How to Negotiate Medical Bills and Lab Fees

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Medical bills are usually one of the last things you want to worry about when a large, often unexpected, medical event happens. We save you time. We save you money. But most importantly we are experts advocating on your behalf.

We have over 30 years’ experience in navigating the medical insurance world. We know who to talk to and we know the terminology. We know your 200-page insurance benefit book better than most medical billers and we also know the average charge of every medical procedure. This allows us to not only guarantee our insured clients are covered correctly, but for us to negotiate on behalf of the uninsured from “full retail pricing” to a more reasonable rate.

Ways to Save on Medical Bills FAQs

Can You Claim a Tax Deduction for Medical Expenses?

If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, it might be possible to deduct medical and dental expenses you paid that year for yourself, your spouse, and even your dependents.

According to the Internal Revenue Service (IRS). "You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you're allowed to deduct on Schedule A (Form 1040)."

How Much Can You Save on Medical Bills With a Flexible Spending Account?

According to the Federal Flexible Spending Account Program (FSAFEDS) website, an FSA, an account that lets you use pre-tax dollars, may save you on average 30% for your out-of-pocket medical costs.

Can You Save on Medical Bills by Using Urgent Care?

Maybe. It depends on your insurance and how much you have to pay out of pocket for an urgent care visit. However, visiting an urgent care is typically less expensive than going to the ER at a hospital.

Can Medical Marijuana Help You Save on Prescriptions?

A 2016 study released from the University of Georgia found that medical marijuana may lower the need for some prescription drugs like those used to treat depression, nausea, and pain. If you purchase medical marijuana to use in place of prescribed drugs, you might save some money.

Can You Save on Medical Bills by Going Vegan?

A vegan or vegetarian diet is often equated with overall better health, but there is no telling if it would or would not save money on your medical bills. However, one could argue if you are healthier, you may be less likely to develop chronic health problems, and that could lower your costs during your lifetime.

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Make Good on Your Promise

If you agreed to pay at the time of service, do it. If you agreed to send in regular monthly payments, get those payments in on time each and every month. Failing to do what you promised could cause the provider to rescind any discount extended to you, which could indeed land you in the collections department.

Key Considerations for Negotiating Medical Bills Keep these items in mind when you're facing what looks like a medical bill you can't handle:Insurance companies negotiate with health care providers all the time. You can, too. No one will think you're stingy for doing so.Call the billing department right away when you get a bill that you can't afford to pay. It's harder to negotiate a bill after it becomes delinquent.Stay polite and maintain your composure. No one wants to help someone who's rude.Doctor fees and hospital bills aren't the only bills you can negotiate. You can also negotiate your dental work and lab fees. 

3. Ask about any financial assistance programs

Once you’ve cleared up any errors on your bill, the next step is to look into any financial assistance programs your healthcare provider or hospital may offer.

Many hospitals are legally required by federal and state law to offer financial assistance to patients who can’t afford their medical bills, so long as the service is “medically necessary.” This includes things like inpatient hospital stays and emergency room visits.

These financial assistance programs are known by many different names, such as Charity Care, Bridge Assistance, or simply Patient Financial Assistance. If you have Medicaid, Medicare, or any other kind of medical insurance, then you’ll need to use those benefits first before you can take advantage of any financial assistance programs.

It’s important to note that while some hospitals offer these services, they may not make you aware of them unless you ask, so it never hurts to check. Talking with your hospital directly will give you a better idea of what programs are available to you.

6. See if a payment plan can be set up

If everything on the bill is correct, but you simply cannot afford to pay it off right away, talk to the billing office to find out if there is anything they can do. Ask about discounts or if any fees can be waived. Many hospitals have interest-free payment plans.

5. Offer to Work out a Discount Plan

If you pay in cash, or if you pay over time, addit

If you pay in cash, or if you pay over time, additional options may become available. It may also help you to temporarily postpone payments for other bills, such as student loans, as a way of relieving financial pressure while you save up to pay.

