A medical emergency can be very expensive. When you get the final bill, it might leave your eyes bulging. If there’s no room in your budget to cover the cost, then these bills might end up in collections or as a charge-off. Let’s explore how to negotiate medical bills before they hit collections. Plus, we'll also discuss how to negotiate medical bills in collections.
But first, let's discuss why you should consider medical bill negotiation in the first place.
Why you should negotiate medical bills
Medical bills can add up quickly. Even with stellar health insurance, you might face bills that amount to thousands of dollars in the event of a medical emergency.
Large medical bills can impact your budget
On average, Americans pay just under $5,000 in medical costs per year. The reality is that unexpected medical bills can take a bite out of any budget. Even if you have an emergency fund on hand, covering such a large cost can be painful.
Your medical bills are likely negotiable
But the good news is that most medical bills include room for negotiation. That’s right! A medical bill is a transaction. And as with all transactions, you may negotiate them.
Although it can be an uncomfortable conversation, you might be able to save yourself thousands of dollars. Remember that the worst-case scenario is that they say no. But the best-case scenario is that you walk away with thousands of dollars saved.
So in the end medical bill negotiation is crucial to keeping your finances intact when dealing with a large debt.
How to negotiate medical bills before they hit collections
When you receive a medical bill, it’s a smart move to negotiate it before it heads to collections. If you can resolve the bill before it hits your credit report as a negative item, that’s the preferred option.
That said, here’s how to negotiate medical bills before they hit collections:
1. Negotiate before treatment
Did you know you can start your medical bill negotiation can start before treatment? If you have the opportunity, get a cost estimate before signing off on medical treatment. Simply ask the billing department if there is any room for negotiation.
In some cases, the office may be willing to work with you. Even if they aren’t willing to offer a better price, they might be able to work out a payment plan that suits your budget.
Of course, this is not always possible due to a pressing medical concern. But remember that it never hurts to ask.
2. Shop around for lower treatment costs
If you have the time to shop around for medical treatment, you might be shocked at the different price points you find around town. Depending on your insurance company, you might be able to compare rates across providers.
If your preferred provider has a significantly higher cost, consider bringing it up to the billing department. The discrepancy can back up your ask for a lower price point.
3. Dive into your insurance policy
Before you pore over your medical bills, you need to take a close look at your insurance policy. It’s important to understand exactly what the policy covers and doesn’t cover.
You can use this information to make sure that you are being billed appropriately for a treatment. If a covered cost is included in your bill, pointing it out could mean big savings.
If you aren’t sure what your policy covers, request a Summary of Benefits and Coverage from your insurer. This document maps out the details of your coverage.
4. Ask for an itemized bill
After you’ve received medical treatment, you’ll receive a bill for the total amount. But unfortunately, most of the time you won’t receive an itemized bill unless you ask for it directly from the billing department.
With an itemized bill in hand, review it for any possible errors. If you spot any incorrect charges, you can have them removed. Additionally, you can confirm that your insurance policy covered everything that it was supposed to.
If a charge slipped past your insurance company, then speak with your insurer directly.
It might seem silly to check for errors but you’d be surprised by the sheer number of mistakes. According to Medliminal, over 80% of medical bills contain overcharges.
5. Ask for a pay in full discount
If you have the means to pay for a medical bill upfront, then you should absolutely ask for a discount. The reason most medical providers allow for a pay in full discount is it eliminates the need for them to spend time and energy tracking down a payment.
The amount you can save will vary. But expect to save around 10% to 20%. Asking for a pay in full discount can be an excellent way to handle a medical bill negotiation.
It is also a great way how to negotiate medical bills in collections!
6. Ask about a payment plan option
An upfront payment might not be an option. But what about a payment plan?
With a payment plan, you can keep the bill out of collections, which means it won’t be a hit to your credit score. The good news is that most providers offer a payment plan.
In many cases, there isn’t any interest associated with this option. Ask for a payment plan that fits your budget. In many cases, this is an option.
7. Look for financial aid
Depending on your medical provider and location, there might be financial aid opportunities available. If this is an option, then the billing department should be able to provide more information. Remember, it never hurts to ask.
If you truly cannot afford the bill, an assistance program may be able to help. Seek out this opportunity for any medical bill negotiation that is deemed unaffordable.
How to negotiate medical bills in collections
If you’ve exhausted all of the negotiation tactics above, that’s not the end of the road. The provider may send the bill to collections. But there’s still an opportunity to negotiate with the debt collector.
Here’s how to negotiate medical bills in collections:
1. Determine the statute of limitations for your state
If a medical bill is in collections, take the time to learn about your legal rights. Specifically, determine the statute of limitations rules for your state.
Essentially, the statute of limitation rules set a time limit on when the bill can be collected. If your debt has been unacknowledged for a certain period of time, then you might not be responsible for repaying it anymore.
If the debt is within the time limit, then start your negotiations.
2. Demonstrate hardship
Demonstrating hardship is how to negotiate medical bills in collections. Financial hardship means that this medical bill, in combination with your other bills, is pushing you toward the brink of bankruptcy. If you filed for bankruptcy, a debt collector might get no payment at all.
With that, many debt collectors are willing to work out a deal with borrowers that can clearly demonstrate financial hardship.
You can show that this bill is causing hardship by providing proof of your current income and current bank statements. The numbers will clearly indicate if the monthly payments on this bill cannot be made.
3. Make an offer
Whether or not you demonstrate hardship, debt collectors may be willing to accept an offer. Although it will be an uncomfortable conversation, make the offer.
Depending on the situation, they may be willing to accept half or even a third of what you owe. Be prepared to go back and forth about a finalized number. But be ready to make the payment immediately to eliminate this issue from your life.
If the collector accepts your offer, then make sure they agree to sign a legally binding document that indicates the entire debt is settled. Without this document, they might return for more later.
Learning how to negotiate medical bills in collections can save you money!
When you negotiate medical bills, it’s possible to save thousands of dollars on the cost of your treatment. Even if you technically have the funds to pay in full, you might be leaving money on the table by skipping a quick negotiation.
The unfortunate reality is that medical bills can throw a wrench in your financial plans. Choosing to negotiate medical bills can help you avoid the fallout of financial problems that come along with a bill that goes to collections.