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Should I use patient financing for medical bills?
What you should know before getting a loan at the doctor's office.
Most doctor’s offices, dentist practices and even hospitals offer loans and credit cards that you can apply for directly in the office. It’s an easy way to cover the cost of an appointment or procedure you can’t afford. But you might be able to qualify for a less-expensive option by working out a payment plan with your provider — or by taking out a personal loan elsewhere.
What's in this guide?
What is patient financing?
Patient financing is a type of loan that you can get through your medical provider, usually through a third party. Some big providers may have their own in-house financing programs, but that’s not always the case. How it works depends on the program.
- Term loan financing. Many patient financing options work a lot like other personal loans. They typically start at around $2,000 with rates ranging from around 6% to 36% APR. But according to experts, you usually need a credit score of at least 760 and meet income requirements to qualify for the lowest rate offered.
- Promotional 0% APR financing. Some providers offer a promotional 0% APR period, which can last from six months to a few years. But the APR that kicks in after the period ends is higher than what you’d pay with other types of financing — around 25%. It’s best for smaller bills.
- Flat-rate financing. Some providers offer the same rates and terms to all borrowers, regardless of credit or income. This can clock in at around 15% APR — a good deal if you have bad credit, but expensive if you can qualify for a lower rate.
- No credit check 0% interest financing. Some plans advertise 0% interest and no credit check — but charge a flat fee. This can result in an APR over 36% depending on the fee in relation to the cost of the procedure and how long you have to pay it off.
What types of treatment can it cover?
Unlike insurance, healthcare financing is available for nearly all medical treatments. You can use it to cover everything from bariatric surgery to buying a hearing aid when your insurance coverage falls short. Even to pay for what insurance companies consider elective procedures, like cosmetic surgery or LASIK eye surgery.
You can also finance other costs your policy leaves behind, like that $2,000 ambulance ride or prescriptions for expensive medications.
When does patient financing make sense?
Patient financing makes sense when it’s the least expensive option out there. If you can’t qualify for an interest-free payment plan with your provider or negotiate down your bill, this option can split up the cost into manageable installments.
And if you have a credit score below 670, certain types of patient financing can offer a better deal than other types of loans. In some cases, you might even be able to apply with a cosigner, which is rarely available on personal loans.
Pros and cons of patient financing
Pros
- Covers procedures insurance won’t. Sometimes what’s labeled an elective procedure is more of a necessity than your insurance company believes — like with gender confirmation surgery. In these cases, patient financing could be your only option.
- Makes high copays manageable. Prescriptions are costly, and even copays can be unaffordable if you need more than one. Patient financing can help ease the strain on your budget.
- Help with high deductibles. If you have a $7,500 deductible, your insurance isn’t going to do you much good until it’s met. Healthcare financing can help you cover the costs of medical procedures until your deductible is met.
Cons
- Doesn’t eliminate medical costs. Medical treatment is expensive, and a loan won’t reduce that cost in the long run. It’s likely more expensive than paying up front once you account for interest and fees.
- Can be expensive. Hospital financing in particular can cost more than other options, which is why comparing lenders is key.
- Not optimal for chronic conditions. Healthcare financing only puts off paying the full cost of treatment until later. If you’re on a number of prescriptions for the foreseeable future or have frequent costly treatments, financing might not effectively lower your costs.
Patient financing vs. personal loans
Your specific patient financing options will likely come down to what your doctor’s office offers. Here’s how in-house patient financing and general-use personal loans differ.
Patient financing
When you need funds to pay for a specific procedure or hospital stay, healthcare providers often offer financing with partner lenders. It’s a tempting option because there isn’t much you have to do — if you’re approved, the money goes directly to the hospital or doctor’s office.
But your choices are limited to what your medical provider offers. And it can also be more expensive than a general-use personal loan, especially if you don’t have good or excellent credit.
Loan with private lender
Generally, you can use a personal loan for any legitimate expense, including medical treatment. You can typically borrow from $2,000 to $50,000 and pay it back over a fixed term, usually between one and five years.
After you’re approved and receive your funds, you have the freedom to spend it on paying off hospital bills, picking up prescriptions or covering unexpected ambulance rides. You can also use a personal loan to consolidate your medical costs into one bill so that it’s easier on the wallet and mind.
Compare personal loan options
Decided on a general-use personal loan? Compare today’s top options.
