At a Glance

According to recent U.S. Census Bureau data, 19% of U.S. households could not afford to pay for medical care up front or when they received care. While the median medical debt amount is only around $2,000, 4% of households reported a medical debt burden that exceeded 20% of their annual household income.

When you see the doctor or have a medical procedure, you should try to pay the medical bills off on time. However, if you’re unable to, outstanding medical debt can have a negative impact on your overall financial health, including your credit score.

Do medical bills affect your credit?

Even after insurance pays its portion of medical bills, the outstanding balance may be too much for you to pay off. Most health care providers do not report to the three credit bureaus (Equifax, Experian and TransUnion), so those bills are not included on your credit report and do not affect your credit score

However, if you continue to build outstanding balances and the provider turns your account over to a collection agency for failure to pay, the collections agency may report this to the credit bureaus, which can affect your credit report and therefore, your credit score.

There are a couple important differences between how medical bills affects your credit compared to other debt:

  • You have 180 days (six months) to make payments or payment arrangements with the medical providers before the collection agency can report the debt to the credit bureaus. Until then, your credit score is not affected. Once this happens, your credit report and score will be negatively affected until you pay off the debt completely.
  • Once the debt is paid, the credit bureaus must remove the medical debt from your credit report. However, until then, or if you do not pay it off, it will remain on your credit report for up to seven years.

The first thing that happens once your medical debt goes to collections and is reported is it decreases your credit score, sometimes up to 100 points or more. Because one of the biggest factors affecting your credit score is your payment history, having an unpaid bill that’s gone to collections will have a major impact on your score. This can affect your ability to get additional loans, credit cards, or other lines of credit.

How to keep medical bills from being sent to collections

Be familiar with your insurance coverage, including what it does and doesn’t cover, and how much it’s going to cost you prior to receiving any medical services. When you receive a medical bill, the first thing you should do is carefully review each charge and compare it to your Explanation of Benefits (EOB) from your insurance company.

If you’re unable to pay, you can:

  • Contact your insurance company to make sure what is/isn’t covered is accurate.
  • Contact your provider. See if they will negotiate a reduced amount owed, or set up a payment plan. Some providers offer financial assistance programs, so ask if you qualify.
  • Be sure to dispute any inaccurate information. For example, if you paid off the debt they sent to collections or the amount isn’t what you are supposed to owe, you can submit documentation to support your claim.
  • If the bill is still sent to collections, contact the collection agency to see if you can work out a payment arrangement. Even if you can’t pay the debt in full, you may be able to negotiate a settlement amount, or make smaller payments over time instead of paying the full lump sum at once. Once it’s paid off, it can be removed from your credit history.

You can also contact a billing advocate, who is a professional that can help you sort through your bills and try to negotiate with the medical provider/facility or creditors on your behalf.

What happens if you don’t pay medical bills in collections?

If your bill is sent to collections and you don’t pay it off, there are a few things that will happen (in addition to a decrease in your credit score).

  • You’ll likely be charged late fees or non-payment penalties, which can add to the total you owe. You may also be charged interest on your total amount, which can make paying off your debt even more difficult.
  • The collections agency can take you to court. You can’t be sent to jail for the debt itself, but the court may order a wage garnishment (meaning they take a certain amount of money out of your income until the debt is settled), and/or, they could put a lien on your property (meaning the medical facility can obtain access to the property if debts are not paid).

Commonly asked questions

How can I get medical bills off my credit report?

Unpaid medical bills sent to collections can take up to seven years off your credit reports, but if the bill is paid, it will drop off your report. Or, if your bill was sent to collections in an error and is less than 180 days old, or has now been paid by insurance, you can dispute the error with the credit bureaus and it will be removed.

What happens if I don’t pay my medical bills?

If you don’t pay your medical bills, it will remain on your credit report for up to seven years. The collections agency may charge you penalties or late fees for non-payment, which can add to your total and make the debt more difficult to pay off. Plus, the medical facility could take you to court for non-payment, and while you can’t be sent to jail, it could be very costly.

Can medical bills ruin your credit?

If you have medical bills that are sent to a collections agency and that’s reported to the credit bureaus, your credit score can drop 100 or more points. While this doesn’t necessarily ruin your credit, it can make it more challenging to qualify for new lines of credit. It’s important to pay off your bills as soon as possible, and once you do so, you may see your credit score begin to increase.

Is it legal for medical bills to be on your credit report?

It’s legal for medical debt that hasn’t been paid and has been sent to collections to be on your credit report as long as it’s been at least 180 days since you received the initial bill. Then, if you or your insurance company repays the debt, it will be removed from your credit report.

What qualifies as a deductible medical expense?

Some medical expenses are tax deductible which can help save you money. When you’re filing your taxes in 2022, you’re able to deduct qualified, unreimbursed medical expenses that are more than 7.5% of your 2021 adjusted gross income (AGI). The IRS Publication 502 has a full list of medical expenses that can be included as deductions, but they include payments to doctors, insurance premiums, some medical equipment, and inpatient and outpatient hospital bills.