Matt becker
February 01, 2018

It’s no secret that health care is more expensive now than ever for many Americans. According to the U.S. Bureau of Labor Statistics, the average U.S. household spent $4,612 on health care in 2016, representing approximately 8 percent of the average family budget. And when medical costs soar, debt will often follow.

A 2014 study by the CFPB found that nearly one in five credit reports contains a medical bill in collections, which can reduce your credit score by as much as 40 to 100 points. That’s the bad news. The good news is that you can both save money and keep your credit score intact if you know how to negotiate your medical bills.

This guide will show you how to do it.

Table of Contents:

Part I: Understanding medical negotiations

Feel empowered to negotiate

It’s a little-known fact that it is possible to negotiate your medical bills, all the way from before you’ve received the care to the point at which you’ve been treated, your insurance company has paid its share and the doctor or hospital has sent you a final bill.

“It almost always makes sense to try to negotiate,” says R. Ruth Linden, Ph.D., president of Tree of Life Health Advocates, a patient advocacy company. “It doesn’t mean you’ll always be successful but it’s always a good idea to ask. If you don’t ask, you won’t receive.”

Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, adds that many people fear that trying negotiate their medicals means they’ll be denied future care due to their inability to pay. But he says that this isn’t something you should worry about.

“You’re not going to be denied treatment if you reach out promptly and try to work out an agreeable repayment plan,” McClary said. “If you feel like you’re not able to afford the full cost of the care, you should absolutely reach out to your care provider and have a frank discussion about what you’re able to afford.”


How much can you save?

Given all the variables involved — from the type of care you receive, to where you live, to your income and many other factors — it’s impossible to say exactly how much money you could save by negotiating your medical bills.

But there are a number of different opportunities to negotiate, all of which could present significant cost savings.

Choose the best provider to begin with. Linden says that the first step is simply choosing a health insurance plan that includes your preferred doctors and hospitals as in-network providers, and then only using in-network providers when receiving care. Doing so gives you a head start, as your insurance company will typically cover more of the cost for in-network care.

Negotiate before treatment if you can. Beyond that, you can shop around and negotiate the cost of a service or procedure before receiving it. Sites like and can help you understand the typical cost for services in your area, and you can call a number of providers to ask what they charge for a given service rather than automatically going with the first doctor you’re referred to.

But while shopping around can save you money, and while it’s smart to know what you’re paying ahead of time, Linden cautions against making decisions solely on price.

“Cost is a consideration, but it should never be the top consideration,” she said. “You should choose providers based on things like who has the most expertise and who has performed the most procedures on people with your condition.”

Negotiating after treatment. Once you’ve received care, there are still more opportunities to negotiate.

McClary encourages people to carefully review each bill they receive from both their providers and their insurance company, comparing them with each other and with your own records of the care you received. There may be billing errors, such as duplicate charges or charges for care you didn’t received, all of which can be negotiated out of the bill.

“If there is anything that looks odd, it’s always worth reaching out, identifying the item, and asking clarifying questions,” McClary said. “Simply by asking the question, you may find out that the item you called attention to shouldn’t be on the bill at all.”

Even if there aren’t any errors, you still may be able to negotiate a reduced bill, especially if your financial situation would make paying the full bill difficult or impossible. Linden has occasionally helped her clients get their entire bill forgiven, and at other points has been able to negotiate discounts of 10 to 50 percent.

Try a payment plan. McClary adds that even if you aren’t able to secure a discount, you may be able to negotiate an interest-free repayment plan that allows you to pay your bill in smaller increments over a longer period of time.

The bottom line is that there are multiples opportunities to negotiate the cost of your medical care throughout the process, and you have little to lose and a lot to gain by giving them a shot.


The best time to negotiate medical bills

The best way to save yourself the most money is to start the negotiation process before you have received any medical care.

Understand the costs before treatment

As Linden mentioned above, you can do a lot to minimize your costs simply by choosing an insurance plan that includes your preferred providers as in-network and by making sure that you only use in-network providers. But this isn’t always as straightforward as it sounds, which means you may have to do a little extra work ahead of time.

For example, you might have scheduled surgery with an in-network doctor at an in-network hospital, but the hospital might use an out-of-network anesthesiologist or other ancillary provider during the procedure. Some states, like California and New York, have laws that prevent out-of-network providers from charging out-of-network rates when performing care in an in-network setting. But other states do not, which could leave you with a large, unexpected bill.

