, one recent report estimates that 41% of working-age Americans have medical debt or have struggled to pay medical bills. That’s a serious problem.

And unfortunately, many people don’t know that in these situations you can often negotiate your medical bills or unpaid debts. You just need to have a bit of information and be ready to stand up for yourself. Read below for tips on exactly how to negotiate your medical debt when you:

–Are at a medical facility
–Receive a bill in the mail
–Already have medical debt

How to negotiate medical debt while at the hospital or doctor’s office:

One of the biggest “secrets” is that you can negotiate your bill on the spot while you are still at the doctor’s office or the hospital. The only catch is that you will need to be able to pay cash to make this work. Obviously that is not an option for some people, but if you do have enough in your savings account or emergency fund, it can help you take 5%, 10%, or even 25% off the cost.

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How does it work? Well, in many cases, you won’t know the total cost of your visit until much later (once all the billing codes have been processed), but that doesn’t prevent you from pre-paying. You can simply pay whatever amount you’re comfortable paying, and you’ll get a discount on that portion of your bill. If you pay more than what the visit ends up costing, you will receive a refund from the doctor’s office or hospital.

If you do have some cash saved up, here’s how to handle the negotiation:

Step 1: When the staff person asks for your insurance card and/or co-payment, tell them you’d like a discount and that you’re ready to pre-pay with cash. (Of course, if you enter the hospital with an urgent condition, focus on your health situation first – the financial stuff can wait!)

Step 2: If the hospital or doctor’s office agrees to give you a discount in return for your pre-payment, then pay before leaving.

Step 3: Once the paperwork is processed, the healthcare provider will calculate how much you owe. If you paid more than the total cost, you’ll get a refund. If you paid less than the total cost, your discount (5% or more) will be applied to the portion you paid already and you’ll need to pay the remainder.

This can make a big difference, especially on large hospital bills. For example, let’s say you go in for a planned procedure and offer to pay $2,000 up front for a 25% discount. If your total cost for the visit ends up being $4,000 you’ll save $500!

Be prepared for this process to take some time, though. Hospitals often have up to a year to bill you for your visit. By the same token, if you pay $2,000 up front and the visit ends up costing $1,200 you may have to wait several months before receiving your $800 refund.

How to Negotiate When You Get a Medical Bill in the Mail:

You might need to invest some time in order to save some money. Before the bill itself arrives in the mail, you will receive an Explanation of Benefits (EOB) – which is not a bill. Once you get this document, go through it carefully to see exactly what was covered.

The Explanation of Benefits will show three things: (A) what was paid by your insurance, (B) what was written off by the provider, and (C) what you may owe.

Notice that the last part says “may owe” – not “will owe.” That’s because the amount can still be negotiated. This is where your research and time come in. First, find the part of the EOB that explains which things were not covered and why not. Use your health insurance company’s website to see if any of those items should have been covered under your plan.

Because medical billing codes are so complex now, it’s not uncommon for one or two of the codes to be written down incorrectly or forgotten entirely. That means you’ll be billed for something that should have been covered by insurance. If you find a mistake, call the doctor’s office or hospital and ask them to fix it (and re-bill the insurance company).

Remember, you can always call your provider and ask them to put your bill on hold for 30-60 days. That way your bill won’t be sent to collections while you’re doing this research.

But what if you don’t receive an EOB prior to getting your bill? In that case, it’s a good idea to call your provider (the hospital, doctor, or dentist) and find out what you’re being billed for. Then call your insurance and verify that info and tell them you did not receive an EOB. This way, you can find out exactly how your provider should have billed you, which will allow you to call back the provider and explain what they should do (i.e. which billing codes to use).

Also, make sure to notify your provider of any secondary insurance you may have (through your spouse or parents, for example) and make sure your provider bills them too before they ask you to pay your share of the bill.

How to Negotiate Once You Already Have Medical Debt:

After all the steps above, there’s a good chance you may still have some medical debt to deal with. In that case, there are still some proactive options you can use. For one thing, you can always ask for a payment plan so that you don’t have to pay the entire amount at once. Most times, you can spread out payments over a year (or even longer) if you need that breathing room financially.

And the best part about that is you will rarely have to pay interest, even during the time you’re paying it down. Medical debt is different from most other debts in that regard. You just have to make sure you ask for a repayment plan with 0% interest!

Once you have a monthly payment amount, you can include it in your monthly budget and hopefully it will allow you the flexibility to pay it off without being crushed by it.

Medical debt is a common problem, but with these tips we feel confident that you will be able to take control of whatever medical debt you may have. As always, if you have any questions, leave us a comment below.

Have you tried negotiating medical debt before? Were you successful? Let us know in the comments below.

Image credit: Alex E. Proimos

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  • Great tips for someone that is faced with huge medical expenses and are not aware of the fact that they can negotiate the payment.

    It is really unfortunate that medical costs are so high in the U.S. and that many people get hit with these kinds of bills. I am quite thankful that in Canada we are fortunate not to have to deal with this.

    • Thanks so much! It’s a shame that some people are not aware of their options when it comes to negotiating medical bills and medical debt. I’m glad to hear that the situation in Canada seems to be better.

  • That is good information. And I really like your blog post that you shared – thanks for the heads up!

  • Red

    What if you never negotiated. You have bills still coming in and some on your credit report. A payment plan would still be more then a budget could handle do to all the diffrent payments.

    • Yes, that could be very difficult. The best thing to do is call each provider and see if you can work out a payment schedule that fits within your budget. In some cases, the provider and/or insurance company will be willing to work with you to get a repayment schedule that works for you.

  • nshoe

    What if the amount was negotated already by my insurance and then applied towards dedutible and that is the amount I am personally getting billled for. The medical office is telling me that this cannot be negotiated any further because the insurance company already did. Is this true or is there a way around this?

    • I couldn’t say for sure without knowing your situation, but it sounds like the amount has already been negotiated and if that’s the case then they may have no ability to negotiate further.