7 Ways To Get Out Of Medical Debt : Life Kit One in five Americans struggles with medical bills. The secret is that there's something you can do about it — you just have to know where to look and how to ask.

Getting Out Of Medical Debt Can Feel Impossible. Here's How To Do It

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You go to the doctor because you want to be healthier and feel better, right? But for millions of people in this country, there is a really bad side effect. And we're not talking, like, the list of side effects you hear on those pharmaceutical commercials - may result in massive bleeding, blinding headaches, excessive dry mouth, night sweats, restless leg syndrome, warts. This side effect arrives in your mailbox, and it can be just as painful.

JAMES HARRISON: For two years, I would wake up in the middle of night thinking, oh, my God, I'm going to have to pay $64,000. I'm, you know - I'm screwed.

ARNOLD: Medical bills can be outrageously high, and when those bills turn into debts that you can't afford to pay back, talk about headaches.

ASHLEY MACLAREN: If you don't pay this, we're going to come after you.

UNIDENTIFIED PERSON #1: They just kept coming in, and another said 200.

MACLAREN: They said they were going to taking me to court.

UNIDENTIFIED PERSON #2: I started using credit cards to pay for prescriptions, physical therapy.

UNIDENTIFIED PERSON #1: And then another was, like, 900, and I was like, why? Why? What? Where did this come from?

MACLAREN: I was absolutely terrified.

UNIDENTIFIED PERSON #2: Most of my cards are now almost maxed out.

ARNOLD: This is a huge problem. One in 5 working Americans who have insurance still say that they have trouble paying their medical bills. But the good news is if you're struggling with medical debt or helping a parent or a family member, there are things that you can do, like negotiating the debt down by a lot to something that you can afford.


JEN BOSCO: You know, sometimes negotiating medical debt issues - it's not something you need a law degree for. You just have to kind of be a pest.


ARNOLD: This is your NPR LIFE KIT for getting out of debt. This episode - medical debt. I'm Chris Arnold. I cover personal finance and consumer protection. And we're going to give you seven important things you need to know to help you deal with medical bills so you'll know who to call, what to say and how being a pest in the right way might save you thousands of dollars. We're going to learn how right after this.


ARNOLD: So my daughter's in high school, and she'll do this thing where she'll say, Dad, I'm going to fail physic; I totally don't understand this. And she gets, like, all A's and B's, and she's just totally not going to fail physics. But I say, look; why don't you just talk to the teacher and ask for help? She's like, Dad, I don't want to talk to the teacher about it. And she gives me this look like I'm just, like, completely crazy. But, like, where does that leave her? She's kind of stuck. And you know, in life, sometimes it is not our natural impulse to reach out and ask for help. But when it comes to medical debt and you owe thousands of dollars, you absolutely need to ask for help. And this is our first big takeaway here. Tip number one - the most important thing that you can do is ask for help as soon as possible.

BOSCO: A lot of people, you know, naturally kind of react as if this is an individual problem; this is my problem.

ARNOLD: That's Jen Bosco. She's an attorney with the nonprofit National Consumer Law Center. She works on medical debt issues at the big national policy level, but she also worked as a one-on-one counselor helping people like you and me who got stuck with big medical bills.

BOSCO: This is just unfortunately something with the health care system that we have, a problem that a lot of people have to deal with.

ARNOLD: And because it's a big problem, that kind of helps you in a way because millions of Americans struggle with this, and this is a well-trodden road that you're walking down. And there are places to get help if you know where to look and how to ask. So let's say that you don't have insurance or you have really crappy insurance, and you get hit with a big bill from a hospital. Jen says you want to call up, and there are particular words - sort of like magic words - that you want to say when you ask for help.

BOSCO: You know, in terms of magic words, certainly, like, financial assistance policy is the term. Charity care is also a term that might be used.

ARNOLD: OK, so they're not, like, the most magical words, like sparkly unicorn. But Jen says these are phrases that you should remember when you call up your hospital. So you call up. You say, hey, I'm trying to find out about charity care or the financial assistance policy. I can't afford these bills. I need help. And nonprofit hospitals, by the way, are required by law to have these policies. And if your income qualifies you for this help, sometimes the hospital might cut your bill in half or even just forgive it completely - forget it, done. It's crazy that this can be such a huge relief for people, but often nobody will even mention it to you. You just have to know to ask for this help.

