Medical bills come flooding in every time a person requires a medical procedure or falls ill and needs to visit a doctor or hospital.
The debt that arises out of those visits or treatments is an increasing concern in the U.S. According to a comprehensive study conducted by the Journal of the American Medical Association (or JAMA) released in July 2021, 17.8% of all individuals had medical debt in collections. This research showed that between 2009 and 2020, unpaid medical bills were the largest source of debt that Americans owed collection agencies.
But what can you do with medical debt in collections?
What to do When Your Medical Bill Goes to Collections
When you receive a medical bill, a due date is on the invoice indicating how much time you have to pay before it goes to collections. Providers often send these bills several times before the debt is forwarded, often giving individuals between 90 to 180 days to submit payment.
Many Americans believe there is no rush or importance to paying medical bills, but some may not understand the full repercussions of unpaid medical bills. That is because collection agencies will take over your medical debt.
If you have found yourself with a medical bill at a collections agency, contact the agency as soon as possible to work out a payment plan. If you are unable to pay the debt in full, debt collectors may offer a settlement amount. However, paying a settlement amount is still reflected negatively upon your credit because you are not paying the total debt.
You must understand the statute of limitations put in place by your specific state, as each state differs. This statute of limitations regarding medical debt refers to the length of time debt collectors can legally attempt to collect the owed debt. While the statute of limitations exists for a specified time, this unpaid debt is available on your credit report for approximately seven years.
Medical Bills and Health Insurance
Health insurance pays for some portion of the costs for office visits, procedures, and medications needed but may not cover all costs until you meet your deductible. The amount paid by your insurance company differs depending on your specific insurance policy and coverage.
If you have insurance and have received a medical bill or have an account in collections, the first thing you need to do is request an explanation of benefits, or EOB, from your insurance company. Your EOB will break down the billed amount, the amount insurance has paid, and the remaining balance you owe. If your records disagree with the explanation of benefits, your insurance company will often help resolve a dispute with you as they do not want to pay more than they have to either. However, you must file a dispute promptly, typically within 30 to 60 days.
Individuals without health insurance still have many options regarding disputing, reducing, or even eliminating medical bills. First, contact the office directly to negotiate a payment plan regarding medical bills from your primary care physician's office. Medical bills received from a hospital come with a higher price tag as there is often more testing and treatment provided.
If you have found yourself unable to afford your bill, contact the provider and ask about their financial assistance programs. Federal law requires all non-profit hospitals to carry out these programs. Some hospitals are happy to work with individuals to reduce a bill to receive payment. In their eyes, some money is better than no money. Of course, this varies by hospital.
Paying Off Medical Debt
It is essential to know that even if you are actively paying a medical bill, it can still go to a collections agency. Therefore, many experts recommend prioritizing your medical debt payments by first paying your mortgage and credit card debt and then paying your medical debt.
Before you begin paying a medical bill, be sure to examine your statement to ensure that there are no discrepancies. If you have found an error, file a dispute as soon as possible and take diligent notes or record conversations throughout the process.
Settling a debt with a debt collector happens by negotiating a reduced total amount due. However, these agreed payments often require the full payment to be made at one time. Therefore, it is best to settle medical debts as early as possible before going to a collections agency.
Beware of Scams
Several people make a living off scamming others, so knowing what to look out for is essential. For example, medical scammers may pose as hospital representatives contacting patients by phone to obtain personal information, such as a credit card number. Some scammers even go so far as to use a process referred to as "caller ID spoofing," whereby the scammer alters the caller ID to display the hospital's name and a local phone number.
A scammer will:
- Withhold information
- Pressure to make an immediate payment via money transfer or prepaid card
- Threats of jail time without payment
- Ask for personal or sensitive information such as banking information, routing numbers, or your social security number.
To avoid falling victim to a scam, ask for a call back number, contact the original creditor to verify the bill, and understand what to look out for that may not be appropriate.
Everyone will suffer medical debt at one point or another throughout their lifetime, so do not fear it or let it add unnecessary stress. Instead, thoroughly examine every bill for errors and make disputes and payments promptly.