To prevent this, you can call your health care provider ahead of time and verify that they will only use in-network physicians during your procedure. Additionally, it’s always a good idea to ask your provider what the cost of the given service or procedure will be before you actually receive it. At the very least, it will help you prepare for the cost, and in many cases that information can be used as the starting point of a negotiation.

You can also call other providers in the area to ask about their fee for the same service, which can again be used to help you negotiate a better rate with your preferred provider.

After treatment: Damage control

Of course, sometimes this is out of your hands, especially in an emergency situation. In that case, review our bills and dispute out-of-network charges afterward.

Linden also says that you can occasionally negotiate a discounted rate if you’re willing to pay cash upfront instead of going through your insurance company. Though it’s important to understand that any payments made outside of insurance won’t count toward your deductible or out-of-pocket max, which could come back to bite you later on.


How to negotiate medical bills

When it comes to handling the actual negotiation, there are a few strategies that the experts agreed would increase your odds of success.

Don’t be afraid to ask questions. Whether it’s asking your doctor whether a particular procedure is necessary or how much it will cost, or questions about your bill or to have some of it forgiven, they all emphasized that you have every right to ask, little to lose and a lot to gain.

“If you don’t ask questions, nobody else is going to ask them on your behalf,” Linden said. “If you have a question, call your provider or insurance company and ask them to explain it to you. If you don’t understand their answer the first time, ask them to explain it to you again. Don’t be shy.”

The quicker you act, the better. Responding promptly both decreases the odds of your bill being sent to a collections agency and shows the provider that you’re serious about handling the bill, which may make them more willing to negotiate.

“Your main objective is to make sure that the bill doesn’t go on to a third-party debt collection agency, which is very likely to happen if it goes unpaid according to the provider’s expectations,” McClary said. “You need to act quickly to either make arrangements for a full payment or negotiate some kind of discounted rate or installment plan.”

Ask for an itemized bill of services. Tina Pashley, a spokesperson for Medliminal, a medical billing advocacy group based in Roanoke, Va., says that the most important thing to ask for is a detailed itemized statement of the services provided, particularly for more complex visits like an inpatient stay, emergency room visit or outpatient procedure.

“When people get their bill in the mail, they often don’t realize that most of the time they’re getting a summary bill,” said Pashley. “These summaries are very vague and they don’t show you the full breakdown. You need to request the itemized statement in order to see all the details.”

Pick up the phone. Missy Conley, the director of consumer claims for Medliminal, says that it’s generally better to call your provider directly rather than writing or emailing.

“The problem with writing is that it never seems to get to the right person,” says Conley. “Calling allows you to get the right person on the line, and you can document the date, time, and person you spoke with in case you need to call back in at a later time.”

Seek payment assistance programs. Conley encourages people to reach out to their provider and ask about financial assistance and charity programs that they offer. Hospitals in particular often have standard procedures for helping people with their bills, and these programs can result in a significant cost reduction.

“People are sometimes reluctant to apply because they have to hand over tax information and they’re worried that the hospital will come after them,” Conley said. “But the only thing the hospital can do is say no, and you may be able to have [as much as] 40% of your bill forgiven.”

Don’t bite off more than you can chew. Finally, Linden emphasizes that you should only ever agree to a repayment plan that you can actually afford. Because if you agree to make a payment and are unable to do so, the bill could be sent to collections, leaving you with a new set of issues to deal with.


Common medical billing errors to watch out for

Medical billing errors are much more common than you might think. In fact, Tina Pashley says that Medliminal reviewed over 1,700 hospital bills from 2017 and found that 99% of them contained at least one error that was costly to the patient.

“This was actually the highest year we’ve seen in terms of errors,” Pashley said. “It seems to be getting worse and worse.”

Here are some of the common errors that Pashley and Conley say that people should be looking out for:

  • Double billing. This is when the provider charges you multiple times for the same service. Pashley says that the service or procedure is often worded a little differently each time it’s listed in the itemized bill, which can make it difficult to recognize.
  • Incorrect medication units. This can happen when the doctor orders a medication that you don’t end up taking, such as extra pain medication, or when they simply input the incorrect dose of medication administered.
  • Charges for preventive care. Conley says that the most common error she saw in 2017 was from patients who went in for a wellness visit, which should be 100% covered as preventive care, but saw it changed to a diagnostic visit that they subsequently had to pay out-of-pocket.
  • Inaccurate insurance reimbursement. Sometimes insurance companies don’t process the claim correctly, leaving you to foot more of the bill. This can happen when they incorrectly deny certain services, or if, for example, they only cover 78% of the cost of a service when they are supposed to cover 80%.

