Dealing With Medical Debt

Regardless of where you stand on the issue of public and private healthcare, one thing is for certain- Americans have a lot of medical debt. A recent story published by USA Today estimates that just over 55% of Americans had a medical bill that was sent to collections during the 2020 COVID-19 pandemic. While some of these bills were related to the pandemic, others were leftover from previous unpaid medical bills.

Of the 56% of Americans who had medical bills sent to collections, 32% owed between $1,000 and $5,000, 15% owed between $5,000 and $10,000, and 5% owed sums greater than $50,000.

Whether you owe $5,000 or $50,000, it’s essential to understand how medical debt works, how it’s accrued, and how the collections process works. In today’s article, we’re going to discuss how to deal with your medical debt, from negotiating with your doctors before it goes to collections to negotiating your debt after it’s gone to collections.

By the end of this article, you should fully understand how medical debt works and what to do if you ever find yourself drowning in unpaid medical bills.

Why You Should Pay Your Medical Bills Before They Go Into Default Status

The most common reason why so many people’s medical bills go into collections is that hospitals are required to see patients upfront without asking for prior payment. Every year, millions of Americans visit hospitals and urgent care facilities to seek treatment. Sometimes, the visit is related to an emergency; other times, it’s just a scare or a close call.

However, whatever the case is, people are being seen and treated prior to treatment costs being discussed with them. Our country’s hospitals are notoriously expensive, and without insurance, you could easily pay thousands of dollars for a simple procedure. Just read this story about how some hospitals charge up to $15 for a single Tylenol pill or charge $53 just to use a fresh pair of latex gloves.

Regardless of the ethics behind medical costs, though, you’re still required to pay them. The reason why most adults have health insurance is to prevent these bills from racking up too much. However, not everybody has health insurance, and some people have health insurance plans with a high deductible that still requires them to pay large amounts out of pocket.

If you take nothing else away from this article, remember this- it’s always better to deal with your medical bills before they get sent to collections. Whether you’re paying them in full, passing the costs to your insurance provider, or attempting to negotiate them down, being proactive is the best way to ensure that your credit doesn’t suffer as a result of a doctor’s visit.

Understanding And Dealing With Your Medical Bills

If you want to be in the best position to negotiate a lower cost for your medical bills, then it’s a good idea to understand your medical bills. Here is some of the most common information that you should be aware of regarding medical payments and billing.

Always Review Your Medical Bills

You should always review your medical bills. Keep in mind that hospitals and doctor’s offices are very hectic, fast-paced environments. That being said, it’s not uncommon for desk staff to accidentally overcharge you for treatment, add extra fees, or forget to enter your health insurance information.

By reviewing your medical bills as soon as you receive them, you’ll be able to tell if you’ve been accurately charged for the services you received or if you’re unfairly taken advantage of.

Understand Your Health Insurance Policy and What It Covers

Although the recent U.S. census reports show that 92% of Americans have health insurance coverage, only a small fraction of those covered truly understand how their health insurance policies work and what they cover. Many assume that just because they have health insurance, they have a free pass to go to the doctor’s office whenever they want without paying.

Although there are some plans that are like this, they are very expensive, and most Americans don’t have these types of health plans. Instead, most health insurance plans have very strict guidelines on what they do and don’t cover, which doctor’s offices you’re allowed to go to, and how much you have to pay out-of-pocket before they step in and help with the remainder of the bill.

We could write a 20-page post on health insurance, but we’ll save you the boredom. Instead, we’ll simplify it and give you the main pointers you should be aware of.


Your health insurance deductible is the amount that you have to pay out-of-pocket before your policy helps you pay for the rest. For example, if you have a $2,000 annual deductible, that means you’ll have to pay for $2,000 worth of doctor’s visits and prescriptions before your insurer will put a penny towards your medical bills.

Policies with lower deductibles typically require higher monthly premiums (payments), while policies with higher deductibles come with a more affordable monthly payment.


Most health insurance plans have what’s known as a co-pay program. Even after your deductible is met, your insurer won’t cover all of your bills. Instead, they’ll just cover a percentage of your bills. A typical ratio is a 40-60 copay, where the patient pays 40% of the bill, and the insurance policy pays 60% of the bill.

This means that even if you’ve met your deductible and your visit is “covered” by insurance, the medical facility will still hold you personally responsible for paying your percentage of the visit. If you fail to pay it, the bill will be sent to collections.

