Should You Ever Pay Your Medical Bills With a Credit Card?

Since the Affordable Care Act, the large majority of us have health insurance, which means we all have to figure out how we’ll cover co-pays, deductibles and bills for expenses not covered. While paying a co-pay with cash isn’t unheard of, you may find it more convenient to pay with a credit or debit card.

Increasingly, you’ll be asked for a co-pay when you make a scheduled health care visit (there are exceptions; certain checkups and procedures require no co-pay). In that case, a credit card may be your best bet. That should give you some time to come up with the co-pay if it’s not in your regular budget. And if you have a rewards card and will be able to pay the card off in full, some of the pain of an unexpected bill can be mitigated by a small reward. (Or, if you anticipate a large expense — think pregnancy or knee replacement — a balance-transfer card might be useful if it has a low- or zero-interest promotional rate.)

Especially in the case of non-routine care, you may also be faced with co-insurance, the amount you have to pay after insurance pays. That can be stickier, because sometimes insurance doesn’t pay as quickly or as much as you might hope, and you may be getting a bill that you have reason to believe you won’t ultimately owe. What then? Do you pay it?

It actually happened to me recently when, after nearly six months, I worried that a still-unpaid bill might be sent to collections, thus doing serious damage to my credit score. I truly believed insurance would eventually cover the expense (I had appealed a denial) … but also that the account was close to being turned over to collections. And so I put it on a credit card at the beginning of a billing cycle, to maximize the time between when I charged it and when I would have to pay it, hoping that insurance would come through and pay its share of the bill.

Eventually insurance did come through. The medical provider told me I’d be issued a refund in 4-6 weeks. Instead, I paid the provider the appropriate amount for my co-pay with a check, and successfully disputed what I charged to my credit card with the credit issuer (and thus had the charge removed).

If you’re hoping to use a credit card to buy time on a bill you don’t think you should have to pay, here’s what to know:

Paying carries its own risks. Once the bill is paid, health care providers may be less motivated to help you get insurance to pay. In addition, if you’ve already paid the “retail” rate, you lose the ability to negotiate a lower price. If you’ve ever looked at a bill and seen how much the “negotiated rate” your insurance company pays compared to the full retail rate, you’ll understand why it’s such a big deal to potentially lose that ability.
But not paying the bill is also risky. Your credit report can reflect late payments (most health care providers do not report to credit reporting agencies, but a few do). If your account is sent to collections, your credit score is likely to suffer. You could lose a good credit score that you’ve worked hard to build, and you could either not be approved for credit or you could end up having to pay more in interest if you do qualify. If you’re concerned about how a medical bill could be impacting your credit, there are many ways to check your credit scores for free, including through Credit.com.

For me, paying and timing it so that I had nearly two billing cycles to continue to fight with my insurer bought me time to resolve it. Disputing it (even if insurance had not eventually paid) would have resulted in a bit more time while the credit card issuer investigated. And all of that time was interest-free. (I should add that the reason I filed a chargeback is because I know that under federal law the provider couldn’t drag its feet and take “4-6 weeks” to issue a refund to my card after they agreed I was due one. It wasn’t just a stall tactic.) Most important to me, it prevented a huge hit to my credit for a bill I actually did not owe.