With each passing year, more Americans seem to struggle with how to pay their medical bills and debts. To cope with the burden, many put off other financial priorities like saving for retirement, paying credit card bills, or even going to the doctor, potentially making themselves even sicker. According to a national survey conducted by Discover Personal® Loans, 45% of Americans believe it might take more than a year for them to pay off their current medical debt.*
It’s a widespread problem. Kaiser Family Foundation1 research found that 100 million people—or 41% of U.S. adults—carried some kind of medical or dental debt. In fact, medical debt was the most common type of debt that appears on credit reports, according to the Consumer Financial Protection Bureau.2
Paying off your medical debt doesn’t have to consume you. Armed with knowledge and the right tools, which might include a personal loan to cover medical bills, you can start chipping away at your debt and gain some peace of mind. Our four-step plan will help you pay off your medical debt and put you back on the road to financial wellness. Here’s what you need to know:
Table of contents
Understand what you owe
Medical bills can contain all kinds of errors, from duplicate charges to data entry glitches to coding mistakes.3 Don’t assume that the bill you get from your provider is accurate. Call your doctor—not the billing company—if you suspect a billing error and ask for an itemized bill, which can alert you to mistakes like double billing.
Even an accurate bill might be more than you can afford. Try negotiating a lower amount directly with your provider. Healthcare providers have significant leeway and may be willing to accept less than the amount they billed you, especially if you are uninsured. Uninsured patients are often initially charged the maximum rate, so providers may be willing to accept the negotiated rate they’d bill insured patients.
In addition, ask about financial assistance or charitable care. Many hospitals and clinics have such programs but don’t advertise them. Some states now require hospitals to screen eligible patients for this type of assistance, taking the burden off patients to do the research. Programs vary by hospital, but patients earning up to two or three times the federal poverty level—which for a family of four was $30,000 min 2023—can usually reduce their bills.4
If you can’t make headway on your own—or you feel overwhelmed by the process of medical billing—consider working with a medical billing advocate or other credit advisors, such as the nonprofit National Federation for Credit Counseling, for assistance with your overall debt. Those specializing in medical issues can help comb through your medical bills and find errors, duplicate charges, unreasonable charges, or even fraud. They can also help get denied claims reversed by your insurance companies.
Some hospitals or clinics employ social workers to help you interpret medical bills and file claims with your insurance company. You can access their services for free. And some employers provide this service as part of their benefits package. The Patient Advocate Foundation offers free one-on-one help sorting out medical bills and negotiating with providers for people undergoing treatment for serious medical conditions.
For big medical bills or complex issues, you might consider turning to an independent billing advocate. Be sure to understand how they charge (for example, if it’s hourly, per project, or a percentage of what they save you) and what the rates are. Hourly rates for such help can have a wide range. Umbra Health Advocacy maintains a national directory of members of the Alliance of Professional Health Advocates.
Build a medical budget
Medical expenses are a fact of life. Healthcare ate up up about 8% of the average family budget in 2022,5 so it makes sense to set aside money every month toward this line item. But medical expenses often accumulate suddenly, typically after an unexpected illness or accident, making it difficult to budget sufficiently. That’s why it’s important to build up an emergency savings fund to help you deal with unforeseen expenses.
A health savings account (HSA) may help by building up a tax-advantaged pool of money for medical expenses. If your medical expenses are significant, you might also want to consult with a tax advisor to discuss ways to pay them off in a tax-advantaged way.
Create a plan for medical debt
As of July 1, 2022, the three nationwide credit reporting agencies began removing paid medical debt from credit reports. In addition, they will not report unpaid medical debt unless it has been in collections for 12 months (up from six months previously). And finally, unpaid medical collections debt that had an initial balance of $500 or less were being removed from credit reports entirely starting in early 2023.6
While that’s a welcome development, significant medical debt can still be a burden. If you ignore medical bills long enough, some of these bills could go to collections and eventually damage your credit score, making it difficult to borrow in the future. Medical debt can also harm your credit score if it forces you to stop paying your other bills, as 25% of respondents in the Discover Personal Loans survey had acknowledged.* In total, 58% of all debt in collection is medical debt, making it the most common type of debt.7
When dealing with medical bills and debt, our four-step plan will help you get rid of your medical debt and put you back on the road to financial wellness.
Consider personal loans
Dealing with mounting medical bills and debt can feel overwhelming—especially if you’re also managing an illness. But you can lighten the load by making a concrete plan of action, and if you need to borrow money, by finding a lender you can trust.