Medical Debt: How to Negotiate and Pay It Off

Step 1 — Request an itemized bill and check for errors

Studies consistently show that 80% of medical bills contain errors. Before negotiating, get an itemized statement — not just a summary — that lists every charge by code and description. You have a legal right to this under HIPAA.

Common billing errors to look for: duplicate charges, charges for services not received, upcoding (billing for a more expensive procedure than performed), and facility fees on outpatient visits. Dispute any errors in writing directly with the hospital billing department before the bill goes to collections.

Step 2 — Apply for charity care and financial assistance

Nonprofit hospitals (which is most hospitals in the US) are required by the IRS to offer free or reduced-cost care to patients who cannot afford to pay. This is called charity care or financial assistance. Income thresholds vary but typically cover patients up to 200 to 400 percent of the federal poverty level.

Ask the billing department for their financial assistance application. Many people qualify and never know it. Even if you do not fully qualify, partial assistance can reduce your balance by 30 to 80 percent.

Step 3 — Negotiate the balance

Even if you do not qualify for charity care, you can negotiate. Hospitals typically accept 40 to 60 percent of the billed amount from self-pay patients because that is roughly what insurance companies negotiate. You can use this as leverage.

Step 4 — Set up a payment plan (interest-free)

If you cannot pay a lump sum, ask for a payment plan directly through the hospital. Hospital payment plans are almost always interest-free — unlike medical credit cards such as CareCredit, which charge deferred interest that can spike if you miss the promotional window.

Request a monthly payment you can sustain for the full term. Hospitals typically accept any reasonable amount and rarely send accounts to collections while you are making consistent payments under a plan. Get the payment plan in writing with the total amount, monthly payment, and confirmation that no interest will accrue.

Step 5 — Know your rights if it goes to collections

As of 2023, medical debt under $500 no longer appears on credit reports from the major bureaus. Debt over $500 that is at least one year old can still be reported, but collection agencies have limited time to sue (the statute of limitations, which varies by state).

• Request debt validation in writing within 30 days of first contact
• Do not pay a collector before checking whether the debt is past the statute of limitations
• Never give a collector access to your bank account directly
• Medical debt cannot be used to deny you housing under many state laws

How medical debt fits into your overall payoff plan

Medical debt typically carries no interest (unlike credit cards), so it is usually lower priority than high-APR debt. Pay your credit cards first using the snowball or avalanche method, then direct extra payments toward medical bills once high-interest debt is cleared.

Use the debt payoff planner to enter all your debts — including medical — and see the optimal payoff order based on your balances and rates.