What Happens When You Don’t Pay Your Medical Bills?

A person waits in the waiting room of a hospital as a nurse pushes a wheelchair with a patient sitting in it.
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If you’re struggling with unpaid medical bills, you’re not alone.

Americans owe an estimated $220 billion in medical debt, according to a 2024 analysis by the Peterson-KFF Health System Tracker.

Mounting medical bills can wreck your financial life. They can damage your credit score, make it difficult to pay other bills and demolish your emergency savings fund.

However, the rising cost of health care and a lack of adequate insurance make it difficult for many people to avoid medical bills.

Fortunately, there are steps you can take both before and after seeking health care to help lower or even eliminate your medical debt.

So What Happens When You Don’t Pay Medical Bills?

You might not want to deal with that bill — but avoiding your medical debts can have serious financial consequences.

Specifically, this is what can happen if you don’t pay medical bills:

  • Additional reminders and phone calls from the hospital or doctor’s office
  • Late fee charges
  • Forwarding the debt to a collections agency
  • Increasing letters and phone calls from the agency
  • Legal action, such as wage garnishment

If a medical bill isn’t paid after a certain period of time, it can be turned over to a debt collection agency.

So long as a medical bill is yours, it’s accurate and you owe the money, then debt collectors can contact you to try to collect it, according to the Consumer Financial Protection Bureau.

Letting your medical bills linger in collections is a bad idea. Debt collectors can actually sue you to recover the money.

If they win the lawsuit, the debt collector can garnish wages from your bank account or place a lien on your home.

To avoid having your bill sent to collections, call the hospital or doctor’s office billing department and work with them to create a payment plan you can afford — then stick to it.

How Unpaid Medical Bills Impact Your Credit Score

Unpaid medical bills won’t hurt your credit score immediately. But if you ignore them long enough, your score will suffer.

First, your medical provider will need to send the bill to a collection agency. That could take anywhere from one to six months. Then, the collection agency must try to collect on the debt for a full year before it appears on your credit reports.

If the agency reports the unpaid medical debt to credit reporting agencies, it will appear on your credit reports under payment history, which makes up about 35% of your credit scores.

The exact impact depends on your credit situation, but even someone with a good credit score could see a drop of as much as 50 to 100 points, though the effect will lessen over time

An unpaid medical bill in the payment history section of your report can cause your credit score to drop by as much as 50 to 100 points. Unpaid medical debts can linger on your credit report for up to seven years but changes earlier this year mean that bills you’ve paid off after being sent to collections won’t show on your credit report.

Your credit score impacts many things in your life. A bad credit score can keep you from opening a new credit card or skyrocket your interest rate on a new loan.

Ever wonder what goes into your credit score? Learn the facts behind that important three-digit number.

So Why Wouldn’t You Pay Your Medical Bills?

Well, some of us can’t afford unexpected medical bills.

More than 100 million people in the U.S. live with medical debt, according to a recent joint research project from NPR and the Kaiser Health Network released in July 2022.

The poll found that more than half of U.S. adults say they’ve gone into debt because of medical or dental bills in the past five years.

Medical debt isn’t just a problem for the uninsured or underinsured. It can also come from billing issues, like out-of-network doctors, hospitals or ambulance rides people thought were in-network.

The Consumer Financial Protection Bureau aired its concerns about the use of medical collections — a main point being that many consumers are unaware their medical debt even exists, unlike unpaid utility and phone bills.

The agency found that 58% of bills in collections and on people’s credit records are medical bills.

Here Are 6 Ways to Tackle Your Unpaid Medical Bills

The best advice, as with almost any financial matter, is to stay proactive.

1. Check for Errors

You don’t want to pay for someone else’s mistakes. As many as 80% of medical bills contain errors, so you should make correcting billing errors your first priority.

“First, get a detailed, itemized statement to see if you even owe it and that it’s accurate,” said  Pat Palmer, Medical Billing Advocates of America founder and CEO.

