Medical Debt: Your Rights and How to Negotiate What You Owe
Medical debt is uniquely American — no other developed country has a system where an unexpected health event can create tens of thousands of dollars in debt. The good news is that medical debt has more flexibility than almost any other type. Hospitals negotiate. Bills can be reduced dramatically. You have legal rights.
Request an Itemized Bill First
Before you do anything else, request a detailed, itemized statement of every charge. You're legally entitled to this.
Itemized bills routinely contain errors. Studies suggest 80% of medical bills contain mistakes. Common problems:
- Duplicate charges
- Charges for services not received
- Unbundling (charging separately for things that should be billed as one service)
- Incorrect billing codes (wrong procedure or diagnosis code)
- Charges for a "room rate" during outpatient procedures
Compare the itemized bill against your explanation of benefits (EOB) from your insurance company. The EOB shows what your insurance paid and what you're responsible for.
If you find errors, dispute them directly with the hospital's billing department. Put your dispute in writing and keep copies. The hospital is required to investigate and correct errors.
Understand Charity Care Programs
Most nonprofit hospitals (which represent about 60% of US hospitals) are required to provide charity care — free or discounted care for qualifying patients — as part of their tax-exempt status.
Income eligibility: Many programs cover patients up to 200-400% of the federal poverty level. For a family of four, that's roughly $62,000-124,000 in 2024.
Some hospitals offer sliding-scale discounts well into middle-income ranges.
How to apply:
- Ask specifically: "Do you have a financial assistance or charity care program?"
- Request the application (some hospitals don't advertise this)
- You'll need to provide income documentation (pay stubs, tax returns, bank statements)
- Apply before the bill goes to collections if possible, but many programs still accept applications after
The application process usually takes a few weeks. The potential outcome — elimination or substantial reduction of the bill — is worth the effort.
Negotiating Medical Bills
If you don't qualify for charity care or want to negotiate beyond the program, direct negotiation is often effective.
Know the Leverage You Have
Hospitals write off significant amounts of medical debt annually. Getting 40-60 cents on the dollar in cash is better for them than chasing 100 cents over years or writing it off completely.
Negotiation Approaches
Lump-sum settlement: Offer to pay a reduced amount in full immediately. For a $5,000 bill, you might offer $2,000-$2,500 as payment in full. Hospitals often accept this, especially for uninsured patients where the "chargemaster" rate (what's billed) is much higher than what insurers actually pay.
Reference insured rates: Research what Medicare or major insurers pay for the same service. Medicare rates are often 40-60% of chargemaster rates. "I understand Medicare would have paid approximately $X for this service" is a factual negotiating point.
Request a payment plan with no interest: If you can't pay a lump sum, ask for an extended payment plan. Most hospitals offer 12-24 month installment plans, and many offer 0% interest.
Write requests in writing: "I'm requesting a goodwill reduction / financial hardship adjustment" in writing creates a paper trail and often gets taken more seriously than a phone call.
What to Say
"I'm willing and able to pay you today, but I can only afford $[X]. Would you be willing to accept this as payment in full?"
Be prepared to walk away from the first offer. Start lower than you expect to end.
Get any settlement offer in writing before you pay. A verbal agreement to forgive the remaining balance that isn't in writing isn't binding.
When a Bill Goes to Collections
If a medical bill is sent to a collections agency, your rights and options change:
Dispute Rights Under the FDCPA
The Fair Debt Collection Practices Act gives you rights:
- Within 30 days of first contact, you can request debt verification — the collector must provide proof the debt is valid
- You can request that they stop calling you (in writing)
- Collectors cannot call before 8am or after 9pm, contact you at work if they know your employer prohibits it, or use abusive language
Medical Debt and Credit Reports
As of 2023, the three major credit bureaus agreed to:
- Remove medical debts of less than $500 from credit reports
- Wait 12 months before reporting medical debt to credit bureaus (giving you time to resolve it)
- Remove medical debt in collections once it's paid or settled
Additionally, CFPB rules proposed in 2024 would ban medical debt from credit reports entirely. Check current status — these rules were being implemented and may affect your situation.
Negotiating with Collections
Collections agencies often buy medical debt for 5-10 cents on the dollar. A $5,000 bill purchased for $500 means they make money if they collect anything over $500.
You can negotiate a lump-sum settlement — often 30-50% of the collection amount. Get the settlement amount in writing, pay only by check or money order (traceable), and keep proof of payment permanently.
Protecting Yourself Going Forward
Always bill your insurance before paying anything: Even for small expenses, always make sure the provider has your insurance information. Pre-authorization for certain procedures may be required.
Ask about cash pay discounts before receiving care: For elective or non-emergency procedures, ask the provider upfront: "What's the cash pay rate?" This is often 20-40% less than what they'd bill insurance.
Understand your deductible and out-of-pocket max: Know your insurance plan's structure so you're not surprised.
Keep an HSA for medical expenses: HSA dollars are pre-tax. Using an HSA to pay medical costs reduces the effective cost by your marginal tax rate.
Medical Billing Advocacy Services
If you're facing a large bill and don't want to negotiate yourself, medical billing advocates negotiate on your behalf for a fee (typically 25-35% of the amount saved). They know the industry and often achieve better results than patients negotiating directly.
Organizations like the Patient Advocate Foundation also offer free assistance for people with serious or chronic conditions.
The bottom line: medical debt is more negotiable than almost any other debt. The sticker price is rarely the final price.