A medical bill or payment-plan offer may ask you to pay for care, possibly in installments. Check the bill or agreement for the amount and when payments are due, and ask about financial assistance and insurance coverage before agreeing to a plan or medical credit card.
What to have in front of you
- Your medical bill and any payment-plan offer
- Your insurance information
- The terms of any medical credit card or financing plan you are considering
- Information about any financial assistance or charity care offered by the provider
- Your credit report, if you are reviewing medical debt that appears on it
Start by asking about assistance and insurance
The Consumer Financial Protection Bureau, or CFPB, says your medical provider may be required to offer financial assistance, also called charity care. This assistance may reduce the cost of care or cover the full cost. Your insurance may also cover the procedure.
Ask your provider what financial assistance is available and whether you are eligible. Nonprofit hospitals and some private hospitals must provide free or reduced-fee care. You can also ask your insurance provider what your coverage includes.
The CFPB says you should ask about these options before agreeing to a payment plan or medical credit card. If you have already put a hospital bill on a regular or medical credit card, it may be harder to receive financial assistance. You still have the right to seek assistance, even if you have already paid.
Federal or state law may also provide other protections that can help with a medical bill.
Ways to respond to the bill
The CFPB describes several options to consider:
- Ask about financial assistance or charity care. Your provider can explain what is available and whether you are eligible.
- Check your insurance coverage. Your insurance may cover the procedure.
- Ask about a payment plan. Some providers offer plans that let you pay in installments, either directly or through a lender.
- Consider a medical credit card. These cards are used to pay for medical services. They can involve interest, fees and a credit check.
- Look at other financing. An existing credit card or a personal loan from a bank or credit union could be less expensive than a medical financing product.
- Accept a bill and decide later how to pay. The CFPB lists this as another option.
Your medical bill may include incorrect or higher amounts. The CFPB says you can negotiate the bill with your provider. If inaccurate or invalid medical debt appears on your credit report, you can dispute it with the credit reporting companies.
The choice depends on your circumstances and the terms offered. Take time to understand those terms before signing an agreement.
How a medical payment plan works
Some providers offer payment plans or lines of credit directly or through lenders. Under a medical bill payment plan, you pay the medical financing provider in installments, and the medical provider is reimbursed as you pay the bill.
Some plans are interest-free. Others offer installments with deferred interest. With deferred interest, there is generally a point when the promotional period ends. If the bill has not been paid in full by then, the cost of interest may be added.
Read the agreement to see when payments are due, when interest may start or change, and when fees may apply. Some plans have administrative or processing fees. Ask whether you or your provider would be responsible for those fees.
How a medical credit card works
A medical credit card is used to pay for medical services. A doctor or staff member generally signs you up, and the card company checks your credit. If you are approved, the card company pays the doctor, and you are responsible for paying the card company back.
Medical credit cards often defer interest for a period. If you pay the balance within that period, you can avoid interest. A late payment or an unpaid balance at the end of the promotion may lead to significant interest and fees.
The CFPB says that if the balance is not fully paid by the end of a deferred-interest promotion, or if a payment is missed, interest can accrue on the full amount charged rather than just the remaining balance. Check the agreement for the promotional period and its conditions.
Compare the terms before deciding
Medical financing products vary. Check whether the product covers the service you need and whether your provider accepts it. Some products are limited to certain services or providers. Others can be used more broadly or may cover care for family members.
Also review:
- The interest rate and when interest starts accruing
- Whether the rate is fixed or variable
- Whether interest compounds
- The payment schedule and possible late fees
- Whether a credit check is required
Missed payments on a medical credit card or installment plan can appear on your credit report. If a lender reports missed payments, this can reduce your credit score and affect applications for credit, housing or employment.
Where this comes from
Consumer Financial Protection Bureau: What should I know about medical credit cards and payment plans for medical bills?