9 ways to get out from under a heaping pile of medical debt

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Negotiate early and often

If your hospital or doctor bill is more than you can afford, pick up the phone and offer to pay a smaller amount that you can manage.

Make sure you reach someone who’s in a position to negotiate. “If you don’t ask the right person, you won’t get the right answer,” says Erin Singleton, chief of mission delivery for the Patient Advocate Foundation, a national nonprofit that helps patients resolve medical debt problems.

The best time to negotiate is first thing in the morning and early in the process, says Michelle Katz of Los Angeles, a nurse and author of “Healthcare Made Easy.”

Throughout the process, be sweet and don’t get upset. “Say, ‘Hey, I just lost my job and I can’t afford this $500,000 bill. What would you do in my situation?'” Katz says.

Ideally, you want to negotiate before the health provider turns the bill over to a collection agency.

“When the medical provider turns the bill over to a collection agency, they will get only 50 percent of what you pay. Why can’t they get that 50 percent from you?” asks Katz, who says she once helped a patient negotiate an $800,000 bill down to $75,000.

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Set up a payment plan

Working out a payment plan with the doctor or hospital might be a good option costing you low or no interest. Negotiate here, too, Singleton says.

“Offer what you can afford,” she says. “If the medical provider asks for $100 a month and you can pay only $25, let them know. That way, you’re able to maintain the payments.”

It worked for Laura, a Durham, North Carolina, woman who suffered a heart attack in 2009 at age 40 and spent a week in the hospital. Her share of the $116,000 bill was about $7,000.

“I actually had pretty good insurance,” she says. “But we didn’t have a spare $7,000 we could hand them. We knew right away we were going to need to set up a payment plan.”

It was relatively easy. She and her husband were able to pay about $130 a month with low or minimal interest until the debt was paid off.

“No one suggested we go out and get a second job, sell one of our cars or anything like that to pay the bill,” she says. “From our experience, hospitals are willing to work with people. Hospitals would much rather have the money than not.”

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Work with a negotiating pro

If negotiating scares you, leave it to a professional. Companies such as CoPatient, based in Boston, negotiate on behalf of patients to reduce their bills.

When CoPatient is able to find billing errors, it saves patients an average of 40 percent, co-founder Rebecca Palm says. Clients are charged a fee equal to 35 percent of the money saved, she says.

Negotiating pros know there’s a lot of wiggle room in the rates charged by medical providers, Palm says. “We’ve seen as much as a 1,000 percent variation for the same procedure.”

You also can expect a professional negotiator to know the medical lingo and how to navigate the system. “Most consumers would need a whole different dictionary just to understand all the technology,” Palm says. “Sometimes the consumer doesn’t know the right words to describe the challenges.”

CoPatient has negotiated bills as low as $500 and as high as $1 million, Palm says.

Another source of negotiating help is the Patient Advocate Foundation, which doesn’t charge for its services. People coming in with an average debt of about $1,800 have been able to reduce that by 20 to 30 percent with the foundation’s help, Singleton says.

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Look for financial assistance

Especially if the hospital or health care provider is a nonprofit, see if you qualify for financial assistance, says Chi Chi Wu, a staff attorney at the National Consumer Law Center in Boston. Under the Affordable Care Act, nonprofit hospitals are supposed to have formal policies on help that’s available.

“If the patient is eligible, he or she could have all or part of the bill waived,” Wu says. “Even if the patient isn’t technically eligible for financial assistance, he or she should apply anyway if the debt is unaffordable. It doesn’t hurt to ask.”

Help paying for prescription drugs may be obtained from the Patient Advocate Foundation’s Co-Pay Relief Program.

Patients must be insured, have an income below 400 percent of the federal poverty guideline and meet other qualifications, Singleton says.

Other support may be available from a charity or government program focused on your specific disease or condition, such as breast cancer, Crohn’s disease, diabetes and HIV.

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Get a little help from your friends

Crowdfunding is another option to pay medical expenses. Sites such as Kickstarter and GiveForward will help you create a way for friends, family and sympathetic strangers to donate money to help pay the bills.

The best crowdfunding campaigns show why the person is deserving and outline specific needs, says Ethan Austin, GiveForward’s president. He says successful efforts also:

• Rely on personalization, promotion and persistence.
• Keep potential donors abreast of what’s going on.
• Come up with new reasons to give.
• Set incremental deadlines to encourage people to respond.

There are fees when you use a crowdfunding website. Kickstarter takes 5 percent of the money raised and charges 20 cents for each pledge, plus 3 percent.

GiveForward’s fee is 7.9 percent, plus 50 cents per transaction. The money covers the cost of the company’s online payment service provider and pays GiveForward’s coaches and developers, Austin says.

In 2014, GiveForward users raised an average of $3,031 to assist with medical bills, he says. Some have raised much more than the average: Two victims of the Boston Marathon bombing have collected around $900,000 to help with lifetime costs of their injuries, according to GiveForward.com.

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Reach for your plastic

Of course, you could just pull out a credit card to satisfy the debt and maybe even rack up some points in the process.

But this is not a good first step, Singleton says. “If you put your medical debt on a credit card, you lose negotiating power.”

Plus, you’ll likely end up paying more in interest. “The most important thing you need to remember is medical debt (on a payment plan) is usually interest-free,” McClary says. “If you switch it over to a credit card, you’re taking interest-free debt and tacking interest onto it. It’s costing you more.”

If your credit card offers frequent flier miles, cash back or points that earn other rewards, putting your medical debt on plastic may seem more tempting. “Maybe you can get an airline flight somewhere,” Katz says.

But negotiate to lower your bill first, she says. Or, look for a zero-interest credit card offer.

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Use a medical credit card

Another option is a medical credit card. These cards are intended for health care expenses and typically come with attractive terms, such as introductory periods during which you pay no interest. The CareCredit card, for example, charges no interest for up to the first 24 months.

When Laura’s husband got hit with a big dental expense days after she came home from the hospital, the North Carolina couple put that bill on a medical credit card.

A medical credit card can work. But be careful, McClary advises.

“A lot of these medical credit cards come with very high interest rates,” he says. “I’ve seen some examples of interest rates approaching the high teens. It may be possible to find a lower interest rate with other options.”

Consider a medical credit card after you’ve exhausted other methods of working it out, Katz says. “I recently heard of a hospital charging 1 percent interest … a lot better than 8 percent or more.”

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Last resorts

If all else fails, there are a couple of other routes you might pursue. But they can have long-term consequences.

Home equity loan: Taking out a home equity loan to pay medical debt is generally a bad idea, experts say.

If you put your medical debt onto a second mortgage or home equity line of credit, “you’re ratcheting up the stakes,” McClary says. “You don’t want to put your house on the line for unsecured medical debt.”

“You absolutely don’t want to take out a home loan to pay medical debt,” Wu adds. “Now, you’ve put your house at risk.”

Bankruptcy: If nothing else works, a final option may be to file for bankruptcy.

“If you have a $20,000 bill and you can’t afford it, bankruptcy may be something you want to consider,” Wu says. “There’s nothing wrong with that. There should be no moral shame that you got sick, got socked with this huge unaffordable bill and couldn’t afford to pay it.”

But you’ll wreck your credit, and the stain of bankruptcy will stay on your credit report for up to 10 years.