BOSCO: Another option is, well, if you're not eligible for true charity care or financial assistance; maybe your income is a little bit too high, often people can negotiate the bills down anyway on their own behalf. So if you are a person without insurance, you might be getting billed by a hospital at what's called their chargemaster rate, which is kind of the sticker price for care.

ARNOLD: The chargemaster rate - that's another one of these magic words and another way to dramatically reduce your bill. So it's like when you buy a car. The sticker price - it's obviously a little higher than the price that you have to pay if you negotiate and haggle little bit. But with medical bills, I mean, it's, like, a completely different thing. The sticker price, this chargemaster rate - it can be insanely, ridiculously higher.


ARNOLD: And so this is our next tip. Tip number two - you never want to pay the sticker price when it comes to medical bills.

HARRISON: They had billed me over a hundred thousand dollars for this procedure. I don't have that kind of money.

ARNOLD: That's James Harrison (ph), who has his own landscaping business in Florida. And since he's self-employed, James says he only has this pretty bare-bones health insurance plan. But then his doctor caught this serious heart problem that actually could have killed him. Literally the next day, he had to rush into the hospital and get heart surgery.

HARRISON: I went in for an emergency catheterization - cardiac catheterization where they put me in the hospital and installed stents.

ARNOLD: And James just assumed that his insurance would cover emergency heart surgery, but it didn't. What happened was, even though he spent the night in the hospital, the operation was considered an outpatient procedure. It got coded that way. And therefore his insurance said, well, we don't cover that. And so James got hit with that $100,000 bill. Now, that's the chargemaster price - the sticker price. And Jen says the reason that the sticker price on health care is so super high is because hospitals use it to negotiate with insurance companies.

BOSCO: They'll say, you know, well, our chargemaster rate is $10,000 for an MRI. But they might work out something with the insurance company to just charge $5,000 for the MRI. So the insurance company will agree to pay $5,000 for it. But an uninsured person might be actually billed for the full chargemaster price.

ARNOLD: So that's actually, like, super interesting - right? - because what that is then is just sort of like, well, here's our opening sort of outrageous price in our negotiation with insurance companies. But the result of that is that, you know, if you don't know how to advocate for yourself, you end up paying this sort of artificially huge price that no insurance company or Medicaid - or that nobody's really paying except individuals who get stuck with it.

BOSCO: Oh, absolutely. Medicaid reimbursement is way, way below the chargemaster rate. It is backwards that the people who can least afford to pay are the ones who tend to get the highest bills.


ARNOLD: But here's the thing. Often you don't have to pay that crazy high price if you know how to push back - even if it's for a smaller bill too, a couple thousand dollars that the hospitals hitting you with. So you can call the hospital and health care provider, and you say, hey, you know, I can't afford the sticker price. What's the lower price? What do you bill insurance companies or Medicaid and Medicare? And find out that lower amount and ask for that. And actually James, who had heart surgery, he figured this out. He went online. He read up on all this. And he found that the hospital only charges Medicare $28,000 for that same procedure.

HARRISON: I mean, that's what Medicare pays. That's what the insurance company pays. How come James Harrison is the only person in the world that has to pay 100,000?

ARNOLD: Good question.


ARNOLD: Why does James have to pay four times more? And this is the next tip - call it tip number three - to negotiate that lower affordable bill, sometimes you need to be very persistent. Don't give up on this. When James first called up the hospital, he did what Jen recommends. He asked for help, and it worked - sort of.

HARRISON: I was talking to their financial assistance person. And at that point, they said, OK, well, you qualify for a 40-percent discount. So they said therefore we can change the amount to $64,000, and you can pay that within a year.

ARNOLD: Wait. So now he's supposed pay $64,000 in one year. I mean, OK, I guess that's a discount. But James told us his entire annual income is not much more than that.

HARRISON: That's ludicrous. Again, you know, even $64,000, I don't have that in one year anyway.