In-Network vs. Out-of-Network Doctors

Most health insurance policies have a network of doctors, hospitals, and medical facilities that they work with. If you want your insurer to help you cover the medical costs, then you’ll usually need to go to an in-network doctor or treatment facility.

If you go to an out-of-network doctor, then you may be required to pay 100% of the bill out of pocket. This means that you should always double-check where you visit before seeking treatment. Otherwise, you could be left with enormous doctor’s bills.

Discuss Your Bills With Your Doctor

Now that you know a little more about how health insurance policies work, let’s discuss the various ways you can deal with your medical bills.

The easiest way, by far, to deal with your medical bills is to simply discuss them with the doctor who provided the service. If you have any questions about the treatment or medication you received, they should be able to clear it up and provide you with an itemized list of exactly what you’re being charged for. If you’re unable to speak with the doctor directly, then one of their office staff will usually be able to do the same.

If you see that you were billed for something that you did not agree to, then you may be able to negotiate with the doctor’s office to get the item removed from your account.

Seek Legal Advice

Seeking legal advice should always be a last-ditch effort because you can guarantee that doctor’s offices already have access to the best lawyers. This means that you’ll need to present a solid case if you want to win. Otherwise, you’ll just be left with an unpaid doctor’s bill and attorney fees!

However, if you believe that your doctor or a treatment facility has wrongly charged you, and you have hard proof, then consulting with a medical attorney could prove fruitful. This is especially true if you have large bills that are upwards of $5,000 or more.

Negotiate A Payment Plan

One of the most common ways to deal with medical debt before it goes into collections is simply to negotiate a payment plan. Remember, it costs the doctor’s office money to send you to collections. So, if they can get their money without having to pay collections officers to harass you, then they’ll almost always be willing to negotiate a payment plan with you.

Consider Using A Medical Credit Card

Another option that’s similar to setting up a payment plan is to use a medical credit card. These credit cards typically offer lower interest rates and are designed to cover the costs of unexpected medical bills or medical bills that your insurance provider refuses to pay for. These cards offer users the ease of using them anytime without applying for separate lines of credit or personal loans to cover uncovered medical costs.

Breaking Down The Causes Of Medical Debt

Below is a chart that breaks down the leading medical conditions and how they contribute to the broad spectrum of medical debt in the United States.

Source Of Medical-Related Debt

Percent Of Patients

Hospital Stays

Testing, Labwork, and Diagnostics22%
ER Visits19%
Doctor’s Office14%
Outpatient Service Facilities11%
Dental Visits4%
Nursing Homes and Hospice


How To Deal With Medical Debt In Collections

Taking care of your medical debt before it goes into collections is, by far, the best way to prevent long-term problems. However, if your debt is sent into collections, here are the best ways of dealing with it so that it doesn’t continue to impact your credit score and history negatively.

Disputing Erroneous Reports

If you find erroneous reports on your credit that are the result of medical bills that your insurance has already covered and paid for, then you can dispute these claims and get them immediately removed from your credit.

Apply For Charity Programs

If you incurred a bill at a charity hospital or a church-funded medical facility, then you may be able to apply for their charity program. To maintain their tax-exempt status, these hospitals are legally required to give away a certain amount of free or low-cost treatments to patients experiencing economic hardship.

Consolidate Your Medical Debt

If you have large amounts of medical debt that are weighing down your credit score, you may consider consolidating them with a debt consolidation loan. This will pay off all of your old medical bills at once and leave you with a single, affordable installment loan.

Start A Debt Management Program (DMP)

If the amount of the debt isn’t too much, then you might consider a debt management program. Once started, your interest rates and late penalties will stop as long as you continue to make regular monthly payments towards your debt.

Negotiate A Medical Settlement Deal

If you have a large amount of debt, then you might want to consider negotiating a settlement. Settlement deals can sometimes hurt your credit, but they’re better for your overall score than a default loan status. Plus, you’ll usually save anywhere between 25% and 50% on your total debt amount owed.

Declare Bankruptcy

If you are completely and utterly unable to repay the debt that’s owed, then you can consider filing bankruptcy. Once completed, this legal process will remove all obligations to pay any debts and will give you a clean slate to start over with. However, this can really hurt your credit in the long term, and it can take years to rebuild your credit after declaring bankruptcy.