If you have health insurance coverage, make sure the claim was correctly submitted to your health insurance company and they paid their share.

Check your itemized billing statement for duplicate items, services you didn’t receive and charges that your health insurance company should have picked up.

Call the hospital billing department or your provider’s office manager with questions or if something doesn’t look right. Remember: You have the right to demand to know what you’re paying for.

You can also ask the provider not to send the bill to collections until you can make a payment. This isn’t guaranteed to work, but still worth trying.

2. Try to Negotiate Your Bill

If you find you do owe the bill, try calling and negotiating with your medical provider.

You might be able to negotiate your medical bill to a smaller amount or set up a repayment schedule, Palmer said.

Start the negotiation process with the medical provider — the hospital or doctor’s office where you got care. Medical providers may ask for proof of income or other financial statements.

Negotiating your medical bill can help get part of the unpaid debt forgiven. Or you might be able to work out a lower payment or a no-interest payment plan.

If the provider can’t or won’t negotiate and the bill is in collections, then ask the bill collector if you can settle for a lesser amount.

Providers and debt collectors are often willing to negotiate because they rather get some money from you than nothing at all.

If you’re successful, get details about the payment plan and the new amount you owe in writing. This way you have a record of your agreement with the provider or debt collection company.

3. Ask About Financial Assistance Programs

Owe a big hospital bill? Call the hospital’s billing department and see if they offer financial assistance for unpaid medical bills.

If you make less than the federal poverty income level, you could qualify for the hospital’s charity care program, which covers the medical expenses of patients with low incomes.

Even if you make two to three times the federal poverty level, you’re still likely to qualify for a discount on your bill.

Just make sure to speak with the billing department within 90 days of getting the bill.

4. Know Your Rights and Advocate for Yourself

Consumers are enjoying more protections from the credit-damaging consequences of medical debt than they used to.

In 2022, the three major credit reporting agencies — Equifax, Experian and TransUnion — announced that paid medical bills will no longer be included on credit reports issued by those companies.

In the past, a medical bill that went to collections could linger on your credit report for years — even after you paid it off.

Another change in 2022: Medical bills only show up on your credit report if they go unpaid for at least 12 months. (It used to be six months).

And starting in March 2023, the three major credit bureaus will not include information on medical bills in collection for amounts of $500 or less on consumer credit reports.

Here are two rights you have, according to the Consumer Financial Protection Bureau:

  1.  Medical debt collectors can’t engage in aggressive collection tactics, like calling you around the clock, harassing you or contacting you through social media pretending to be someone else. You have the right to tell collections agencies to stop contacting you. Learn about your rights in the debt collection process and how to file a complaint.
  2. Debt collectors can’t report a medical bill to the three credit bureaus without trying to collect the debt from you first. Here’s how to dispute an error on your credit report.

In August 2022, VantageScore announced all paid and unpaid medical debt — regardless of how much is owed or how long the debt has been in collections — will be excluded from 3.0 or 4.0 score calculations by mid-October 2022.

Finally, The No Surprises Act protects you from receiving surprise bills from out-of-network providers you didn’t choose in a medical emergency. This rule went into effect January 2022.

Dealing with debt collectors? Knowing these five things can reduce your stress and save you time.

5. Get Outside Help

Medical bill advocate organizations can help negotiate bills on your behalf. They can also detect billing errors the average patient might miss.

Medical bill advocates come at a cost, though. They often charge by the hour (think $100 an hour or more), or they take a percentage of the amount they’re able to get reduced from the bill (usually 25% to 35%).

Two major medical billing advocate organizations include the Patient Advocate Foundation and Medical Billing Advocates of America.

6. Get Your Medical Bills Under $500

In the first half of 2023, all medical debt less than $500 stopped appearing on credit reports from the three major bureaus.

If you have unpaid medical debt, consider getting it below $500 so that it will no longer appear on your credit report.