ARNOLD: In the end, the hospital sued James. He had to show up in court. He was pretty nervous. But he told the judge this thing about how he was getting stuck with this crazy high sticker price, but he'd found this much lower rate that Medicare and Medicaid pays.

HARRISON: So my case came up, and I explained to the judge what was going on. I said, you know, normally this hospital gets $28,000 from this procedure. They get that from Medicare. They get that from insurance companies. Why are they charging me over $100,000? This just doesn't seem fair to me.

ARNOLD: And the judge seemed persuaded and set the case to mediation.

HARRISON: The mediator said look; Mr. Harrison wants to pay this. He's not trying to be a scofflaw. He says he has a bill to pay. He just wants to make sure he's getting the right bill here. Long story short, they said, OK, how about $25,000?

ARNOLD: And they agreed to a four-year payment plan, which James is paying. And that's not fun. But it is affordable. He can do it. And so it's all working out. It just took a long time and a lot of effort to get there. So Jen says look; hopefully you won't have to go through all of that. Some hospitals are much easier to deal with, but persistence definitely can pay off. Also there's a good online resource to help with all this, for looking up a fair price instead of that sticker price, for all kinds of medical procedures. And it's kind of like the Kelley Blue Book Thing for cars. This one's called Health Care Blue Book. And it's at healthcarebluebook.com.


ARNOLD: OK. So some of these terms kind of technical - chargemaster, charity care - we know. Don't worry. We're going to recap the important stuff at the end. But we're taking a breather from the hard stuff now because there is one very simple easy to remember rule in all this too. And here it is - tip number four - don't put medical debts on your credit card.

BOSCO: I would really advise people not to put their medical debt on a credit card if possible because if you put it on a credit card, then you're losing whatever protections you might have for medical debt. Then it's just credit card debt.

ARNOLD: Jen says, once you put medical debt onto a credit card, the hospital's paid, right? And they don't have an incentive anymore to lower your bill.

BOSCO: There's no need for them to negotiate with you or try to work with you after that.

ARNOLD: Is the issue here basically, like, you're taking a kind of debt that might have a very low interest rate or no interest rate at all, might get help with it from the hospital, but as soon as you put it on a credit card or pay it off with some other kind of high-cost loan or something, you're transforming that medical debt into something else. And you lose all kinds of protections and opportunities that you might otherwise have.

BOSCO: Yeah, that's exactly it.

ARNOLD: And that gets us to our next big idea here. The thing about medical debt is you can get this huge bill for like $50,000 and get panicked and think, oh, my, this is this the biggest, the worst - important debt problem that I have. Holy crap. But the thing is, in a lot of ways, medical debt does not matter as much as other debt.

And this is tip No. 5. We're going to explain how this makes sense. Medical debt is less important for you to pay. The hospital or the collections company, they're probably not going to tell you that. But often, if you're struggling with medical bills, I mean, you've got a stack of other bills on the kitchen table too. And you're trying to figure out, all right, you know, which ones of these should I really focus on paying?

BOSCO: You know, medical debt, it's very stressful for people. So, you know, I'm not minimizing how difficult that is. But it is a lower-priority debt than some of those other things that you just can't go without in the short term. Like, you have to pay your rent or you're not going to have a place to live. You don't want to have your car repossessed and have no way to get to work.

ARNOLD: And your credit cards. I mean, you know, you're paying 20 percent interest. Like, that's going to get bigger and bigger and bigger. You know, if you're trying to focus where you're going to put the money to pay down debt, it kind of makes more sense to focus on the credit cards than the medical debt.

BOSCO: Yes, I would agree. It's true, the medical debt, there might not even be any interest attached to it.

ARNOLD: So for that reason, it makes more sense to push the medical debt to the back burner and pay your other higher-interest-rate debts first. Also, another little bonus here, medical debt is not as damaging to your credit report as, say, not paying your mortgage your credit card. It's actually weighted differently. And on top of that, federal law blocks the credit bureaus from putting medical debt on your credit report until it's been past due for six months. So that gives you some breathing room and some time to try to negotiate with the hospital or insurance company and figure all this stuff out. And eventually...