Ask for an itemized summary of services

Conley emphasizes that requesting a detailed itemized statement from your provider is the best way to check for these errors. This is especially important if you receive care in an emergency room or inpatient setting, since those bills will often contain charges for many different services and medications, increasing the odds of there being an error.

If you see something in the itemized statement that doesn’t look right, or if you don’t understand something in the bill, Conley says that you should call your provider’s billing department as soon as possible. They should be able to explain exactly what you’re being charged for, but if you still feel that it’s incorrect you can dispute the charge directly with the billing department and ask them to remove it.

When you make the call, Conley encourages you to write down the date, time and name of the person or people you spoke with so that you can easily reference that information if any of it is disputed by the provider at a later date.


Part II: The best way to pay medical bills

Understanding your insurance

A 2014 CFPB study on medical collections found that confusion was a common reason for medical bills being missed. While the average medical bill in collections was only $579, which was much smaller than other kinds of debts, consumers had a hard time understanding who they owed money to, what their insurance plan covered and what their share of the cost was.

“Navigating the health care system today is not an easy task,” said Conley. “We encourage consumers to know their insurance and understand their coverage, but that’s easier said than done.”

Still, a basic understanding of how your provider works with your insurance company, how your insurance company calculates both their share and your share of the cost and the documents you receive throughout the process can help you spot errors, avoid incorrect payments and be in a better position to negotiate.


Reviewing claims

After you receive care, your provider sends a claim to your insurance company detailing each of the different services provided. The insurance company processes that claim and calculates how much they will pay and how much you will owe, based on your coverage.

Once that happens you should generally receive two documents:

  • An Explanation of Benefits, or EOB for short, from your insurance company. This details how much they paid the doctor for each service and how much you will owe. This is not a bill, however.
  • A statement from the provider, which shows the final amount you owe, and may contain a summary of the care received and the charge for each service.

Linden stresses that at this point, it’s important to understand a few things:

An EOB is not a bill. First, an EOB is not a bill and therefore doesn’t reflect money actually owed. In fact, you may receive several EOBs for the same care as the claim gets updated over time. So, Linden says, you should never pay an EOB without first receiving a bill from your provider.

Compare the EOB to your statement. Second, Linden encourages consumers to compare the EOB from their insurance company with the statement from their provider. If they don’t line up, or if there is anything in either document that doesn’t look right, Linden says that you should call your insurance company first so that they can help you determine whether they made an error in calculating your benefit, or whether the provider may have miscoded or otherwise incorrectly submitted a service.

Of course, a good review of your EOB requires an understanding of your insurance coverage. And while every insurance plan differs, there are a few key terms that are common to almost every plan:

  • Deductible. Your deductible is the amount of money you have to pay toward your medical expenses before your insurance starts to kick in. Some services, such as preventive care, are not subject to the deductible.
  • Out-of-pocket max.This is the maximum amount you will have to pay in a given year for all covered services. Once you have spent this amount, your insurance will pick up 100% of the cost of additional covered care.
  • Co-pay. This is a fixed amount you have to pay for a given service. For example, you might have a $30 copay for a visit to your primary care doctor, in which case you will have to pay $30 each time you make such a visit even after you’ve met your deductible.
  • Coinsurance. Once you’ve reached your deductible, many insurance plans will cover a fixed percent of the cost of additional care. For example, if you have a $100 bill and you have 80% coinsurance, your insurance will cover $80 of the bill and you will have to pay the additional $20.
  • In-network and out-of-network. In-network providers are doctors, hospitals, labs and other medical providers that have contracted with your insurance company to accept negotiated rates for covered care. You will typically receive better coverage by using in-network providers. Some insurance plans don’t cover out-of-network providers at all, and some do but with higher deductibles, copays and coinsurance.

You should be able to request a summary of coverage from your insurance company that details how all of those variables break down for your specific plan. And if you are having trouble understanding either the terms of your coverage or how they have been applied to the care you received, Linden says that you should keep asking your insurance company until you get an answer you’re satisfied with.


