Getting Myself Out Of Medical Debt
Tags: Medical Debt, Debt, Low Income, Financial Planning, Financial Freedom

My step-by-step playbook to becoming medical debt-free

My story begins with an injury that drew me to the ER, had a few stitches, scans, and so on…

I was insured but it didn’t really matter since my deductibles are 3800$, so as you can expect from the hospital I received a 3500$ bill a few weeks later and had no clue how I am going to survive it.

Me without medical debt

The Envelopes Are Coming

I didn’t fully recover to go back to work and the bills were already arriving. I felt completely drained and exhausted from even opening those envelopes. The envelopes kept coming and the pile was getting bigger, and bigger and the hospital started calling. The hospital representatives didn’t give me a lot of options. They were polite and didn’t break any rule (to my knowledge) but the options they put in front of me were:

Pay upfront — after convincing them it’s more than 10% of my income they agreed to a 20% discount for an upfront payment. Payment plan — pay 350$ each month. Yeah right, I just have that extra 350$ every month (emoji).

So I decided to do my research before asking for some money from my family to pay it off. After a little digging in Reddit and listening to a few podcasts, I came to realize that I can pay way less. In the meantime, Intimidating letters came by and a few calls from debt collectors but I knew I am up to something.

So what did I do

The first thing I realized was that if your wage is below 40–50K — you can get a big discount from the hospital. Almost every hospital has a charity care policy (or financial aid at some places), and they don’t tell you about it unless you ask them. The application process is frustrating and takes a lot of time to get their reply — but it is actually to your advantage! I used a free online service to apply for charity care and financial aid and it was really convenient — entra.care.

In the same way, it takes you a lot of time to fill out the application, it takes more than a month for the hospital to process it, in the meantime — no collections are allowed! You can easily buy yourself time by just submitting the request (and appealing negative results afterward). Just, the moment you send your application, tell the hospital you applied for charity care, so they would stop calling.

When I told the hospital, I applied to charity care, I guess they realized I am serious about paying my debt but also not too stupid to follow their rules. Surprisingly, They came with an offer — a 30% discount instead of the 20% they asked for just a month before. This means they can do better.

I was polite and explained this is still about 10% of my wage and I cannot pay more than 2% (600$) without getting into financial hardships so if they want to settle they are very welcome. But not in an amount that would send me to the street. They said they will need to think this through.

The collector called and I told him the same. My charity care application was still in process so I just earned more time and in the meantime got back to work and put some money on the side. Now I had some more time to ask friends and family to have a look at those medical bills to see if they find something suspicious — I had no clue but they coded my visit as a level 4 emergency, and one doctor was not in my insurance network, making it 1000$ more expensive.

Now — angrier than ever I called the hospital once again. I didn’t care who was in my network and who was not, because the hospital didn’t ask my permission. I didn’t care what level 4 is because I knew already who I am dealing with. I was still polite but assertive although I wanted to tell them what I was really thinking about them:***.

I just told them the facts:

I know the bill should be 2500$ instead of 3500$ because it wasn’t a level 4 case (I didn’t know what it means but why not just say that and see what happens?) and I don’t care who is not in my network — it is your responsibility, not mine. 2500$ is still impossible for me to pay and that’s why I applied to charity care. I can still dispute the bill and start it all from the beginning or we can reach a settlement. The settlement I am proposing right now, take it or leave it, is 200$ over 4 months (50$ a month). Because I know it would still take time to process my charity care request and eventually the price would be around 700$ — So I tried to bargain for less. They eventually agreed to 250 dollars, 50$ a month instead of the 3500$ they wanted at the beginning.

My Playbook

To sum it all up, That’s what I recommend doing in case of a medical debt

Apply for charity care and any other financial aid/ Medicaid program you can find. I found this free online service that does all this paperwork for you: entra.care. I guess you can find more just beware of scams. Tell the hospital immediately you are waiting for a response for your application. Read your medical bill, find suspicious lines and just tell the hospital they have a mistake, You don’t need to know exactly what you are talking about — convince yourself you are right about this one. Take advantage of the time you earned by applying for charity care to put some money on the side. Call the hospital/ collector and tell them that you want to settle this debt but this amount would cause you financial hardships and it is more than 5/ 10% of your income. Bargain: Even if they propose a reasonable amount — ask for at least half of it. If they give you 3 months of payment as for 12. Just make sure it is an amount you can pay over time. Open an HSA (Health Savings Account) together with your high deductible plan.

Good Luck!