Your Bill Reduction Depends On Your Income: Billing departments, charity care, and patient advocates will typically consider your income when negotiating your medical debt.

Use the Salary That’s Most Advantageous to You: “Your income and financial situation may have changed tremendously,” says Moore. “It’s important that you’re very clear about what time frame [your] income applies to.” If you’re making less than you were before your illness, you have every right to request that program eligibility be based off of your new, lower income.

For instance, your income last year with full-time employment may have been $80,000. But after a year of surgery, treatment, radiation, and therapy, you could be living on disability payments.

Your bank statement, prior tax return, and current income may all tell different stories, and you can choose which one best reflects your own.

Billing Periods Typically Last 12 Months: When you work out a payment plan, expect to split your payments into around 12 monthly installments. It’s possible to have more or fewer payments, depending on the size of your bills. If you establish a history of successfully making payments, it’s possible to extend this schedule significantly beyond 12 months.

Very Small Payments Postpone the Collection Process: As long as you’re adhering to the billing process that charity care or billing agency has set up, they cannot initiate the full collections process.

This won’t affect your ability to receive charity care “if you can demonstrate financial need,” Moore says. “Even if you’re in the midst of pursuing charity care or a full writeoff, you want to keep paying your bill. That way, they won’t turn you over to collections for the full amount.”

2. Make sure the bill is accurate

Bills are put together by humans, and humans make mistakes. Go line by line to make sure there wasn’t an error. Look for things like a procedure you never received, one that you already paid for, or one that should have been covered by your insurance.

If you find one, call the company to let them know to remove it from your bill. Or, if you didn’t receive an itemized bill, you can ask for one to be sent to you.

6. Check to see if the expense is HRA-, HSA-, or FSA-eligible

Lastly, once you have a clear idea of what you’re expected to pay—whether it’s all at once or in monthly installments—you’ll want to check and see if the service you received can be paid with any of your health accounts, or better yet, reimbursed by your employer with a health reimbursement arrangement (HRA).

While health accounts like health savings accounts (HSAs) and flexible spendings accounts (FSAs) will include some of your own contributions, using your HRA allowance is made entirely of your employer’s contributions. If the medical expense you incur is HRA-eligible and less than your monthly allowance amount, you won’t pay a single cent out of pocket.

Watch our video for an overview of the products and services that are HRA-eligible

4. Check if You Qualify for Aid

Medical bills are likely among the highest persona

Medical bills are likely among the highest personal bills the average individual will come across in their life. Hospital costs throughout the U.S. averaged $2,607 a day in 2020. That’s why so many organizations exist with the sole intention of helping others pay off these debts. Not pursuing one of these sources is akin to leaving money on the table that was intentionally left there for you.

Medicaid

The federal government set up the Medicaid insurance program specifically to help low-income Americans struggling with medical bills. In most states, this emergency coverage can cover your original charges even if you did not have an active policy, so long as you were eligible at the time. Specifics for coverage and timelines vary greatly from state to state — be sure to check your state’s specific program to see if you are eligible.

Local Agencies

Looking within your community is another great place to find assistance. There are many grant programs set up at the state, county, and town levels that are specifically targeted to tackle medical emergencies. Even if they do not cover the full price of a treatment, they can help delay the time it takes before your bill gets sent to collections. This could give you enough time to get the remaining funds yourself and avoid collections altogether.

Charities

Where the government falls short, look to private charities to pick up the slack. If you’re dealing with a specific condition, there may be a foundation already in place to help you. Charitable assistance can target bills related to treatment, like chemotherapy, or to needed medical devices, like wheelchairs and hearing aids. Check out directories like the Patient Advocate Foundation for comprehensive lists.

Charity Care

Sometimes assistance can be found through your hospital. Often called charity care, this department actively wants you to find sources of aid. Remember, hospitals are less concerned with where you get the money from than whether or not you are making payments.

The effectiveness of these programs will depend on the organization they are associated with. Some will have robust resources while others are little more than skin and bones. A competent program will be able to coordinate with billing agencies and readjust the amounts on bills you already owe.

