Medical Debt Consolidation

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What is Medical Debt Consolidation?

It’s possible to owe more than one healthcare entity medical care money. This is usually as a result of several out-of-pocket healthcare costs. Medical debt consolidation involves combining all individual medical debts so that you only make one payment on a specific date, monthly. Having just one payment date means that you don’t need to make multiple medical payments every month.

For instance, you may owe $5,000 for an operation, dental care charges of $2,000, consultation fee of $100, ambulance services $350. Instead of making numerous payments every month to all these creditors, you can take a medical consolidation loan. This means that you will only make one payment monthly in addition to interest.

Benefits of Medical Debt Consolidation

There are several reasons why people go for this debt consolidation:


Making multiple debt payments per month can get complicated because each creditor has its specific terms of payments. Besides that, you might easily get torn regarding what payments to make and what to avoid. However, medical debt consolidation helps to eliminate these aspects.


If you have only one bill to pay, then it is less likely that you will forget to pay it. This will help avoid your account going to collections.

Reduced Interest Rates

Debt consolidation can potentially lead to reduced interest rates. This is particularly possible if you have a specialty card that’s designed for use in a medical office or your medical bills are charged to your credit cards.

How to Consolidate Medical Bills

Managing a hefty medical bill isn’t easy. However, one of the standard methods of solving this issue is by using debt consolidation. But how does it work? During this process, borrowers are usually helped to manage their debts in several ways. This could be by:

  • Requesting longer periods for pay-offs
  • Reduced interest rates
  • Lower payment options
  • A combination of the three

The general process of consolidation involves typically:

Go for the Lowest Medical Bills

Ensure that you always have the lowest medical debt. So, carry a comprehensive research before you even visit your medical care provider. Look for the best healthcare options, especially for those procedures that are costly. Secondly, you can negotiate with the health provider to pay low medical bills. Lastly, you can look for better payment support alternatives. This could be from an insurance company, local or state medical subsidies.

The Tax Implications

It’s also important to consider the tax effects of consolidating a medical bill. If you effectively plan for it, then you can significantly reduce your total tax bill.

How can you do this? If you have insurance with a high rate of deduction, then you need to develop a Health Savings Account. This is where you will be putting money annually into your pretax account for medical expenses. Note that any amount that’s not used will get carried forward into the following years.

In case you have adequate discretionary income, then you can put the annual family or individual amount into this type of fund. As a result, that amount will get subtracted from your total gross income, and you will end up paying no taxes.

Pay Your Medical Debt

Make sure that you start by paying the bills that are referred to as “Going to Collection” first. Paying these should be before these bills get are moved from the health facility to the collection agency. Understand that unpaid and late bills will negatively affect your credit card score. As a result, you will end up with reduced chances of getting credit access. Besides that, lenders will subject you to high-interest rates.

Ways to Consolidate Medical Debt

There are several options for consolidating a medical debt:

Using Personal Loans

Personal loans can be used for all types of expenses. It’s only your credit card rating as well as the lender’s term of services that matter. However, make sure that you critically compare and analyze the lender’s interest rates as well as their terms of payments.

Home Equity Loans

You can use your home as collateral by taking a home equity loan to pay your medical debt. Note that a home equity loan is usually secured while medical debt is not. However, make sure that you consider the implications of such a loan. This is because you will be converting unsecured debt into a debt that’s secured. Be aware that if you default the home equity loan, you will end up losing your home.

Zero Percent Credit Cards

If you are eligible for a zero percent interest credit card, then you can consider this option. This means that you need to have a high credit limit, or your credit score should be good. But just like the other options, you need to exercise caution. This is because there will be interest charges once the no-interest period elapses. Sometimes these interest charges are high, and you may end up paying high amounts of money.

So, Should You Consolidate Your Medical Debt?

Unlike other debts, medical debts won’t accrue interest. Although they may be subjected to penalties, interest rates can’t be applied to it. Therefore, you can use a debt consolidation loan to get out of this debt. This means that you are converting a debt without interest charges to that which has interest charges. However, you need to know that you will end up paying more.

You can use debt management to negotiate with your creditors. Overall, the goal is to ensure that medical debt is paid off. The best thing about a debt management program is that you can use it to consolidate other bills as well.

Downsides of Medical Debt Consolidation

This debt payment system also comes with its disadvantages. They include:

Taking out medical debt consolidation loan has interest charges: If you decide to take-out your medical debt consolidation loan, then be prepared to pay interest. It should be noted that medical debt from hospitals or a doctor’s office usually doesn’t have interest rates.

You can put your home at risk: Loan options such as home equity loans used as collateral for medical debt can easily put your property at risk. This is because you might end up defaulting the loan. As a result, the lender will end up repossessing your property to recoup the money.

Other Options for Medical Debt Consolidation

If you don’t want to consolidate your medical bills, there are several different options that you can consider.

Critically Analyze Your Medical Bills

Make sure that you take time going through your medical bills. It’s essential to verify that what you are billed for is correct. This helps to minimize the chances of any errors. It’s not unusual for these bills to have mistakes and the most common ones usually include:

  1. Duplicate charges
  2. Incorrect duration of surgery or the time under an anesthesia
  3. Charges for canceled tests or medical procedures and others.

Note: If you find there is a wrong billing error, request for an updated bill.

Seek Services of a Credit Counselor

Several medical conditions accrue massive medical debt. However, it’s possible to navigate through this issue without using medical debt consolidation. A credit counselor can help you to negotiate with collection agencies to create an affordable medical payment plan. Besides that, these professionals can advise you on how to handle your finances. This way, you will learn how you can effectively plan your medical bills budget.


Did you know that it is possible to negotiate your medical bills? Well, you can ask your healthcare provider for financial assistance programs. Understand that most hospitals don’t provide patients with information regarding the financial assistance program. But it’s there if you ask for it.

Negotiating is essential, especially if you want to request an affordable payment plan. Besides that, you can use the opportunity to request a payment offer. This can help to reduce the total amount that you owe them. Alternatively, if they agree to a particular payment plan, your bill will be split into affordable installments.

Note: Although you can declare bankruptcy, this should be the last option to consider. This is because bankruptcy results in a serious credit score impact and will massively affect your financial reputation. The advantage of this is that it may save your property from foreclosure.

The Bottom Line

Medical debt is one of the many causes of financial woe. The general cost of healthcare has increased significantly over the years, even with the development of technology. On the other hand, salaries are dwindling. As a result, most people end up getting in medical debt while seeking even the most basic healthcare services.

Owing money to multiple entities, money can be costly. First, you end up making multiple payments every month. In addition to that, you need to have a priority list on what to pay and what to ignore. However, medical debt consolidation can help ease all these complications. All you have to do is analyze your finances and then get the best consolidation loan.

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