Welcome to your “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.
Today’s question is about dealing with debt; specifically, medical debt.
If you’ve got medical debt, or any kind of debt that’s causing you a problem, watch the following video and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript to find out what I said. You also can learn how to send in a question of your own below.
For more information, check out “Successfully Negotiate Your Medical Bills in 7 Simple Steps” and “Get Help With Debt Collectors.” You can also go to the search at the top of this page, put in the word “debt” and find plenty of information on just about everything relating to this topic.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, everyone, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson..
Today’s question comes from Garvel:
“What’s the best way to attack medical debt? Are medical bills which go into collections ever open to reducing the amount for a closeout price?”
Consumers have gotten a couple of breaks on medical debt in recent months.
Now, before a credit-reporting agency can put unpaid medical debt on your credit history, it has to wait 180 days. Prior to that change, it could go on your report immediately, which could hurt your credit. This change is only fair. As you know if you’ve ever dealt with a complex bill that bounces from you to your insurance company and back to the doctor, these debts can take months to get paid.
Another change: When your insurance company satisfies a medical debt, it now has to be removed from your credit history.
So, we’ve had a couple of breaks when it comes to medical billing. But let’s go back to Garvel’s question: What’s the best way to attack medical debt?
The best way to deal with medical debt is to keep it down in the first place. If you’ve got a high-deductible health plan — something I’ve had for many years — let your medical provider know that. Let them know you’re going to be paying for this out of pocket. You might find yourself getting a break.
Another thing you can do: Make sure the bill is accurate. There are people called medical billing advocates who will check your bills for accuracy. Obviously, we’re not talking about something simple. But if you’re in the hospital and you’ve got a stack of bills, sometimes these medical billing advocates can help you get those reduced. Why? Because hospitals make huge errors in their bills, and often inflate bills.
So, billing advocates can be an important member of your team to help you get bills reduced. They’re not free, but if the situation calls for it — if the bill is complicated enough and high enough, and you’re out of pocket enough — it might be worth looking into. One place to start your search is through Medical Billing Advocates of America.
Once you’ve got a medical debt, can you negotiate it? Absolutely. You can negotiate any debt. You can go back to the hospital and say, “Hey, this is tough. Can you reduce my bill for me? How about if I give you half the amount, but I’m going to pay it all today?”
You can do this with collection agencies as well. But it’s generally easier to negotiate with the hospital or doctor that originally billed you.
In summary, you can and should try to negotiate any unpaid bill, including medical debt. Be careful, however, if you get contacted by a collection agency. Sometimes these companies will buy old debts for pennies on the dollar that are no longer collectible because the statute of limitations has run on them. But it’s not illegal for them to try to collect a debt, even though it’s not legally collectible. So sometimes they’ll call you up and try to get you to restart the statute of limitations clock. How? By getting you to pay something on it. They might say, “Just send me a dollar.” Do that and you’ve restarted the clock. A debt that was legally noncollectable is now back on the books. In short, be very careful when you’re contacted by a collection agency.
If there’s any doubt, check it out. See what the statute of limitations is in your state; they’re not all the same. Reach out to a consumer lawyer and ask them for help. Sometimes, a first consultation is free. And if you’re getting abused by a debt collector, definitely reach out to a lawyer. They might represent you for nothing, because they’ll collect their fee from the debt collector who’s violating the law. Where can you find a lawyer? Right here.
I hope that answers your question, Garvel. Make it a super-profitable day, and don’t forget to meet me right here next time!
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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