Negotiating a payment plan

Once you’ve reviewed all your documents, corrected any billing errors, attempted to get a discount and applied to any financial assistance and charity programs your provider offers, you’ll arrive at a final amount that you owe your provider for the care you received.

At this point, the bill may still be more than you can afford to pay, even if you were successful in receiving some kind of discount or assistance. If that’s the case, you can ask your provider about setting up a payment plan that allows you to make monthly payments over a period of time rather than paying the entire bill upfront.

Linden says that the availability of payment plans varies from provider to provider, but with larger organizations it’s often possible to set up a payment plan over a number of months with 0% interest, which can make it easier to fit the payment within your regular budget.

She also stresses the importance of knowing what you can afford and only agreeing to a payment plan you know you can actually stick to, or else you may find yourself with a payment you’re unable to make and the possibility of your bill being sent to collections.

“It’s important for the consumer to make a proposition based on what they can afford,” Linden said. “Ask politely and make a strong business case for your situation.”


HSA, FSA and other payment options

Whether you’ve negotiated a repayment plan or you’re paying the bill in full, there are a few different strategies you can use for making the actual payment, some of which can save you a little more money.

Here are the major options:

  • Health Savings Account (HSA). Health savings accounts allow you to contribute money tax-free and spend it on qualified medical expenses, getting you a discount on health care equal to your tax rate. You must have a high-deductible health insurance plan in order to be contribute, and 2018 contribution limits range from $3,450 for individuals to $6,900 for families.
  • Flexible Spending Account (FSA). Like the HSA, these offer tax-free contributions and tax-free withdrawals for medical expenses. These are offered through employers and typically have a $2,650 annual contribution limit.
  • Savings. If you don’t have tax-free options available to you, taking the money out of your regular savings may be your best bet.
  • Cash flow. Depending on the size of the bill, you may be able to fit it into your monthly budget. This may be especially useful if you negotiate a payment plan rather than pay your bill all at once.

If you don’t have the savings or cash flow to handle the bill, and if you can’t negotiate a payment plan that works for you, you could be at risk of having your bill sent to collections. Which, according to McClary, is the last thing you want to happen.

If this is the situation you find yourself in, McClary says that you could consider taking out a different loan in order to pay your medical bill. While doing so would increase the cost of your bill by adding interest to it, and while you would still face the risk of defaulting on the new debt, it could be the best solution if you have no other way to pay your bill.

“My goal is to encourage people to get out of debt as quickly as possible,” said McClary. “But if you can avoid going into debt collection, it may make sense.”

Here are some of the options you have for using new debt to pay your medical bill:

  • Credit card. A number of credit cards offer introductory periods with 0% promotional interest rates. This could be the most cost-effective way to do it. Just watch out for the fine print — they could carry additional fees or interest charges if you’re unable to pay off your balance before the promo 0% APR period is up.
  • Home equity loan. A home equity loan allows you to borrow against the equity you’ve built in your home. Because it is secured by your house, interest rates are typically lower than other types of loans.
  • Personal loan. Personal loans typically have higher interest rates than home equity loans, but you are not putting your house at risk.
  • 401(k) loan. It’s possible to borrow from your 401(k). There are downsides though, such as sacrificing retirement savings and potentially having to pay the entire loan back within 90 days if you leave your job.


Advocacy groups and other sources of help

In addition to all of the steps you can take yourself, there are a number of programs, organizations and professionals that can help you at each step along the way.

Many hospitals and other sizeable medical facilities offer financial assistance and charity programs specifically designed to help people who can’t afford to pay their medical bills. According to Conley, these are always the first programs you should seek out.

Search your city and state for medical billing advocacy organizations.

Medical billing advocates, like Conley and her team at Medliminal, can help review your bill, spot billing errors, identify insurance coverage that is applied incorrectly and submit appeals on your behalf in order to save you money.

There are also patient advocates, like Linden, who will stand on your side and guide you through the entire process from choosing a provider to negotiating the final bill.

And there are a number of local service agencies, as well as local charities and churches, that may be able to offer assistance.

The bottom line is that you’re not alone. Not only is it possible to negotiate your medical bills and, in some cases, find significant relief, but there are a number of ways to get help doing so.