7. Dont Ignore Your Bill

Most people are familiar with the anxiety that sets in when looking at a steep bill. It may be tempting to stick it back in the envelope and forget about it, but you need to fight that urge. The amount you owe is not going to disappear until after you do something about it.

If you delay paying, then you are likely going to hurt your credit score along with having to deal with debt collectors who are a lot less reasonable than your hospital’s billing department. Being proactive regarding your situation will be the single greatest step you can take toward improving it.

Negotiate for Insurance Rates

If you’re uninsured, then you may be charged a higher rate. Look up the fair market price for the care you received. This is the amount that providers regularly accept from insurance companies as payment in full, and it’s the amount you should aim for in your negotiations. You can find this information in the ​Healthcare Bluebook.

Contact the billing department to negotiate a lower payment after you have this information. Politely ask to speak to a supervisor if the individual you're speaking with summarily turns down your request. Keep moving up the organizational chart until you reach someone who's willing to help you, or until you reach the highest authority.

Cash Is King Ask your doctor or the billing manager if they'd be willing to give you a discount for paying in cash if your initial request for a discount based on hardship is turned down. Point out that your cash payment will save the office credit card fees and staff time in processing paperwork. Instant cash flow is hard for any business to decline, especially if you offer to pay at the time of service. Of course, you have to have the cash available to pull this off. Find out if a family member or friend can help you out if you don't.

Look for other sources of payment

You may have overlooked ways to cover your bills.

"I often had people eligible for Medicaid or subsidized insurance that they were able to get," said Jenifer Bosco, staff attorney at the National Consumer Law Center.

"In some states, when you qualify for Medicaid, there is retroactive eligibility."

More from Invest in You:Actor Chadwick Boseman died without a will. Why you should have a planMany Americans will eventually need long-term care. How to pay for itThe big lesson Suze Orman learned from her recent health scare

If you have no insurance, check with your providers to see if they offer a discount to uninsured patients.

There are also federal requirements for nonprofit hospitals to provide financial assistance programs for low-income patients. The aid varies depending on the state and the institution.

However, 45% of nonprofit hospital organizations routinely send out bills to patients who have income low enough to qualify for charity care, according to an analysis by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation

Trim Prescription Drug Costs

There are several ways you can save money on prescription drugs:

8. Use Generic Prescriptions

Since the FDA eased restrictions on pharmaceutical companies being able to advertise directly to consumers (called DTC advertising) in 1997, Americans have been bombarded with multi-million-dollar ad campaigns promoting name-brand drugs and treatments. According to Consumer Reports, generic drugs are as effective and safe as name-brand drugs and often cost significantly less.

9. Get Drugs by Mail or From Big-Box Retailers

You can sometimes find prescription drugs at reduced rates at warehouse club stores like Sam's Club even if you're not a member. Several large retail chain stores also offer significant discounts (without health insurance), such as $4 for a 30-day supply or $10 for a 90-day supply on 300-400 popular generic drugs. You can also ask your doctor to recommend a mail-order pharmacy where you can get a larger prescription package (e.g., a three-month supply instead of a typical one-month supply) for less.

10. Ask for an Over-The-Counter (OTC) Alternative

Your doctor or pharmacist can let you know if an OTC drug can treat your symptoms for less money.

The following section will show you how to save by watching for billing errors and working the system.

Always check your medical bill before paying it. Hospitals and medical offices may inadvertently overcharge you.

Taking the Next Steps

  • Make sure you have the right copy of your Explanation of Benefits before assessing your bill.
  • If your income is low, you may have access to heavily discounted healthcare options, including subsidies on HealthCare.com.
  • Communication with your community and billing department is key. Help is available.

This is the second post in a series on negotiating high medical bills. Before you leave the hospital, you can also read our guide to prepare for medical bill negotiations. If you’re having trouble paying your bills following an urgent medical need, search for assistance programs such as Medicaid and charity care.

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