What is medical debt?
Medical debt is a debt you owe for medical services. This includes hospital care, doctor visits, or other treatments. Even if you have health insurance, it may not adequately cover all costs for medical services. You can still incur medical debt.
By law, when you apply for credit, lenders can’t treat your medical debt differently from your other types of debts. For example, the lender is allowed to reject your loan application because your debt is too high.
If the lender rejects the application just because your debt is medical debt, that is not allowed.
Dealing with medical debt
If you’re having problems paying your medical debt, talk to your healthcare provider. They might be able to give you options. Ask what “financial assistance” programs they offer. They might have a repayment plan that’s more affordable for you.
Many hospitals also have “charity care” programs to excuse some people from the full amount they owe. To qualify for these programs, you may have to provide information that helps to show your inability to pay. This could include tax returns, pay stubs, and a “statement of financial hardship” explaining why you can’t pay. Many hospitals are already required to tell you about these options even if you don’t ask.
Bankruptcy and medical debt
You may be considering filing for bankruptcy to help with medical debt. It’s possible to use bankruptcy to discharge your medical debt. But you should learn about the different types of bankruptcy you can file first.
It’s important to understand that filing bankruptcy is not a perfect solution. It will have a negative effect on your credit score. It may make it harder for you to get credit in the future on affordable terms. If you have medical issues that will result in more bills, you may not be able to use bankruptcy to get rid of those future debts. Talk to a lawyer or other experienced advisor to understand these issues in making decisions on whether and how to file bankruptcy.
Learn more about bankruptcy.
Medicaid and medical debt
If you have Medicaid coverage, your medical debt may be paid back using Medicaid payment. When applying for Medicaid, there is a part of the form that asks about unpaid health care costs. This is called medical backdating of eligibility. If you meet the Illinois residency requirement for the months before your application, you may check the box that you have unpaid medical bills from the 3-month period before your application. Do this if you want your Medicaid coverage to include your medical debt.