What is a safe down payment for a patient payment plan?

Collect 20 to 25 percent of the balance before the plan starts. It’s the strongest single predictor of completion. A patient who can’t pay it needs financial assistance, not a longer term.

How long should a patient payment plan run?

Tie the term to the balance. Under $500 closes in three months, up to $2,000 in six to twelve months, larger balances in up to 24 months. Plans longer than 24 months rarely finish.

Do patient payment plans fall under the Truth in Lending Act?

They can. Regulation Z treats you as a creditor if you regularly extend credit carrying a finance charge or payable in more than four installments by written agreement. Zero interest doesn’t exempt you. Have counsel review the agreement.

Should we charge interest or late fees?

No. A finance charge pulls the plan under Regulation Z outright, and states are capping medical debt interest. Virginia limits interest and late fees to 3 percent per year from July 1, 2026. The revenue gain doesn’t cover the exposure.

Can unpaid medical balances still be reported to credit bureaus in 2026?

At the federal level yes, since the CFPB rule was vacated on July 11, 2025. But 15 states restrict it, the bureaus exclude collections under $500 and remove paid collections, and a one year wait applies. Don’t build strategy on credit pressure.

What plan default rate should we accept?

Measure completion instead. A well run program keeps compliance near 78 percent, so about one plan in five breaks. Below 60 percent completion, your installments are too small or you aren’t storing payment methods.

Is a payment plan better than sending the balance to collections?

Almost always. Agency placement returns 20 to 30 cents on the dollar. Early-out placement within 90 days recovers 20 to 40 percent more than post write-off placement, and the patient stays with your practice.

Structuring patient payment plans without increasing your bad debt

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