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Medical Bills • 3 minute read

Managing Medical Debt

Managing Medical Debt
By Kristina James
Published by Ruby

Ruby's online tools and app helps you organize your medical bills and save money.

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Paying bills is a rite of passage when you hit adulthood. Most people enter a monthly rhythm of anticipating and paying for certain expenses. But what happens when you receive a medical bill you had not planned for, and making matters worse, you can’t afford to pay it?

This situation will sound familiar to anyone who has experienced a medical emergency or illness and faced the avalanche of expensive bills afterward. It is no wonder that 137 million Americans have difficulty paying off their medical debt. In this article, we’ll go over a few options to consider when making a plan to tackle your medical debt.

Medical Debt Management 101

If you need help handling your debt, National Debt Relief lists a few tactics you can use:


Debt Forgiveness and Aid


  • Debt forgiveness may be a possibility if you face a financial obstacle in paying your bills. You can apply for it through the hospital or healthcare facility that treated you, and they will make a determination based on factors such as your income and household size.


  • Government grants can also offer assistance if you fall into a lower income bracket. Nolo explains that while Medicaid funds are usually allotted for future healthcare costs, knowing that your new bills are covered can offer some financial leeway in the present.



Debt Negotiator


  • A debt negotiator is an individual hired to negotiate for you with healthcare providers in order to decrease the balance you owe.


  • You may want to consider working with a debt negotiator if you owe large sums of money but do not qualify for debt forgiveness or a government grant.


  • If this sounds like the right path for you, be sure to do your research. It is important that you are knowledgeable on the company’s fees and that you know your individual rights.


  • It also helps to be aware that medical debt is unsecured, meaning that it is not connected to a car, house or other asset, so the interest rates will be higher.



Debt Settlement


  • In a debt settlement, you work with your healthcare provider to agree upon an amount of money you will pay in order to settle the debt.


  • This agreement benefits you because you can get out from under your debt, and it benefits healthcare providers because they are paid at least some of the money they’re owed.


  • The downside to settling your debt is that it will show up on your credit report. Although, the report will read that you paid your debt off, which reflects positively on you.



Credit Counseling


  • Credit counseling can be a good step if you have not been able to negotiate a settlement with your healthcare provider.


  • When you work with a credit counselor, they review all of your finances and assist you in devising a plan to pay off your debt and creating a budget.


  • After making a plan, the credit counselor negotiates with creditors on your behalf.


  • These plans can take time, usually three to five years, so if you are looking to get out of debt quickly this is probably not the best option.


  • It is important to be aware that this form of debt management will affect your credit score, but not severely.



Medical Debt Consolidation Loan


  • Some individuals utilize loans to consolidate their debt. According to TheBalance, you use the funds from the loan to pay off your debts. Instead of dividing payments among multiple creditors, you would make one monthly payment on your loan.


  • You can apply for a debt consolidation loan at the bank


  • Debt consolidation is beneficial when you can lower your monthly payment or interest rate. If one or both of these rates does not decrease, consolidating your debt may not be the solution.


  • It is also crucial to be wary when working with third-parties. TheBalance warns that sometimes debt consolidation companies urge you to apply for a loan that comes with a high interest rate. Over time, these loans can actually cost you more than if you paid off your debt without one
Ruby is here to help.

It is easy to become overwhelmed when organizing medical bills, insurance documents, and other necessities. Thankfully, Ruby can help you navigate the process. With Ruby on your side, you’re able to store all of your important medical information in a secure virtual profile that you can access on your smart phone, tablet or computer. Then, when you need to reference a medical bill, you know exactly where it is without digging through a cluttered desk or filing cabinet. Create your free Medical Information Kit today!

For more information on medical bill and insurance necessities, read our article, What You Need To Know About Medical Bills And Insurance.

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