When it comes to having an unexpected doctor’s bill or needing an emergency root canal, it’s worth knowing your payment options before rushing to open your wallet.
More than 14% of Americans struggle to pay medical bills, according to a recent report by the Centers for Disease Control and Prevention, and almost a third of working Americans currently have some kind of medical debt (about 28% of those owe $10,000 or more), a new survey by Salary Finance found.
Charging your unexpected medical debt on a credit card may seem like a quick fix, but the band-aid solution can actually cost you more pain in the long run.
“It’s definitely something people should avoid unless they’re able to pay off the full amount of the charge right away,” Lisa Zamosky, health-care expert and author of “Health Care, Insurance and You: The Savvy Consumer’s Guide,” tells CNBC Select. “You want to avoid adding to the pain of medical debt by racking up interest while you work to pay off your credit card.”
Below, Zamosky and financial educator Thomas Nitzsche, of Money Management International, Inc (a 501(c)(3) nonprofit member of the National Foundation for Credit Counseling) share the three things you should consider before charging medical expenses on your credit card.
1. Double-check your charges
Estimates say that up to 80% of medical bills contain some sort of error, so definitely read over any medical bill intently before paying anything. Have a trusted family member or friend be a second set of eyes for any red flags.
“Always make sure your bill is accurate — particularly after a hospital stay,” Zamosky says. She recommends that patients request an itemized bill to check that the services seem consistent with the care they received. “Speak to the billing department if something seems off,” she says. “If you’re insured, request your health plan’s assistance.”
The process of disputing a medical bill may take a while, but the time spent can save you money.
2. Negotiate your bill
When asking for a discount on your bill, know that medical providers usually offer more flexibility when it comes to your debt than traditional credit card lenders do. And it never hurts to ask, especially when it means saving money.
Before you pay off a medical bill on a credit card, first exhaust all your other avenues for reducing or repaying the balance, Nitzsche tells CNBC Select.
Explain your financial situation to your health-care provider if you can’t afford to pay the full balance. And if there’s an amount you can afford to pay upfront, offer to pay that immediately in exchange for the remainder of the balance being forgiven.
“If that’s not an option, at least ask for a discount on the charges — the Medicare rate, for example, is a good place to start,” Zamosky says.
And if they aren’t able to reduce the charges, try negotiating an interest-free payment plan.
“Many hospitals and other health-care providers will allow for that,” Zamosky says. “And, again, that’s much preferred to incurring credit card interest.”
3. Apply for financial aid
Depending on your situation, you may qualify for financial assistance. And in some states, hospitals are required by law to provide free or reduced services to people who qualify.
Nitzsche says many hospitals have “financial aid assistance,” but don’t often advertise it. Typically, you will need to ask to apply for financial aid — and come prepared when you do, as the application entails filling out detailed personal financial information.
“Even if you think you will not qualify for aid, it is a good idea to apply because although you may not receive a balance reduction, simply the act of applying can substantially extend your timeframe for repaying the debt — usually at 0% interest,” Nitzsche says. “This alone can make a large bill more affordable.”
In the best-case scenario, Nitzsche says his clients have had a portion forgiven with any remaining amount on an interest-free monthly payment plan. Patients can also apply with the makers of their prescriptions for financial aid and/or co-pay cards to reduce the cost.
Once you have sought financial assistance, then you can calculate what your monthly payments will be based on the remaining balance.
When you do decide to pay with your credit card
Once you have ensured that your insurance has paid out all benefits (if applicable), and you have exhausted financial aid and/or payment arrangements directly with your medical provider, credit cards should be considered only if you can see a clear and realistic path toward repaying the debt after its charged to the card, Nitzsche says.
The Chase Freedom Unlimited® is a simple cash-back card that offers an introductory 0% APR for the first 15 months on purchases and balance transfers, as well as 1.5% cash back on every purchase. As long as you pay off your medical bill balance in full within the first 15 months of your card account opening, you can save on interest while also earning cash back. This card would only make sense if you can confidently pay off your entire medical balance during the introductory 15-month 0% interest period, otherwise we don’t suggest it.
When moving medical debt to a credit card, consider 0% balance transfer offers. The Chase Slate® Credit Card offers a low introductory balance transfer offer: $0 fee during the first 60 days of account opening and 0% intro APR for the first 15 months from account opening (then 16.49%–25.24% variable APR).
Whatever you do, don’t wait for your bill to go to collections
Ignoring medical bills is a common habit — and mistake.
Disregarding medical bills until they are in collections is not only damaging to your credit, but it can become stressful due to the nonstop calls and notices from collection agencies.
“Not paying the bill should only be a course of action if the consumer has exhausted other options or adjustments and can truly only afford their basic housing and living expenses,” Nitzsche says.
Sometimes you can offer the collector a settlement, assuming you save up enough money to pay a portion of the total in full, he says. A settlement is an agreement between consumer and creditor of a less-than-full-balance payment (or several larger payments) that, once paid, resolves the debt. It’s worth noting that debt settlement offers don’t always work and they are risky: It takes time to negotiate with your creditor, and it can hurt your credit.
Keep in mind that creditors can sue patients for non-payment of their medical debt, but the statute of limitations varies for each state.
If you owe money to any hospital or health-care provider, know that the outstanding balance won’t just go away if you decide to not pay it. Medical debt may disappear from your credit report after seven years, but the debt never expires.
Information about the Chase Slate® Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.