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WalletPrep worksheet · Debt

How to deal with medical debt you can't pay

Name ____________________ Date __________

Key ideas

  1. Always ask for an itemized bill. A summary bill hides duplicate charges and billing codes. Compare every line with your insurer's explanation of benefits.
  2. Nonprofit hospitals must offer financial assistance. You can apply for at least 240 days after the first bill. Eligible patients can't be charged more than insured patients.
  3. Small and paid medical collections stay off reports. The three credit bureaus don't report paid medical collections or ones under $500. Larger unpaid ones can appear after a year.

Vocabulary

Credit bureau
A company that collects your credit history and sells reports to lenders. The three nationwide bureaus are Equifax, Experian and TransUnion.
Explanation of benefits
A statement from your health insurer that shows what a provider billed, what the plan paid and what you owe.
Collections
When an unpaid debt is handed or sold to a debt collector after missed payments. It can hurt your credit score.
Credit report
A record of your credit accounts, payments, balances and some public records, kept by each of the three credit bureaus.
Hospital financial assistance
A hospital program that lowers or erases medical bills for patients who qualify by income. Nonprofit hospitals must have one.
Validation notice
The notice a debt collector must send that names the creditor, itemizes the amount and gives you 30 days to dispute.

Work it out

Leo, a line cook with a high-deductible plan, gets a $4,800 bill after an ER visit at a nonprofit hospital. He calls the billing office before paying anything.

  1. ER bill
  2. Duplicate imaging charge
  3. Corrected bill
  4. Financial assistance (60% off)
  5. What Leo owes
  6. Interest-free plan
  7. Monthly payment

Check yourself

  1. Ana's hospital bill is $3,000. Financial assistance takes off 40%. What does she owe?

    • A. $1,200
    • B. $2,600
    • C. $1,800
    • D. $2,000

  2. Which medical collection can show up on a credit report today?

    • A. A paid medical collection
    • B. An unpaid $1,200 medical collection more than a year past due
    • C. An unpaid $300 medical collection

  3. What should you ask for first when a big medical bill arrives?

    • A. A medical credit card
    • B. An itemized bill and the financial assistance application
    • C. A personal loan

Your turn

Pick your largest medical bill. Call the billing office, ask for an itemized bill and the financial assistance application, and ask them to hold the account while you review it. Write down the date and the name of the person you spoke to.

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Answer key

How to deal with medical debt you can't pay

Work it out

  1. ER bill$4,800
  2. Duplicate imaging charge− $300
  3. Corrected bill= $4,500
  4. Financial assistance (60% off)− $2,700
  5. What Leo owes= $1,800
  6. Interest-free plan1 yr
  7. Monthly payment$150
  1. The itemized bill lists the same $300 scan twice. Removing it: $4,800 − $300 = $4,500.
  2. His income qualifies for a 60% discount under the hospital's policy: $4,500 × 60% = $2,700 off, leaving $1,800.
  3. He sets up a 12-month interest-free plan: $1,800 ÷ 12 = $150 a month, paid straight to the hospital.

Check yourself

  1. C. $1,800 $3,000 × 40% = $1,200 off. $3,000 − $1,200 = $1,800.
  2. B. An unpaid $1,200 medical collection more than a year past due The credit bureaus don't report paid medical collections or ones under $500. Unpaid medical debt over $500 can appear after a year.
  3. B. An itemized bill and the financial assistance application An itemized bill helps you catch errors, and the financial assistance application can cut the bill or erase it.