Medical Debt and Bills: What to Know

Facing confusing charges or a large medical bill can seem overwhelming at times. There may be many worries, ranging from having to pay absurd charges, to damaging your credit score, to being forced into bankruptcy, to having your home and assets seized. But it’s best not to automatically assume the worst, as there are plenty of opportunities to confront your bill, and if you get on top of it, you may find it’s not as bad as you originally thought.

Appealing your bill to your insurance company

After carefully reviewing your contract and seeing what’s covered, the very first thing you should do when you get a bill where you disagree with charges, think there’s a mistake, or don’t think you’ll be able to pay the bill is to appeal it to your insurance company. Most insurance companies have online appeal forms or an online appeal application built into their website. Often times you can simply fill out the form or answer the questions posted and click submit, generally expecting an answer within a couple of weeks.

If you’re unable to locate the online form or application or are not sure if your insurance company provides one, then call your insurance company and ask them about their appeal process. Most companies are more than happy to help you with any problems you may have regarding the appeal process. Pay close attention to the deadline for appealing your bill because once you hit the deadline they may turn your bill over to a collection’s agency, and it will be much harder for you to work out any sort of resolution to your problem.

Working out a repayment plan with your hospital and insurance company

If you still find yourself unable to pay your bill after having appealed it to your insurance company, consider asking your insurance company and your hospital about whether they can set up a payment plan for you, and be sure to tell them what kinds of payments you can make. Although not all hospitals and insurance companies are willing to work out payment plans, many are.

Insurance companies and hospitals are often very reluctant to turn over your bill to the collection’s agency because it often means they get only a small portion of the payment they would have gotten. As a result, many are willing to work with patients to help give them an opportunity to pay without going through a third party. Be sure to politely inquire whether your insurance company and hospital are open to such an arrangement if you feel the monthly bills are too high.

Consulting experts about your bill

If, after the appeal process, you still think certain charges are unfair, incorrect or are covered by your contract, and want to dispute them, consider consulting legal experts about your bill. Legal experts may be able to help you determine your remaining options in an insurance dispute, based on your contract, help you settle it for less, and help you review your other contract provisions with your insurance company.

Depending on the contract, especially if arbitration for settlement is mandatory, you may want to consider hiring a lawyer to help you get through the lengthy, complicated process, as it could save you in the long-run.


Although a last resort, if your medical bills are high enough this might be an option to consider. Medical debt is an “unsecured debt” that would be wiped out by chapter 7 bankruptcy. Still, it’s not something to consider lightly, as there are long-ranging consequences. To get more information on bankruptcy check out our posts about it on

What not to do:

Don’t pay off your bill using credit cards

Although it may seem tempting to have your bill “paid off” by using credit cards, this is a common mistake. While you will no longer have medical bills you will still owe the same amount but at a much higher interest rate. Medical bill interest rates are quite low, while credit card interest rates are very high.

Don’t assume that just because you’re paying the minimum that means they won’t turn over your bill to a collection’s agency

Be aware of hospital’s policy towards payments and turning them over to collection’s agencies. There’s no universal rule of when a hospital can or cannot turn your bill over to a hospital, so it’s important to know your hospital’s general policy.

Know Your Coverage

The Affordable Care Act, which has  sometimes been referred to as Obamacare, added some rights and protections which allow consumers of health care to more easily understand their health plan’s coverage. Every health plan must now provide a summary of benefits and coverage (SBC). This document must be written in plain language and must be easy-to-understand. Here is an example of what an SBC looks like. As you can see, the document not only breaks down the amount of co-pays you will have to pay for various treatments, but also gives you coverage examples.

The idea behind the SBC is to create a standard document which allows you to compare health plans as you are shopping for coverage on the exchange. However, it is also a great tool to have when you are trying to prepare yourself for your next doctor’s visit. No matter if you bought insurance on the exchange, or already have insurance through your employer, every health plan has to provide a SBC. You can ask your insurance company for a copy at any time. Along with the SBC, your insurance company will also be able to provide you with a uniform glossary of all the terms you will come across in the SBC- to make understanding it a little easier.

If you are nevertheless struggling with understanding your coverage, call your insurance company customer helpline!

Affordable Care Act and Nonprofit Hospitals

By: CarmenFeldman

On March 23, 2010, President Obama enacted the Patient Protection and Affordable Care Act (also known as ACA, or Obamacare). The ACA made many changes to existing law, among them the tax code. These changes include additional requirements for tax exempt, or non profit, hospitals. In order to remain its tax exempt status (i.e. not pay property taxes, etc.), a hospital now must have a written policy that addresses financial assistance available to patients. This financial assistance policy (FAP) must address the eligibility criteria for the assistance and must explain what type of financial assistance (discounted or free) the hospital provides. The FAP must also explain the application process and must be publicly available. As an example, here is Boulder Community Hospital’s FAP.

Nonprofit Hospitals are now also required to determine if a patient is eligible for financial assistance before taking extraordinary collection actions. Extraordinary collection actions generally include lawsuits, liens, and similar collection methods. However, this also includes reporting to collection agencies. Therefore, a hospital cannot report your debt to a collection agency before they have ensured that you are not eligible for their financial assistance program. Because reporting to a collection agency can have a significant impact on a credit score, this requirement adds a layer of protection to the consumer.

Be Prepared! Next time you are headed to the ER, make sure you have read the hospital’s FAP in advance. Most hospitals have customer help lines who will be happy to assist you in case you have questions.