BOSCO: After seven years, it won't appear in your credit report anymore.

ARNOLD: Now, we are not saying that you can just completely ignore all your medical bills and they'll just sort of magically vanish one day. That wouldn't be good advice. Look, when you owe money, bad things can happen. And in this case, hospitals can drag you into court. Debt collectors will likely start calling you. But when it comes to aggressive debt collectors, if it's getting unpleasant, this is tip No. 6. You can get debt collectors to stop calling you.

MACLAREN: I got a buzzer on my apartment building on a Sunday afternoon, which is really rare. Normally people just don't drop by.

ARNOLD: We heard from a listener, Ashley MacLaren (ph), in Seattle.

MACLAREN: So I answered it, and it was a gentleman who said he had a package for me. And I went downstairs. And he basically said, you're being served. And I was completely floored. You know, I'm in my early 30s. I've never been served before and automatically really freaking out.

ARNOLD: The old I've got a package for you if you just open the door. And then, you know, when she opens the door, it's a guy who's paid to hand her this envelope. And it's a notice. And it says, hey, you've got this medical bill, and it's overdue, and you owe $700. And Ashley thought that her insurance had already covered this bill, but before she could figure out whether she was even really supposed to owe the money or pay it, the debt collectors started calling.

MACLAREN: They were very hostile with me. If you don't pay this, we're going to come after you. They said they were going to take me to court. And I was absolutely terrified. And they were constantly calling me after they served me.

BOSCO: An instance like that, you could send a letter - a verification letter asking for verification of the debt, so asking for, you know, a detailed accounting of where this debt came from, why you owe it. Was it billed at that sticker price, chargemaster price?

ARNOLD: And Jen says you can also send a letter to a debt collection firm saying basically stop calling my cellphone. You're reaching me during work hours. This is not OK. And legally, a debt collection agency has to back off. They can still contact you for certain things like saying, we are notifying you that we are suing you now. But they have to stop calling you all the time just to say like, hey, you got to pay your bill. You got to pay your bill. Actually, Jen's organization has a book that's a great resource for all this. It's called "Surviving Debt."

BOSCO: The "Surviving Debt" book book that National Consumer Law Center puts out has instructions and templates for the different kinds of letters that people can use to protect themselves.

ARNOLD: Jen says another important thing to know is that, after a time, many hospitals will write off the debt and consider it uncollectible. and other companies can buy that bad debt from the hospital for a very cheap price, and they might still try to collect it from you, but that can only go on for so long.

BOSCO: States each have a statute of limitations for how long you can be sued by a debt collector for debt. So after, you know, a period of time - it could be seven years, it could actually be shorter in some states - but you as a consumer, you have a defense if they try to sue you for that debt. You, you know, would show up in court and say it's past the statute of limitations, Your Honor. They can't sue me for this debt anymore.

ARNOLD: In Ashley's case, she says she just kind of panicked and borrowed the money from a family member and paid the 700 bucks even though that was a lot of money to her and she didn't see how she should actually owe the money. So when it comes to debt collectors in situations like Ashley's, there's a little saying, and it goes, don't pay them but don't ignore them.

You know, you can send the letters to get them off your back and give you some breathing room. But if they're hauling you into court, you should show up and defend yourself. Jenn says debt collectors aside though, if you think you might not actually owe the money and that insurance made a mistake, one thing you can do is request what's called an internal review from an insurance company.

BOSCO: Where the insurance company will send the dispute to their appeals department and will take a look at it and will, you know, decide, oh, yeah, there was a mistake here.

ARNOLD: And we should say, too, you can and you should fight really hard to advocate for yourself. I mean, look at James Harrison. He saved himself, like, $75,000 all by himself by going on the Internet and researching this stuff and standing up in court. But there might also be times when it's just too hard or it seems like too much. And getting some outside help is a good idea. James said the day that he was in court, actually, he saw people getting sued by the hospital who absolutely really could've used some help.

