How to choose a medical bill payment plan that works for you

Committing to pay your medical bills is the first step toward rising above medical debt – and you’re not alone on that journey. The majority of people who are carrying  burdensome medical debt intend to pay it off– 75% according to BouyFi research.

Health care providers and collection agencies understand how unexpected medical expenses can cause a personal financial crisis. They are often willing to work with you – even if you are behind on your payments – to determine the best way to resolve your debt.

Finding a customized solution is likely the best way to resolve your debt, whether that’s settling a medical debt for a reduced amount or making partial payments over time. And if you feel overwhelmed and afraid there’s no solution for you, rest assured that most patients dealing with debt can afford to pay something. The more the solution is customized to fit your individual financial needs, the more likely you’ll succeed.

What to know before negotiating a medical bill payment plan

Knowing which payment option works best for your situation will help you better negotiate with your provider or collection agency. It shows you are serious about wanting to make good on your debt and working toward an agreeable solution.

To prepare further, carefully review all of the financial information you receive from your provider and insurance company. For example, are you looking at a bill or an Explanation of Benefits (EOB) from your insurer? If it is a bill, review it carefully line by line to ensure it is accurate. If you do not understand what a service or charge is for, contact your provider’s billing office and ask them to explain it to you.  Billing errors and misunderstanding the bill can be significant contributors to medical debt.

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How to set up a payment plan for medical bills and choose the right one for you

Building the right plan begins by understanding who holds your medical debt and what repayment plans they are most likely to accept.

  • Medical provider: If you’re behind on your bill, and it still sits with your medical provider, be upfront about what you can afford and suggest a plan that works for your budget. It also helps to research or ask about the negotiated cost of a procedure your insurance company and doctor agreed to. This is very important if you are uninsured or underinsured, since it is possible you were charged more – sometimes much more – for that service than an insured patient.
  • Medical debt collector: If you are behind on your payments, your health care provider may eventually send your account to collections. The collection agency will then reach out to you in an attempt to collect on the debt. When negotiating with a collection agency, ask whether they are collecting on behalf of the provider, or if they own the debt. Agencies that have bought the debt from the provider are typically more flexible when it comes to payment terms and debt reduction assistance.

For both providers and debt collectors, make sure you begin any negotiation with a reasonable offer based on your income and other assets. If you’re not sure where to start, BuoyFi offers a free calculator that will help you develop a medical payment plan that you can afford, based on your verified income and the total amount of your medical debt. 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. Once you’ve received a recommended settlement or payment plan through BuoyFi, talk with a BuoyFi Concierge team member to learn how to have a productive conversation about payment plans with your provider or agency.

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What does a typical medical debt payment plan look like?

We often use “payment plans” as a generic term for a handful of payment options, from interest-free payment plans based on your financial ability, to prompt-pay discounts and debt reduction plans. Choosing the option that works best for you depends on how much you owe, how delinquent you are on your payments, and your ability to pay. Some of the more common financial assistance programs and plans include:

  1. Prompt-pay discounts

Many health care systems provide a prompt-pay discount. This payment option typically provides a discount of 5% to 20% off of the total health care bill if the debt is paid in one lump sum within a set time period, which is often 30 days. Some health care systems offer prompt-pay discounts only to uninsured or underinsured patients. Make sure that you determine your eligibility.

Prompt-pay discounts are a good option for patients who may be able to pay their bills in full and wish to negotiate a smaller fee. Uninsured and underinsured patients might opt for this choice if their overall bill is comparatively low and within their ability to pay it.

  1. Personalized payment plans

Personalized payment plans provide people with a monthly payment that may be a better fit for their budget. Those who opt for a payment plan typically owe between $500 and $3,000 in debt, which allows for monthly payments of less than $100. Many payment plans are set up after someone undergoes an unexpected and expensive acute care procedure, like appendicitis or a broken bone.

Those with personalized payment plans typically make an interest-free, low monthly payment until the debt is paid off in full. If a payment is missed, a late fee may be charged. The monthly minimum payment is determined by the provider’s billing office. Your lowest monthly payment might differ from others in a similar situation based on financial need.

Consider the length of time it will take to pay off your debt, as well. The longer it takes, the more likely you could face new debt, making it more difficult to meet your monthly obligation.

  1. Debt reduction and settlements

If neither a prompt pay discount nor a personalized payment plan fits your financial situation, consider negotiating a partial payment based on the balance. Most experts suggest starting at 25 cents for every dollar owed and working up from there. If you can reduce the debt owed and cannot pay the bill promptly, offer to pay the newly negotiated total over a specific time period, typically 24 months.

If that seems overwhelming, BuoyFi Concierge team members are available to review your settlement and payment plan options. They can also advise you on how best to negotiate your individualized plan.

  1. Medical credit cards

Think twice before paying your debt with a medical credit card. While they differ from traditional credit cards in many ways, you could still wind up paying much more than your original bill.

Many medical credit cards offer zero-interest financing for several medical procedures, but they don’t cover all procedures. Before you apply, confirm that your provider accepts the card, and that it will cover your procedure.

If you choose a zero-interest financing program, make sure you understand what may cause interest and fees to be applied to your balance.  Medical credit cards will often apply interest if you do not pay off the debt within a set period of time, or if you are late to make a payment. Also, remember that if you fall behind on your payments, your creditor may report you to the credit bureaus. Late payments on your credit report beyond 30 days could have a negative impact on your credit score.

  1. Personal loans 

Taking out a personal loan or home equity loan to pay off debt may seem like a blessing in disguise. If you owe multiple providers, you can consolidate debt into one minimum monthly payment. In the case of consumer debt, trading high-interest payments for a lower interest rate and lower payment may make financial sense.

For medical debt, however, personal loans may not be the best option. Upfront costs and interest rates will cost you more in the long run, considering most providers and collection agencies will work with you to set up zero-interest payments or accept a debt reduction and settlement plan.

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Making payments and looking forward to a debt-free life

Once you have agreed to a payment plan solution, be diligent about submitting your monthly payment on time and in full. Paying your monthly bill late could result in additional fees that will increase the overall amount you owe.

To help ensure success, establish a savings routine that fits your financial situation and explores healthcare savings opportunities like Flexible Spending Accounts (FSA) and Health Savings Account (HSA). HSAs and FSAs allow you to save for qualified medical expenses tax-free.

It’s also worth exploring whether you qualify for Medicaid or Medicare. While Medicare is the U.S. federal health insurance plan for Americans age 65 and older, people under 65 with certain disabilities or conditions may also qualify. Medicaid is a joint federal and state program that provides health coverage to people with limited income who meet qualification requirements.

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Resources if you need help finding an affordable payment

Please don’t hesitate to reach out to BuoyFi for help. We offer a suite of tools, educational content, and access to medical bill advocates that can help you to avoid future financial challenges while simultaneously taking control of your finances and planning for future unexpected medical expenses.

We’ll help you figure out how much medical debt you can afford to pay, recommend personalized plans to help you take the first step toward financial freedom, and provide you with the financial tools to maintain that freedom.

Ready to take the first step? Download the BuoyFi app today.