What If You Can’t Pay Your Medical Bills?

Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend.

Image Not Available

If you or a loved one has ever experienced a serious illness, you know how quickly the medical bills can pile up.

One day, it’s a bill for services rendered by the anesthesiologist. The next day, the radiologist wants his cut. Wasn’t this all supposed to be included in the hospital bill?

Fortunately, limits on out-of-pocket expenses included in the Affordable Care Act for 2014 apply to many insurance policies, whether you get your insurance through your employer or purchase it on your own.

That means an individual can pay no more than $6,350 out of pocket for in-network care. The limit is $12,700 for families. That limit includes co-payments and deductibles, but doesn’t include the cost of monthly premiums.

But there are still ways to rack up big medical bills.

If your health insurance plan at work has a separate administrator for medications, your spending on prescription drugs might have a separate limit or perhaps none at all until that rule changes in 2015. So you could conceivably be facing large bills from the pharmacy.

Health care plans that were grandfathered in are exempt from the limits. “Grandfathered plans are those that were in existence on March 23, 2010, and haven’t been changed in ways that substantially cut benefits or increase costs for consumers,” says HealthCare.gov. “Insurers must notify consumers with these policies that they have a grandfathered plan.”

You might have other expenses that aren’t included in that out-of-pocket maximum. “This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for nonessential health benefits,” says HealthCare.gov.

Your health insurance plan may limit your out-of-pocket spending for non-network care or it may not.

And here’s a biggie: You ignored the federal mandate to buy health insurance.

So, if you have big medical bills, what should you do?

1. Don’t ignore medical bills

Medical debt that you don’t pay can have a huge impact on your credit score. In fact, Experian says more than 64 million Americans have a medical bill in collections on their credit report.

According to The Wall Street Journal:

More than half of all debt collection activity on consumers’ credit reports comes from medical bills, according to the Federal Reserve. Such activity results in lower credit scores for consumers, meaning that lenders are more likely to be cautious in extending credit.

The Consumer Financial Protection Bureau recently called on credit-scoring companies to treat medical debt differently from other unpaid bills, saying that medical debt is often unexpected, unlike other bills that go into collections.

Since then, FICO, a major credit-scoring company, has issued a new scoring formula that reduces the impact of past-due medical bills on credit scores. But it could be some time before that score is widely adopted by lenders.

2. Examine your bill and explanation of benefits

According to Medical Billing Advocates of America, 8 in 10 hospital bills probably contain errors. Donna Fuscaldo of FoxBusiness suggests you request itemized bills from your medical care providers and then examine them carefully to determine that you truly received the services.

Next, compare them with the explanation of benefits statement from your insurance provider, which explains what it paid for and what you owe.

If you notice inaccuracies or discrepancies, call the medical care provider to question the bill.

As we said in “10 Ways to Fight High Medical Bills“:

Common errors include charges for medications never administered and services never rendered. Sometimes patients are double billed or charged for room items that should have been included as part of a stay.

3. Negotiate

If you can’t afford to pay the bill, explain your situation to the medical care provider. Perhaps they’ll be willing to accept a smaller amount of money or will entirely wipe out the bill. Many hospitals have charity care programs that cover the bills of low-income patients.

Keep in mind that if you don’t have insurance, your original bill will likely be much higher than the negotiated rates medical providers get from insurance companies, so there’s some wiggle room in that bill.

Perhaps you could benefit from the help of a paid advocate, who will charge either a percentage of the money saved or an hourly rate.

4. Set up a payment plan

Another alternative is to call the billing department and set up a monthly payment plan. Whether interest will be charged depends on the medical provider’s policy. As long as you keep paying, the debt likely won’t affect your credit score.

5. Find help with medical debt

You can visit Benefits.gov to learn more about federal programs you may qualify for. This government website also provides information about help with medical bills.

Some nonprofit organizations also provide help to those who can’t afford medical bills. Drug companies have programs to help people with the cost of prescription medications.

How have you successfully handled big medical bills? Let us know in the comments below or on our Facebook page.

Karen Datko contributed to this article.

Get smarter with your money!

Want the best money-news and tips to help you make more and spend less? Then sign up for the free Money Talks Newsletter to receive daily updates of personal finance news and advice, delivered straight to your inbox. Sign up for our free newsletter today.