What People With Chronic Illness Need to Know About Medical Debt

One in five Americans are affected by medical debt. This is a major stressor that can affect anybody and everybody, especially those of us living with chronic physical and mental illnesses and other disabilities.

Do you have medical debt? So do I! Here’s what you need to know about it:

As with other forms of debt, medical debt occurs when medical bills go unpaid. This is an especially insidious form of debt, as most insurance policies won’t cover the full cost of appointments, procedures, therapies, etc., and medical practices can overcharge for their services, leaving patients responsible for the difference. As of early 2022, 65.9 million people in the U.S. have medical debt, and it’s the leading cause of bankruptcy in this country.

The way medical debt is reported, however, is different from the other types. Your credit report and score are not impacted by your medical bills until they have been sent to collections. The period of time before your bill is sent to a collections agency is determined by the individual health care provider and/or practice.

So, how do we deal with medical bills before they go to collections?

The best preventative measure is to speak with your insurance company before any medical procedures or seeing a specialist. Depending on your plan, you might need a prior authorization, referral, etc. in order for your care to be covered. You’ll also want to keep an eye on your insurance deductible and out-of-pocket maximum.

If you’re eligible for Medicaid, you may be able to have your coverage retroactively applied to medical bills from the three months before the actual start date of your Medicaid plan.

I know, I know, this is all much easier said than done, especially when an unpredictable event occurs.

Let’s get into what you can do about medical bills after the fact:

When you receive the bill from your health care provider or explanation of benefits from your insurance company, check your bill for any errors.
Call your insurance company and the billing office of your health care practice immediately if you see any errors on your bill or you have a question about the amount you’re being charged.
If your insurance company is giving you a hard time, you haven’t met your deductible, or you just need help paying your bill (I had knee surgery in 2020, I feel you), ask the finance office of the hospital or medical practice about setting up a payment plan, or see if they have a financial assistance policy (sometimes called charity care). If it’s a nonprofit hospital, they are required by law to have a financial assistance program. With a quick internet search, you can also usually find a church, nonprofit, or other organization that has funds to help folks with their health care costs.
Use the Healthcare Bluebook to find the fair price for your procedure (you can also ask for the Medicare/Medicaid price), rather than the “chargemaster rate.” Take this information to the billing office and ask them to adjust your bill. It also helps to ask for an itemized bill, that way you can find the fair price for each part of your procedure, appointment, etc.
Do you get nervous at the thought of negotiating or standing up for yourself? Same. When you contact your hospital, ask them to direct you to their patient advocate or patient representative. These folks help patients in these situations all the time!
Try not to put your medical debt on a credit card. Credit cards have high interest rates and you can’t negotiate the amount you owe once it’s on a card. If you have to put your debt on a card but don’t have a credit card or a high enough credit limit, you can apply for a new credit card or personal loan, although applying for a new line of credit doesn’t look great on your report and involves a hard pull of your credit report, which decreases your credit score. If you do go this route, make sure you find a card that provides you with 0% APR for as long as possible.

Which is the worst debt to let simmer? Hint: it’s not medical debt.

While medical debt can be intimidating, it is probably safe to consider it the least harmful type of debt. If you can, try to prioritize your rent, mortgage, student loan, and credit card payments, as these are the accounts with the highest interest rates. Being late on these payments will cause a greater impact on your credit report and score than unpaid medical debt.

You’re not alone.

There are approximately 79 million Americans currently dealing with outstanding medical bills or debt. I attend 3-4 appointments each week and I dread receiving those bills in the mail (and that’s before taking into account prescription costs, specific foods for medically necessary diets, and special braces and clothing). It is unjust that health care costs frequently prevent us from receiving the care we need and deserve – and add an unnecessary burden that can exacerbate our conditions.

For more information, check out the following resources:

RIP Medical Debt (the ultimate resource for all things medical debt-related).
A great explainer on how to save money on medical bills from Her First $100K.
Viral TikTok Video Highlights Hospital Medical Bill Debt Forgiveness Rule
5 Tips for Becoming Financially Equipped for Living With Chronic Illness
NPR’s LifeKit has answers to all of your money questions – including how to deal with the finances of medicine.