HARRISON: The day I was in court, there was two other people there that - they didn't have a lawyer. You know, came in dressed in blue jeans and a T-shirt and sat there. And the judge said, do you have anything to say for yourself. And the only thing they could say was, I don't really have the money for that. And the judge said, OK, I'm sorry but you do owe the money. You know, done. So I really felt bad 'cause I had done all this research over the past year, read up on the ACA and read the hospital procedures and really informed myself. And these people really had no idea. And the hospital just stuck it to them, basically. I mean, the average person is really not up to the task of dealing with this. And, you know, I don't know how people do it.

ARNOLD: So if you're just drowning in a sea of medical bills and it just seems completely overwhelming - and this is our final tip, tip number seven - finding a good nonprofit advocate or counselor can be a really big help. Jen says you've got to be careful, though. There are a lot of scam outfits out there, like anything having to do with money. And they'll just take more of your money and not do much to help. So making sure that you're working with a nonprofit organization is a smart approach.

BOSCO: As long as people are wary and do their research before they start working with a credit counselor. And I think one thing to look for that could be problematic is if they're pushing loan products on you, and they offer loans. That's probably not a place that's advocating for your best interest. You might want to try something else.

ARNOLD: One good resource that's out there for people is the National Foundation for Credit Counseling. And what they do is they screen groups to make sure that they're above-board nonprofits. It's the National Foundation for Credit Counseling - nfcc.org.


ARNOLD: OK. So that's it - the most important stuff you need to know if you're dealing with medical debt. Now, we covered a lot of ground, obviously. So to remember the key points. Here comes the recap. Number one, when you first get that alarmingly big medical bill...

BOSCO: Ask for help as soon as possible.

ARNOLD: You want to start working with the hospital and asking for financial assistance right away. Number two, you never want to pay the sticker price, that chargemaster price. A good place to search for a fair price to pay it off for the hospital is at healthcarebluebook.com. And takeaway number three...

BOSCO: Be persistent. Channel your inner pushy lawyer.

ARNOLD: Come on. Push, push, push. All right. Takeaway number four...

BOSCO: Please don't put medical debt on your credit card. Once it's on your credit card, it's just credit card debt.

ARNOLD: Tip number five is that medical debt is not as urgent to pay as other bills like credit cards and high interest rates.

BOSCO: Relatively speaking, medical debt is a low-priority debt. It is very stressful. It's upsetting for people. But it is a lower priority than some of those other debts.

ARNOLD: And when it comes to aggressive debt collectors calling you about that medical debt - tip number six...

BOSCO: You can get the debt collector to stop calling you. Send them a no-contact letter. Tell them over the phone that you do not want to be called the number that they're calling you at.

ARNOLD: And finally, takeaway, number seven, sometimes, if it all just feels like more than you can handle by yourself...

BOSCO: Finding an advocate to help you can be really important.

ARNOLD: Just make sure it's a nonprofit credit counselor. You can find those through the National Foundation for Credit Counseling at nfcc.org. For more LIFE KIT, check out our other guides at npr.org/lifekit. And while you're there, subscribe to our newsletter, so you don't miss anything. We've got more guides coming out every month on all sorts of topics. And we like to end each of these episodes with a completely random tip. It's got nothing to do with medical debt. This time, it's coming from managing producer Meghan Keane.

MEGHAN KEANE, BYLINE: So if you have a candle and a nice container that you want to save, what you do to get all the wax out in one shot is to put the candle in the freezer overnight. And in the morning, you take a butter knife you just stab the wax. And it comes out in big chunks and pieces. And you have a clean container. You can reuse it for, you know, little plant clippings or other decorative things.

ARNOLD: Wait. Does this, like, work for candlesticks, too? Because, I mean, my candlesticks get, like, all covered in wax. I throw them in the oven. I, like, turn on the oven. And then it's, like, smoking. And it's, like, the fire alarms. And I've got the hood going, and the kids are freaking out. Like, I've just - have I been doing this wrong forever?

KEANE: If the fire alarms are going off, I would say yeah, for sure.


KEANE: Stick to the freezer.

ARNOLD: So I'm using hot, and I should be using cold.

KEANE: You got to go cold, dude.

ARNOLD: All right. I'm going cold candle. If you've got a good tip and you want us to address the topic, email us at lifekit@npr.org. I'm Chris Arnold. Thanks for listening.


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