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Should I look into financing before my procedure?
It’s not a bad idea to look into your options ahead of time so that you can apply for financing as soon as possible. However, you might not be able to apply for a loan until after your treatment. It’s often only after you leave the hospital that you know your out-of-pocket costs for the visit.
Negotiating with insurance companies can take months. Even if you’re going in for a procedure that isn’t covered by your policy, you might not be aware of the costs until you’re in recovery because complications can add to your medical bill.
For more predictable costs that you’ll pay up front, take the time to compare and apply for loans beforehand to make sure you’ve found the most suitable option you’re eligible for.
What if emergency medical expenses come up?
Many hospitals and doctor’s offices offer financing for emergencies, but you might not qualify if you don’t have strong credit.
In this case, online lenders could be an option. Applying often takes just a few minutes, and some lenders can even forward your funds in as little as one day. On top of the quick turnaround, many have less strict eligibility criteria, but be careful: It might lead to interest rates close to the upper limit of 36%.
Need money now? Consider asking a friend or family to front the cost until your financing comes through.
6 questions to ask when comparing patient financing
Ask yourself the following questions when searching for healthcare financing:
- Am I eligible? To avoid time comparing loans you’ll never qualify for, look at the loan’s eligibility requirements first. Lenders often have minimum credit score and income requirements.
- Can it cover my treatment? If you’re applying through your doctor’s office, the answer is yes. Otherwise, you might want to run your treatment by the lenders you’re interested in to be sure they lend for those costs.
- What’s the APR? A loan’s APR is the annual cost of the interest and fees written as a percentage. It’s the quickest way to compare loan costs — just make sure you’re comparing the same repayment term.
- How long do I have to pay it back? Your loan term can determine two important costs: your monthly repayments and the total cost of your loan. Going for a longer term can lower your monthly repayment but increase the total cost.
- Am I penalized for prepayment? Paying off your loan early can help you save on unnecessary interest and get out of debt more quickly. But a prepayment fee could eat into your overall savings and end up costing you more than interest.
- What do former borrowers say? Reading about others’ experiences might not provide an entirely accurate portrayal of what you can expect. But similar complaints across sites that verify user reviews, like Trustpilot, can raise red flags.
What if my doctor doesn’t offer patient financing?
Sometimes in-house financing isn’t the best choice — or even a choice at all, if you can’t qualify or your provider doesn’t offer it. But you can cut down or cover your immediate medical expenses without having to take out a loan.
Ask about payment plans
Hospitals and physicians don’t always advertise it, but many offer payment plans. This option works like a loan, but you won’t have to pay interest.
Call ahead or contact the billing department to find out if this is an option for your situation. Because payment plans aren’t available for every treatment, be specific about what type of procedure you’re getting.
Look into charity or nonprofit financial assistance
If you can plan ahead, look into financial assistance available through charities or nonprofits. You might find one offering grants and other help for the specific costs you’re struggling with.
Many foundations are dedicated to working with specific demographics, like veterans or children with special needs. The assistance might not cover all of your out-of-pocket costs, but it can help make a significant dent.
Negotiate costs with the healthcare provider
If you’re unable to pay your medical bills, your hospital or doctor might be open to negotiating what you owe. Or see if your personal healthcare provider is willing to negotiate on your behalf — they are sometimes more persuasive than you would have been on your own.
If you’re successful, you could end up with a lower bill or an interest-free payment plan.
Use credit cards
For an emergency expense that you need to pay right away, putting it on your credit card could be your only option. Credit cards tend to have higher interest rates than personal loans, so try to pay it off as quickly as possible.
If you’re struggling to make payments, consider our tips for reducing your credit card debt.
Hire a medical bill advocate
Medical bill advocates are available to help you decipher complicated hospital charges and doctor’s bills to make sure you aren’t overcharged.
Many advocates charge a flat fee, while others charge a percentage of the amount they save you. They can be particularly helpful after a medical stay, where duplicate charges, listing wrong procedures and other mistakes aren’t unheard of.
Bottom line
Patient financing won’t eliminate or lower your healthcare costs. But it might make large medical bills less of a strain on your wallet.
If you think you might need financing in the future, compare lenders now to make sure you’re prepared when it’s time to pay. Start with our guide to medical loans to learn more about how they work.
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