Should I put medical bills on a credit card?

Health care costs and medical bills are staggering in the United States. According to the Consumer Financial Protection Bureau, 43 million people hold $88 billion in medical debt on their credit reports, representing one in five American adults.

With so much money owed to health care providers and hospitals, it’s little wonder that many consumers try to use credit cards to pay for their medical bills. But that begs several questions: Can you pay medical bills with a credit card legally? Will paying medical bills with a credit card cost you more or hurt you in the long run? How long do you have to pay medical bills before being sent to collections? And what happens if you don’t pay medical bills fully or at all?

Read on for answers to these and other questions.

Take your medical bills seriously

It’s easy for medical bills to accumulate fast and become overwhelming if you’re not careful.

“Medical debt is common and expensive. In fact, it’s one of the leading causes of credit card debt and bankruptcy,” cautions Ted Rossman, senior industry analyst for Bankrate.

But experts agree that medical debt should not be ignored or taken lightly.

“Medical debt can affect your credit score if left unpaid or you are sent to collections. And it can snowball due to interest and fees, making it even harder to regain financial stability.”

— Dennis Shirshikov Head of growth, Awning and adjunct professor of economics, City University of New York

Experian reports that many health care providers turn to collections if a bill isn’t paid after 90 days; others allow between 60 days and 180 days as a payment deadline. After 365 days, if that debt remains, it could then show up on your credit report.

Keep in mind that medical debt collections on your credit report can make it harder to purchase or rent a home and get approved for financing or credit accounts, according to Todd Stearn, founder/CEO of The Money Manual.

“It can also cause you to be denied future medical care,” Stearn says, noting that one in seven adults with health care debt say they have been denied care due to their unpaid bills, according to KFF.

First step: Check how much you really owe

Are medical tabs piling up? Don’t panic. First, take the time to look closely at your bills and determine if they’re correct and legitimate. From there, you’ll be better prepared to inquire about anything you don’t understand or want to dispute.

Why? Because research shows that medical bills are often inaccurate. A 2017 study from Becker’s Hospital Review found that nearly 90 percent of hospital bills had errors due to duplicate charges, canceled tests or procedures, in-network balance billing, upcoding to inflate diagnosis, incorrect quantities of medicines and other reasons.

Another study from 2020 in the Journal of the American Medical Association found that one in five insured adults had a surprise medical bill in the past two years.

• Analyze your medical bills

  When you receive a medical bill, scrutinize it carefully.
  
  
  “Especially if it is for more than you are expecting based on your co-pay or deductible, you need to evaluate the charges and request a detailed statement of services from the provider or facility,” recommends Daniel Lynch, president and co-founder of Medical Bill Gurus. “Per various transparency laws that vary by state, patients may be entitled to know the price of services publicly and have the right to dispute charges if discrepancies are discovered during an audit of the charges.”
  
  
  Note that patients also usually have defined periods of time in their insurance policy to appeal, request a review and, in some cases, work with an internal patient advocate at the insurance company to communicate directly with the provider’s billing department on behalf of the policyholder.
  
  
  Look closely at your bills to spot any duplicate charges or mistakes.
  
  
  “Keep an eye out for the exact dates you were receiving services. If other dates appear, this is an easy way to identify charges that are easily proven to be unwarranted,” continues Lynch. “Also, watch out for clerical errors. Most of the errors I’ve seen in medical bills are due to incorrect codes and inaccuracies in clinic documentation that lead to the insurance company denying coverage or misappropriating their responsibility.”
  
  
  Also, ensure that your insurance coverage has been accurately applied, and dispute any discrepancies with both your provider and insurer.
  
  
  “Compare all supporting documentation and speak with your insurance company to walk through each of the charges, expressing any concerns you have about duplicate or incorrect charges,” Lynch suggests.
  

• Reach out to your providers

  Looking at your explanation-of-benefits (EOB) statement may not help much. Instead, request a detailed statement of services, a breakdown of costs being billed to your insurance, and how the amount you are being charged is calculated.
  
