How to Negotiate Medical Bills in Collections

How to negotiate medical bills in collections

Every month, millions of Americans struggle to pay their medical bills. Rather than reach out to ask for help, many believe making a minimum monthly payment, often as low as $5, is all that’s needed to stay in good standing with their health care provider and stay out of collections.

Making a minimum payment without an agreement from your health care provider, however, will not guarantee your doctor’s billing office won’t send your account to collections.

Thankfully, there are options that will show you how to pay off medical bills, even if they move into collections. Third-party patient advocate services like BuoyFi will take the time to analyze your financial obligations, including your household income, recommend an affordable payment plan, and provide coaching on how to best approach debt negotiations with your care provider or collection agency.

An industry insider offers tips on how to negotiate with medical debt collectors and pay off your medical debt

According to the Consumer Financial Protection Bureau, a staggering one in five Americans has medical debt that has gone to collections. If you’re among them, chances are you’re looking for information on how to negotiate medical bills in collections—or more specifically, how to negotiate with medical debt collectors.

You may find yourself in this difficult situation for any number of reasons that are beyond your control. It could be that you lack health insurance, or you are insured, but your insurance company didn’t cover some or any of the services you needed. You may have been hospitalized with a serious health issue but have no experience negotiating hospital bills. You may have consulted with a medical bill advocate and tried to work out a payment with the debt collection agency, but it didn’t pan out.

Regardless of the circumstances that got you to this point, as someone who has spent more than 20 years in the healthcare debt industry, I can tell you that the reason most people with medical debt in collections haven’t paid it off isn’t because they don’t want to—in fact, BuoyFi’s research data shows that more than 75% of people with burdensome medical debt want to pay their debts but simply can’t afford to, or they don’t know where to start.

One thing to know from the start – especially if the amount of your debt is so high that you feel like it would be impossible to pay off – is that hospital representatives and debt collectors know you didn’t plan to have a medical crisis and that you have other important financial obligations to take care of like food, housing, transportation and child care.

Because of this, your account holders will often settle a medical debt for a reduced amount or provide for partial payments over time. This is particularly true if the debt has gone delinquent . In fact, through actively working with millions of patients to resolve their medical debt, we’ve found that most patients can afford to pay something as long as the solution is customized to fit their unique and individual needs.

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Four steps to negotiating healthcare bills

So how do you get from here to there – from having burdensome medical debt hanging over your head to the relief you will feel when it’s resolved so you can focus on more important things? Here are four steps you can take now to begin the journey out of medical debt and into financial wellness.

  • Verify that what you received is a bill.
  • Make sure the bill is accurate.
  • Ask about financial assistance programs.
  • Offer a reduced settlement or propose a payment plan you can afford.
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Verify that what you received is a bill

Before you dive into how to negotiate a medical bill, it’s important to first verify that what you received is actually a bill. You may receive an Explanation of Benefits (EOB), and while it may look a lot like a bill, it’s not. An EOB is a statement from your insurance company about which medical services or products you received are covered by your healthcare plan. It will outline the services that were provided, who provided them and when, the amount the insurance company will pay, and the amount that you may be responsible for. You don’t have to make any payments based on an EOB. The hospital or healthcare provider is required to send you an itemized bill separate from the EOB.

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Make sure the bill is accurate

If you do receive a bill, your first step should be to review it closely line by line and verify that it’s accurate. Comparing your bill to the EOB from your insurance company is a great way to determine accuracy. Billing errors can happen for any number of reasons. It could be as simple as a typo in the spelling of your name, or a clerk entering the wrong code for a particular procedure, or billing for a test that was scheduled to happen during your visit but didn’t.

According to data from Kaiser Family Foundation (KFF), a significant portion of medical debt may be caused by billing errors. A KFF survey found more than half of adults with healthcare debt (53%) and 43% of all adults received a medical or dental bill they thought contained an error. Some of the errors included being billed for things people thought should have been covered by insurance, but in other cases, people said they had been billed for services they never received.

While many were able to have the errors corrected, half were not able to or didn’t even try. And, about one in three (32%) of adults with health care debt who received a bill they thought had errors said they had a disputed bill sent to collections.

This is a problem because having debt in collections often affects your credit. It can show up on your credit report and hurt your credit score, which impacts other aspects of your financial health. A low credit score can make it harder to get approved for a personal loan or a mortgage, or result in higher interest rates on a credit card and other loans.

On the positive side, under new policies that took effect in July 2022, the three major credit reporting agencies, Equifax, Experian and TransUnion, will remove any record of a medical collection debt from a credit report once the debt has been paid in full, instead of the previous seven years. In addition, rather than adding medical debt to a credit file only six months after it goes to collection, the credit reporting bureaus will wait one year, giving consumers more time to address the situation. Finally, medical debt balances under $500 will not impact your credit report.

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Ask about financial assistance programs

If the amount of a medical bill is more than you can pay, you can ask your healthcare provider or a patient advocate at the location where you received care about financial assistance programs. Depending on your income, you may qualify for help with medical bills from the federal government, such as through Medicaid, CHIP (the Children’s Health Insurance Program), or Medicare. Many healthcare providers also have their own financial assistance programs, and there are many non-profits and charitable foundations dedicated to helping people get out from under medical debt.

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Offer a reduced settlement or propose a payment plan you can afford

If you haven’t been able to pay your bills, oftentimes your medical provider will send the account to a collection agency to try to collect on their behalf, or they will sell the account to a healthcare asset management company. Some collections organizations earn a percentage of the collected debt, but others who buy the debt have more flexibility to negotiate or forgive the balance based on your income and other factors.

When considering how to settle medical debt in collections, one thing we have found to be particularly effective is to come to a settlement conversation armed with a reasonable offer based on your income and other assets. To make this easy, BuoyFi offers free tools to help you calculate what you can afford and recommends a settlement or payment plan based on your income and the total amount of your medical debt. Using a tool like BuoyFi when negotiating with a healthcare provider or collections agency can help you move from confusion to confidence and take the right steps toward debt resolution and financial freedom. Hospitals and collections professionals may also be more likely to accept an offer or plan recommended by a tool like BuoyFi because it’s based on your verified income.

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How to negotiate a hospital bill – additional considerations

If the settlement options and payment plan recommendations are still not possible due to competing bills, you can try offering a partial payment based on the balance. Start by offering .25 for every dollar owed, or $500 for a $2,000 debt, and negotiate until you find an amount that’s acceptable to the hospital or collections representative. If you do not have the savings to pay this all at once, propose a payment plan that breaks the balance into affordable monthly payments. For example, $500 paid back monthly over two years is a much more affordable $20/month. At BuoyFi, team members are available to review users’ settlement and payment plan options and counsel on how best to negotiate . Finally, be sure to always get any agreements in writing and request written confirmation when you’ve settled your debt.


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A path toward financial freedom

The high cost of healthcare is a burden on many families and many organizations are working to make the system more affordable and easier to navigate. While approaches to solving the problem of high healthcare costs differ, one thing people across the spectrum seem to agree on is that people should not be bankrupted with overwhelming medical debt. If you are in a situation that feels hopeless, know that there is a way out.

Download the BuoyFi app or set up an online account today to calculate a personalized and affordable settlement and payment plan to rise above medical debt.