Negotiating Medical and Other Debt

Did you know that any debt you have, from car loans to mortgages to credit card and medical debt, can be negotiated? You can negotiate terms, interest rates, and other loan conditions. In the case of medical debt, you can reduce the amount owed and, in some cases, eliminate debt. Few people understand that negotiating your debt is possible. 

All you have to do is ask.

Understanding your debt is imperative to deciding your best course of action. Reviewing your options will help you make the best decision for your needs.

Preparing ahead of time before you are in crisis is essential. Get all the facts about your debt. Know your creditworthiness and how these negotiations can affect your credit. Take notes on who you speak with and the time and day so that if you need to refer back, you can. Finally, you must know that some types of negotiations will affect your tax liability. Prepare your offer, but also consider the ramifications before agreeing to a settlement with your creditors.

Medical Debt

• Start early, before the debt goes to collection or even before incurring the debt, especially medical debt. Find out the total cost of treatment or procedures before you have them and your financial responsibility. Search for the best rates in your area, and speak to the billing department to see their financial resources if you know you can't assume full financial responsibility for the services.
• Make sure your itemized bill is correct. Compare it with the explanation of benefits (EOB) before making any payments or arrangements. Search for correct billing codes, duplicate codes, unbundled charges, and upcoding. If you’re paying an incorrect bill, you’re most likely paying too much.
• Again, ask about any financial assistance programs. Many hospitals don’t offer it even when they are available. These programs are known as Charity Care, Bridge Assistance, and Patient Financial Assistance. If you have Medicaid, Medicare, or any other medical insurance, you'll need those benefits before taking advantage of any assistance programs. And remember, if your request is denied, you can always appeal.
• Ask about payment plans. Many hospitals and clinics will allow you to create a monthly payment plan to pay the balance of your bill. 
• Research the insured rate for your service. If you don’t qualify or no assistance is offered, research the insured rate for the service you need. Using well-researched numbers will help you negotiate when you're ready. Contact your healthcare provider's billing department and politely ask if they will honor the price you received from the insurance company.
• Check to see if the expense can be paid for in whole or in part through Health Reimbursement Accounts (HRA), Health Savings Accounts (HSA), or Flexible Savings Accounts (FSA). If you are still working and your employer offers these accounts and consider enrolling in one or adjust your contribution as necessary during your next open enrollment period. While HSAs and FSAs will include all or some of your contributions, the HRA account is funded entirely by your employer.
• Check to see if your employer offers a health stipend. Though not common, they are still around. These stipends are taxable but can allow the employer to reimburse you for the uncovered portion of the bill. Because these are taxable benefits, there are fewer restrictions on which benefits are eligible for reimbursement and who is eligible for the benefit. Another positive benefit is that the health stipend does not require health insurance coverage to receive reimbursement.

If all the above options fail, and you can’t negotiate a medical bill to an affordable price, then it’s time to consider a 0% interest credit card. Your credit utilization, as well as your credit score, must be very good to excellent to be considered. Pay the debt with this card 0% interest card, then pay off the card while you are in the 0% interest period. Again, you must be disciplined to accomplish this without getting into more debt.

Credit Card, Auto, or Personal Loan Debt  

Keeping an eye on your credit card interest rates and balances is very important with interest rates rising. You don’t want to find yourself unable to pay your bill. However, most credit card companies are more willing to negotiate debt by waiving late fees, putting late payments at the end of a term, reducing interest rates, etc. 

What can you do? Again, transfer high-interest balances to a 0% or lower interest rate card. Pay the higher interest rate card while paying the minimum on the lower interest rate cards. Don’t acquire new debt. Additionally, consider securing a low-interest-rate loan to consolidate the payments at a much lower interest rate. 

Consider working with a debt reduction company. They may charge a fee, but it may be worth it to you. 

Here are some other options to consider:

• Credit Card Settlement - This debt settlement allows you to pay a credit card for less than you owe. This is usually done through a third-party agency.  You pay them for the service. 
• Lump-Sum Settlement - In this type of settlement, you offer to settle your outstanding balance in one big payment for less than the balance. If the terms are accepted, they will forgive the remaining balance. Your credit may be hurt, and you may have to pay taxes on the forgiven amount.
• Workout Agreement - Your interest rate may be lowered temporarily, or the interest may be waived altogether. The credit card company may also offer other steps to help you get on track. You may have to close your account, affecting your credit due to credit utilization.
• Hardship or Forbearance - Consider these options if your hardship is temporary. Your credit card company may lower your interest rate, suspend late fees or reduce your minimum payment. You may also be able to skip payments for some time. This may also hurt your credit score.

You can also negotiate cable or satellite bills, cell phone and home phone service, car insurance, home security, newspaper subscriptions, gym memberships, and bundled services.

Gather all account records, including how long you've been a customer and your payment history. Note the name and cost of each line item part of your service (for phone bills, note data usage.) Can you reduce your bill to match your usage? 

Research competitor prices, packages, and terms of the current provider. Note what they are offering new customers. Keep all information for reference. 

When you’re ready to negotiate, make sure you are speaking to the correct person and department. Rarely can the customer service representative you speak to have the power to make any adjustments to your bill. Specifically, you should ask for the retention or collections department. Ask them how they can help you reduce your bill. Using the research you've prepared, let them know if and what the better offers from competitors are and that you would like to work with them rather than go elsewhere. Usually, this will prompt them to keep you as their customer by offering discounts. If this doesn’t help, be willing to let them know you will take your business elsewhere. Be firm but polite. If you are unsatisfied with their offer, be willing to follow up with leaving. 

You can usually get the changes done while on the phone, and they can immediately send you an email confirmation. Whatever you do, get the terms in writing. It isn’t a deal unless it’s in writing!

Don’t hesitate to ask for discounts, payment change options, or settlements. Don’t wait until the last minute. Do your due diligence and be prepared with all of your supporting documents.

If you want help finding and using financial resources available to CLL patients, you can reach out to Diahanna free of charge at myfinancialcoach@healthtree.org.