Sometimes, we get ourselves into financial messes of our own making. (By buying a car we can’t really afford, perhaps, or with credit card balances that date back to college.)
But debt isn’t always about making mistakes. The most cautious, savvy savers among us can see their plans quickly undone by unexpected medical costs. And when there’s no money in the budget to pay those hospital and doctor bills, the frustration and worry can become overwhelming.
Even those with solid health insurance coverage can run into trouble. The Kaiser Family Foundation reports that in 2018 , a quarter of all covered workers were in plans with a deductible of at least $2,000.
Deductibles for the most popular type of Patient Protection and Affordable Care Act plans also rose in 2018 —to nearly $4,000. Add co-pays, prescriptions and other out-of-pocket costs, and your broken bone could break the bank .
If the statements have started to roll in and pile up—or worse, a collection agency is calling—it can be tempting to either pull out a credit card (or two, or three) or ignore the situation altogether. But those paths of least resistance can lead to a crushing credit report that could haunt you for years.
There can potentially be more desirable options to paying off your medical debt, including using a personal loan to get those bills paid off.
The sooner you act, the better, of course. Here are some steps to consider:
Review Your Bills
No more pushing those medical statements into a drawer so you don’t have to look at them. If you haven’t already, go through each bill line by line to make sure you received the services and medications listed. Mistakes happen—providers can make billing and coding errors and insurers can be quick to deny coverage —so don’t just accept what you see.
It is important to be prepared to make some phone calls, maybe even write some letters, if you can’t get answers or satisfaction. Yes, your insurance company and service provider should be figuring out all this for you, but if they don’t, it will be up to you to stay on top of it.
You’ll probably find yourself talking to a different person every time, so make a note of each name and the date and time that you spoke. Ask for a supervisor if you’re getting nowhere, and you can also file a complaint if you know you’re right and can’t make headway. Make sure your debt won’t go to a collection agency while it’s under review.
Talk to Your Medical Provider About Options for Financial Assistance
If the costs are, indeed, all yours to pay and you just don’t have the money, you still may be able to get some help. For example, some non-profit hospitals may forgive a percentage or all of your bill if your income falls within a certain range. Or you may be able to work out an interest-free payment plan.
Many providers might offer a medical credit card as a way to manage your payments. That’s not the same thing as a payment plan, so be cautious before signing on. The card may come with a “no interest” promotional rate that allows you to make payments without interest for a designated period of time, but you’ll likely be required to pay the full balance by the end of the promotional period or you’ll be charged interest retroactively.
That’s because the interest is typically deferred, not waived, on medical credit cards. And even if you’re just a wee bit short of making full payment, the penalty could be significant.
Be prepared to meet with someone in the hospital or health system’s financial department (or at your doctor’s office) if you need help. And look at this in-person engagement as a good thing—this is someone who might have the authority to write off at least some of your balance, and he or she might be willing to talk to you about how to pay medical bills you can’t afford.
You may have to show paperwork pro
ving your current income (a tax return or paycheck) and you should come with an amount in mind that you’re comfortable paying either in a lump sum or over time.
If you show up informed—you might be able to negotiate for a manageable payment plan or reduced charges.
Rally Your Financial Resources
Once you’ve done all you can to pare down your medical debt, you’ll have to make good and pay up.
If you have enough room on a credit card, that’s one way to go—but unless it’s a very low-interest card, it probably isn’t an ideal option. Miss or make a late payment, and your next billing statement will include a late-payment fee. And if your payment becomes 60 days past due, your interest rate may go up.
Financial institutions tend to make balance transfer credit cards sound like the answer to every problem, but keep in mind that if you can’t pay off the balance within the designated introductory period, the honeymoon will be over, and you’ll be hit with whatever annual percentage rate (APR) you agreed to when you signed up.
A better solution might be an unsecured personal loan. A personal loan might have a lower interest rate than a credit card (depending on your credit record) and more flexible repayment terms—so you hopefully won’t feel as though the clock is ticking the moment you get your funds.
After all, the idea is to get rid of that stress, right? And if you choose a lender that doesn’t charge fees, you may be able to pay off your loan early without a penalty.
Another advantage of a personal loan is that it might give you some leverage when you’re working with your provider. You may be able to negotiate a “prompt pay discount,” if you pay your bill in a lump sum rather than over months or years.
Personal Loans with SoFi
There is the potential for a lot more opportunities if you start asking for help paying medical debt before they’re months past due or in collection.
Your medical provider likely might be more accommodating, for one thing. And if you decide to pursue a personal loan, you may have a better chance of being approved—and getting a better interest rate—if your credit is still intact.
You also can be more selective about the lender you choose. Working with SoFi, for example, comes with member benefits not every lender bothers to offer, including an Unemployment Protection Program—if you lose your job through no fault of your own, and qualify for the program, SoFi will temporarily pause your payments.
A SoFi personal loan is fee-free, so you can pay it off early if you like. And the process is quick and easy—if you need your funds fast, you can hop online and apply.
Taking out a loan to pay down your debt may help get you back in control of your finances and lets you keep your focus on your personal well-being.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.