  
  “Reach out to the provider’s billing department and request a breakdown of your timeline to appeal a bill before the debt changes hands to a collection agency. Then, contact your insurance company to gather all available details and information on your claims and medical bills. Keep a file of all receipts, documentation and paperwork provided to you,” advises Lynch.
  
  
  Additionally, request that you be assigned a case manager or point of contact from both your insurance company and the medical provider so that you can follow up with a specific human being.
  

Why avoid paying medical bills with a credit card?

Once you’ve determined the legitimate medical charges you are responsible for, it’s time to make a decision: How will you pay for these expenses? One option is to use one or more credit cards. But think twice about this, says Rossman.

“I would rarely suggest using a credit card for medical bills,” he says. “Credit cards have very high interest rates — with the national average today a record-high 20.72 percent,” he cautions.

Shirshikov agrees.

“If you cannot pay off your balance quickly, your credit card interest can add a significant burden to your overall debt. I’ve seen folks who have ended up paying nearly double the original amount they owe for medical bills because they couldn’t afford the minimum payments,” he says. “Plus, high balances can negatively affect your credit utilization ratio and, thus, your credit score.”

Add Lynch to the list of experts who also frown upon using credit cards to pay off medical debt.

“Accruing debt on credit card should only be used as a last resort, as interest rates are typically higher than other sources of securing financial liquidity,” says Lynch. “Before using your credit card, compare its interest rate to alternative cash sources such as loans, investment accounts and retirement accounts if necessary.”

Additionally, consider that medical debt is treated more favorably by the credit bureaus.

“For example, medical debt doesn’t typically appear on your credit reports unless it’s in collections, has been in collections for more than a year and is a collection of $500 or more,” says Rossman.

A better alternative than using your credit card may be to negotiate directly with the health care provider or hospital.

“Many times, they will offer low or no-interest financing,” Rossman says.

When to pay medical bills with a credit card

On the other hand, using a credit card to pay your medical bills can provide a temporary financial buffer and possibly earn rewards or cash back, depending on the card’s benefits.

“Most medical bills are allowed to be paid using a credit card unless the provider specifies otherwise. But be forewarned that some providers will pass on credit card processing fees,” says Lynch.

If you are in good financial shape and can afford to pay off your medical bills right away, charging them on your card and paying off your balance in full with the next statement could improve your credit rating and yield valuable card perks.

“You can potentially apply for a new credit card and earn a generous sign-up incentive. Some credit cards have very lucrative sign-up bonuses in the form of cash or travel points when you spend a few thousand dollars within the first few months of being approved,” says Stearn.

What happens if you don’t pay your medical bills?

Whether or not you are allowed to or choose to use a credit card to pay down your medical bills, remember that what you legitimately owe will eventually need to be repaid.

“Unpaid medical bills can be sent to collections, significantly impacting your credit score and overall financial health. This can make future financial endeavors more challenging,” says Lynch. “As your credit score begins to drop, access to higher credit limits and lower interest loans becomes more difficult, leading to additional financial pressure and a lack of financial resources to acquire capital.”

Rossman points out that an otherwise excellent credit score can be significantly damaged by a medical bill sent to collections.

“It could cost you 100 points or more on your credit score,” he adds. “And even though credit bureaus now treat medical debt more favorably, it’s not a get-out-of-jail free card — you still need to pay the debt. If you don’t, you could be sued.”

The good news, though, is that, as of mid-2022, medical debt will be removed from your credit reports once you’ve paid it off. Therefore, it is possible to recover from a medical debt-caused decline in your credit score.

The bottom line

Don’t overlook, ignore or underestimate medical debt. When you receive medical bills, review them carefully, check to ensure that you haven’t been charged incorrectly and devise a repayment plan.

The pros concur that using credit cards to repay what you owe to health care providers and medical facilities can be risky and may get you further into debt via high interest rates. Explore all of your payment options carefully, and try to negotiate the bill with the provider or pursue other less costly forms of financing, if necessary.