Chrystal McKay knew enough about medical care costs that she skipped the ambulance ride after a car accident. A friend drove her to the emergency room.
That saved her one bill, but she faces another for more than $20,000 after her ER visit. The 29-year-old Stockton, California, woman must balance paying her debt with getting care for a sprained shoulder that may need surgery: "I have to weigh the pros and cons. I'm already $20,000 in debt, and any more treatment will just put me more in debt."
Uninsured at the time and facing a bill she doesn't know how to handle, McKay finds herself in a position familiar to many in her generation. If she can't cover the cost, her bill may wind up in collections.
No matter your age or insurance status, there are ways to make medical debt more manageable, whether you just got the bill or it's already in collections.
MEDICAL COLLECTIONS PEAK IN LATE 20s
Young adults incur medical collections debt at a higher rate than older age groups, according to a study published in Health Affairs , a health policy journal.
The report looked at 2016 data from the Consumer Financial Protection Bureau's Consumer Credit Panel. It found that the frequency of medical debt in collections peaked at 11.3 percent, for people age 27, and stayed near that level until the mid-40s — even though medical spending in general is low for people in their 20s. The median amount in collections also peaked at age 27, at $684. In contrast, people in their 60s had higher rates of medical spending but fewer medical collections.
That puts millennials — those born 1981-1996 — in the crosshairs. "There are a number of things that add up that make younger adults more prone to this kind of debt," says economist Ben Ippolito, one of the study's authors.
- Less earning power: Americans ages 25 to 34 had a median income of $36,664 in 2017, according to the Census Bureau's Current Population Survey.
- Lack of insurance: Just under 20% of millennials in their late 20s and early 30s were uninsured, the highest rate seen in the Health Affairs report.
- Mobility: Younger people tend to move more frequently, increasing the chances for lost bills leading to collections.
McKay's income took a hit when she had to quit her dog-grooming position as a result of her injuries; she expects to make about $30,000 for the year. And she was recently approved for state-run health insurance. But insurance doesn't entirely shield people from medical collections. The study found that "most medical debts are relatively modest in size, which means they could be incurred before the insured person meets their deductible."
UNCERTAIN HOW TO COVER MEDICAL BILLS
McKay made a GoFundMe page to drum up some money but has only about $1,300 so far. However, she has the right idea in trying to take some type of action, even if the bill seems overwhelming.
If your bill isn't paid for several months, the debt could go into collections, which can drag down your credit score and make you appear riskier to potential creditors.
"I find, by and large, people have no clue about how to handle a bill," says Adria Gross, a medical bill advocate in New York. In nearly 30 years of experience, working at one point for an insurer and now negotiating bills on behalf of consumers, she's seen the confusion medical bills can cause.
"First thing people need to do if they can't afford a bill is call their provider and see if they can negotiate it. And the provider probably can reduce what you owe," Gross says. She advises having details of your income and how much you can pay at hand, to help you make your case.
Other options for handling your medical debt include:
- Pursue a payment plan: Ask the provider to break up your bill into a number of payments to cover the cost over time. If they refuse, you can create your own by transferring the debt to a 0% APR credit card (though you'll need good credit to qualify for one).
- Hire a professional: Medical bill advocates may be able to negotiate your bill down to a fraction of the original amount.
- Try DIY settlement: You may be able to negotiate a lump sum settlement on your own, especially if the debt is already in collections. The creditor may accept your offer to pay less than you owe rather than risk receiving no payment at all.
This article was provided to The Associated Press by the personal finance website NerdWallet. Sean Pyles is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @seanpyles.
NerdWallet: 6 options for paying medical debt
Health Affairs: Unlike medical spending, medical bills in collections decrease with patient's age