Interest and Late Fees on Medical Bills: What to Check

Whether a provider can charge interest or late fees on a medical bill depends on state law and on what you agreed to, such as terms in paperwork you signed or a financing plan, and some providers charge interest while others don't. Federal law says a debt collector can't collect any amount, including interest or fees, unless it's allowed by the agreement that created the debt or by law. If you see interest or fees, ask where they come from, and check that the underlying bill is correct.

Why is there interest or a late fee on my medical bill?

Common reasons include:

• Paperwork you signed at check-in. Some patient financial agreements include terms about interest or late fees.
• A financing plan or medical credit card. These often charge interest, and some use deferred interest.
• A collection account. A collector may add interest or fees if the agreement or state law allows it.
• A billing mistake. Fees may be added to a balance that insurance should have paid.

What should I check first?

1. Is the bill itself right? If the balance is wrong, any interest on it is wrong too. Match the bill to your Medicare Summary Notice or your plan's Explanation of Benefits (EOB).

2. Was insurance billed on time? If a bill sat unpaid because the provider didn't bill Medicare or Medigap, ask them to remove the fees.

3. Are you in Qualified Medicare Beneficiary (QMB)? Medicare.gov says providers can't bill people in the QMB program for Medicare deductibles, coinsurance, or copays for covered services. That includes any interest or fees on those amounts.

4. What did you agree to? Ask the billing office for a copy of any agreement that allows interest or fees.

What does the Consumer Financial Protection Bureau (CFPB) say about interest on medical financing?

The CFPB warns that medical credit cards and some payment plans offer zero or low interest for a promotional period. If you haven't paid the full balance by the end of that period, you may owe the often high cost of interest too. The CFPB says rates after promotions can be upwards of 25 percent in some cases.

If you're on a financing plan, check:

• When the promotional period ends.
• Whether the interest is deferred.
• How much you need to pay each month to finish before the deadline.

What if a debt collector added interest or fees?

The Fair Debt Collection Practices Act says a debt collector may not collect any amount, including interest, fees, or charges, unless that amount is expressly authorized by the agreement creating the debt or permitted by law (15 U.S.C. § 1692f).

The CFPB explains that a collector must give you certain information about a debt, usually in a validation notice. That notice includes an itemization of the debt, showing interest, fees, payments, and credits since a set date.

If the numbers don't add up:

1. Dispute the debt in writing within the period listed on the validation notice.
2. Ask the collector to show what allows the interest or fees.
3. Keep copies of everything.

How do I ask a provider to remove interest or late fees?

It's worth asking the billing office to remove fees, especially when the delay wasn't your fault. You might say:

"I see interest and a late fee on my bill. This balance was delayed because [Medicare hadn't processed it / my secondary insurance wasn't billed / I was waiting for an itemized bill]. Can you remove the interest and fees? I'm ready to pay the correct balance [or set up a payment plan]."

Write down who you spoke with, the date, and what they agreed to.

Can a nonprofit hospital charge interest?

We didn't find an Internal Revenue Service (IRS) rule that addresses interest directly. IRS rules for nonprofit hospitals do limit what a hospital charges people who qualify for financial assistance, and they require the hospital to make reasonable efforts to check eligibility before certain collection actions. If you might qualify, apply. Approval can lower the balance itself.

How can I avoid interest and late fees?

• Open medical mail right away.
• Ask for a short hold on the bill while you wait for Medicare or an appeal.
• Ask for an interest-free payment plan before the due date.
• Read anything you sign at check-in about payment terms.
• If you use a deferred-interest card, plan to pay it off before the promotion ends.

Frequently asked questions

Can doctors charge interest on unpaid bills?

It depends on state law and any agreement you signed. Ask the office to show you the terms.

Can a debt collector add interest to a medical bill?

Only if the agreement creating the debt or the law allows it, under the Fair Debt Collection Practices Act.

Can I ask for late fees to be removed?

Yes. You can ask, especially if the delay was due to insurance processing. Whether the office agrees is up to them.

Should I pay interest on a bill I'm disputing?

Ask the provider to put the account on hold while you sort out the bill. Get any agreement in writing.

Want a second look at fees on your bills?

Bill Review Coach is a monthly medical bill review service for seniors and their families. Snap a photo of the bill, and we'll point out interest or fees that may not belong and tell you what to say to get them removed. You make the calls and write the emails; we help you know what to say.