Legal Protections Against Medical Debt

Medical debt can feel overwhelming, but various legal protections exist to safeguard consumers. Understanding these protections can help you navigate the complexities of medical debt more confidently and secure your financial well-being.

The No Surprises Act and Its Implications

  • Understanding the No Surprises Act: Enacted in January 2022, the No Surprises Act aims to protect patients from unexpected medical bills from out-of-network providers during emergency services or at in-network facilities. This groundbreaking legislation ensures that patients are only responsible for in-network cost-sharing amounts in these situations, significantly reducing the potential for crippling medical bills.
  • How It Affects You: If you’ve received an emergency service or were treated by an out-of-network provider at an in-network facility, review your bills to ensure compliance with the No Surprises Act. If a bill seems to violate this act, you have the right to dispute it. Familiarize yourself with the specific steps to take, including contacting the provider’s billing department and filing a complaint with the appropriate federal or state agency if necessary.

State-Specific Medical Debt Protections

  • Navigating State Laws: In addition to federal laws, many states have enacted legislation to provide further protections against medical debt. These laws can vary widely, from limits on interest rates that can be charged on medical debt to prohibitions against certain aggressive collection practices.
  • How to Leverage State Protections: Research your state’s specific protections against medical debt. This might involve visiting your state government’s website or contacting a consumer protection agency. Understanding these laws can empower you to challenge unfair billing practices and seek recourse if your rights are violated.

FAQs on Managing Medical Bills and Debt

How can I negotiate my medical bills if they are too high?

Begin by requesting an itemized bill from your healthcare provider to review for any inaccuracies. Then, research the typical costs for the services you received using healthcare databases like Healthcare Bluebook. Contact the billing department to discuss a reduction in the bill or set up a manageable payment plan. Mention any financial hardships and be prepared to negotiate firmly but respectfully.

Are there any programs available for medical debt forgiveness?

Yes, many hospitals and medical facilities offer financial assistance programs that can partially or fully forgive medical debt for eligible individuals. These programs often consider your income, financial hardship, and uninsured status. Non-profit organizations and charities also offer grants and assistance for specific medical conditions or demographic groups.

How does unpaid medical debt affect my credit score?

Initially, unpaid medical debt won’t impact your credit score. However, if the debt is transferred to a collection agency and remains unpaid, it can appear on your credit report and significantly lower your score. Recent changes to credit reporting rules now give consumers more time before medical debt affects their credit scores, and debts under $500 or paid medical debts are often excluded.

What should I do if my health insurance does not cover a medical bill?

First, review your insurance policy to understand what should be covered. If you believe a service was wrongly denied, file an appeal with your insurance company. Provide supporting documents and a letter from your healthcare provider explaining why the treatment was necessary. Additionally, inquire about out-of-network charge protections if applicable.

How can I protect myself from surprise medical bills?

The No Surprises Act provides protections against unexpected bills from out-of-network providers during emergency visits or at in-network facilities. Always ask providers if they are in your insurance network before receiving treatment, and check if any upcoming procedures involve out-of-network providers. Understanding your rights under this act can help you dispute any surprise bills you may receive.

Can medical debt be included in bankruptcy?

Yes, medical debt is considered unsecured debt, similar to credit card debt, and can be discharged in both Chapter 7 and Chapter 13 bankruptcy. However, bankruptcy should be considered a last resort due to its long-term impact on your credit score and financial stability. Consulting with a bankruptcy attorney can provide guidance on whether this is a suitable option for your situation.

What are my rights when dealing with debt collectors for medical bills?

Under the Fair Debt Collection Practices Act, you have rights that protect you from abusive collection practices. Debt collectors cannot harass you, make false statements, or use unfair practices to collect a debt. You have the right to request validation of the debt and can dispute it if you believe it’s incorrect. You can also request that collectors stop contacting you, though this does not eliminate the debt.

Rachel Christian is a Certified Educator in Personal Finance and a former senior writer for The Penny Hoarder.