Medical bills can be a big problem, even for people who have benefits to help them cover the costs. Consider that 57% of adults have been surprised by a medical bill they thought insurance would cover, according to research from NORC at the University of Chicago. And nearly 3 in 10 people have had an unpaid medical debt sent to a collections agency, according to a survey from Consumer Reports.
In other words, medical debt can be an issue. But there are steps you can take to pay it down.
What is a medical loan — and do you need one?
Medical loans are personal loans that you use to pay down your medical debt. They might be for as little as $1,000 or as much as $50,000 — or anywhere in between.
They’re considered unsecured debt, which means they’re not secured by collateral, unlike a mortgage that is secured by your home.
Here are a few things you should consider before looking for one.
- You could make one payment. If you’re dealing with medical debt from multiple sources, keeping track of all the balances and due dates may be making your eyes cross. If you use a personal loan to consolidate your debt, you could make one payment every month toward one balance.
- The interest rate remains the same. If you charge your medical bills to a credit card, there’s always a chance that your card raises your interest rate over time. With a fixed-rate personal loan, you can lock in your rate.
- You’ll get a quick decision. Applying for a personal loan isn’t like applying for a mortgage. When you input your details in a personal loan application, you could get a quick response from the lender; this will let you know your options.
- You may pay a high interest rate. Interest rates for personal loans range from 6% to 36%, and that can add up over time if you’re on the higher end of the scale.
- You must be disciplined. When you take out a large personal loan, it may be tempting to use that money for other needs — credit card bills, for instance. You must stay the course and use the cash for its original purpose.
- There may be fees. Some loans charge origination fees to process your loan, and some charge a prepayment penalty fee if you pay off your loan early. It’s wise to read the fine print and avoid personal loans that come with higher fees. But if your credit isn’t great, you may not have as many lender options.
Where to find a personal loan for medical bills
Where do you start? There are a variety of places online where you can compare offers from lenders. Student Loan Hero, for instance, has an online marketplace for personal loans. You can apply for loans from companies like SoFi, Citizens Bank and Earnest, among others.
How to qualify for a medical loan
While qualification for a medical loan will depend on the individual lender, in general, they will look at your credit score, income and debt level.
Your credit score has a great deal of influence on the interest rate a lender will offer you. Your score is considered “very good” if it’s between 740 and 799, while a score of 800 to 850 is considered “exceptional,” according to Experian.
The amount a lender will allow you to borrow and how long it’ll let you borrow depends on your income and how much debt you already have.
Other things to consider
A personal loan isn’t your only option when it comes to medical debt. There are several ways you can address the problem.
Make sure your insurance has covered you correctly
Before wrapping your arms around a large bill from a provider, make sure your insurance has handled it accurately and that you’re dealing with the proper balance.
“Check your explanation of benefits,” said Caitlin Donovan, director of outreach and public affairs for the National Patient Advocate Foundation. “It’ll give you an estimate of what you may owe, but you also want to make sure you’re being charged for the right things, and that whomever is billing you hasn’t circumvented the insurance process.” If your insurer didn’t cover a service and you believe it should have, you can file an appeal.
Check the bills for errors
No matter how you slice it, medical billing mistakes are very common. Go over your itemized bills — your bills should be itemized — with care and make sure every charge syncs with the services you received and the dates you received them.
If you think you’ve spotted a problem, call your medical provider’s billing office and ask to go over the bill with you.
Check your state laws
In some cases, when you see an out-of-network provider, it will bill you for any balance above and beyond what your insurer pays.
This is called balance billing, and many states protect consumers from it. If that’s what’s happening to you, check to be sure you’re not in a state with laws against it.
See if the provider is willing to negotiate
If it’s a large bill — or even a small one — your medical provider may be willing to take less than the full amount of the bill, especially if the alternative is that they’ll have to send it to collections.
“See if they’ll accept the Medicare rate, for instance,” Donovan said.
Ask whether there’s financial aid available. “A lot of hospitals have financial aid programs, but they won’t tell you about it upfront,” Donovan added.
Inquire about a payment plan
If the issue is that you don’t have enough money to pay the bill in full, ask your medical provider whether you might be able to pay it in installments.
This worked for Peter Creedon, a financial planner in Mount Sinai, N.Y., when he was faced with a large dental bill.
“I said, ‘I can’t afford that,’ and the dentist said, ‘OK, why don’t we break it up into three or four equal parts, and just pay it every month?’” Creedon said. “I have found that everybody just wants to get paid.”
Enlist an advocate
Medical billing advocates or organizations like the National Patient Advocate Foundation can help you negotiate with billing departments and medical providers.
The foundation will do so for free, but you must have a diagnosed medical condition — cancer, for instance, rather than a bill resulting from a car accident. Other organizations charge a fee or a percentage of the money saved, but it may be worth it if you’re overwhelmed.
“No matter what, it’s better for you not to do this by yourself,” Donovan said.
You can also get help from the Alliance of Professional Health Advocates or the Alliance of Claims Assistance Professionals.
Interested in a personal loan?Here are the top personal loan lenders of 2019!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|5.74% – 16.99%1||$5,000 - $100,000|
|7.54% – 35.99%||$1,000 - $50,000|
|7.99% – 35.89%*||$1,000 - $50,000|
|5.99% – 24.99%2||$5,000 - $35,000|
|5.99% – 29.99%3||$7,500 - $40,000|
|6.79% – 20.89%4||$5,000 - $50,000|
|9.99% – 35.99%5||$2,000 - $25,000|
|6.95% – 35.89%6||$1,000 - $40,000|
|6.99% – 18.24%7||$5,000 - $75,000|
|9.95% – 35.99%8||$2,000 - $35,000|