At a Glance
What if I can’t pay my hospital bill? You may feel embarrassed if you can’t afford to pay your medical bills, but you’re not alone. According to the Consumer Financial Protection Bureau, nearly one in five households in the U.S. report having some form of overdue medical debt.
Medical debt isn’t uncommon – studies show more than 100 million Americans faced financial hardship due to medical bills in 2022 and about 6% of all adults in the U.S. owe more than $1,000 in medical debt and three million people (1%) owe over $10,000, according to a 2022 analysis. However, not paying your medical bills can have an impact on your credit report and credit score, and have other negative effects on your life and debts.
If you’re having trouble paying your medical bills, read on to learn more about:
What happens if you don’t pay medical bills?
If you have medical insurance, your insurance company will be the first to pay for any covered medical expenses you incur. While they likely won’t cover 100% of the cost, the coverage and how much they pay will depend on the service or procedure performed.
You will then receive a bill for whatever the insurance company doesn’t pay. Or, if you don’t have insurance, the full bill will be sent to you. This is the first attempt from the provider to collect the payment.
Once you receive this bill, you have 180 days (six months) at the most to make payments or payment plan arrangements with your provider. During this time, the provider cannot send the debt to a collection agency or report it to the credit bureaus. The debt will not appear on your credit report and your credit score will not be affected.
However, if you fail to make payments within those 180 days, the provider can sell your medical debt to a collection agency, who can report the debt to the credit bureaus. Once this happens and the debt hits your credit report, your credit score can drop up to 100 points or more. The creditors will then start contacting you through phone calls, emails or letters for payment.
Unlike other types of debt, medical debt is removed from your credit report as soon as it’s paid off. If you don’t pay it off, it will remain on your report for seven years. Additionally, if payments aren’t made, the medical facility 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
- Put a lien on your property, meaning the medical facility can obtain access to the property if debts are not paid.
Does unpaid medical debt disappear?
Unpaid medical debt typically doesn’t just go away. Instead, as mentioned before, most outstanding medical bills end up in collections.
Typically, if debt went to collections, it would appear on your credit report and impact your credit score. However, beginning July 1, 2022, the three credit bureaus now wait one year before reporting unpaid medical debt (an increase from six months).
Additionally, in the past, medical debt would stay on your credit report for up to seven years even if you paid them off. However, TransUnion, Equifax, and Experian are currently working on removing cleared medical debts from consumer credit reports. So, if you were reported to collections but then did pay the bill, it should be removed from your credit report and no longer impact your credit.
Additionally, beginning in 2023, medical debts less than $500 will not be added to credit reports at all.
However, keep in mind that even if they don’t impact your credit, they don’t just go away. Collections agencies can continue to hound you for payment unless you take alternative action.
What to do if you can’t afford medical debt?
It’s important not to put off the care you need, especially treatments or filling prescription medications. However, if you can’t afford your medical bills, forgoing the doctor may seem like a better solution than depleting savings, accumulating debt, and potentially damaging your credit.
If you’re wondering how to deal with medical bills you can’t pay, there are a few things you can try to help reduce how much you owe:
1. Review your bill
Sometimes, medical bills can contain errors. You may be charged too much, charged for something your insurance should have covered, or billed for a service you did not receive. Compare your bill with your Evidence of Coverage (EOC) or Explanation of Benefits (EOB) to make sure insurance covered what it was supposed to. Ensure there are no duplicate items or items you don’t recognize, and don’t be afraid to ask your provider or insurance company for more information or dispute any inaccurate information.
2. Contact your provider
As soon as you’ve reviewed your bill for accuracy, call your health care provider and ask to talk to the medical billing manager. You may be able to negotiate a reduced amount if you pay cash, or they may be willing to negotiate a payment plan over time. If you have low income or other financial hardship, you may qualify for financial assistance through the provider. Ask about options that may be available to you. Be sure to get any agreements in writing.
3. Contact the collection agency
If your bill was sent to collections, contact the agency to see if you can work out a payment plan or settlement. If you agree to any payment plan or settlement, be sure to ask for it in writing.
4. Contact a billing advocate
Medical caseworkers, debt negotiators, or medical billing advocates are professionals who may be able to help reduce how much you owe. They can look for errors on your bill, negotiate on your behalf, and even dispute and appeal excessive charges. The downside is that you’ll have to pay for the advocate, so depending on how much you owe in the first place, this may not be the best option for you.
5. Consider debt consolidation
If you’ve tried all of the above and still can’t pay off your debt, consider consolidating your debt, especially if you have medical bills from different sources. Ideally, you’re able to get a debt consolidation loan with a lower interest rate, which can help you pay off your outstanding medical debt and owe less in interest over the long-term. You’ll also only have to worry about making one payment instead of multiple.
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6. Seek financial assistance
There are several community and nonprofit organizations that can provide financial assistance to those who need help paying their medical bills, such as:
- Government programs like Medicaid, CHIP, Social Security, Medicare, and others.
- Medical charities that offer financial assistance for medical bills like The HealthWell Foundation or The PAN Foundation.
- Hospital financial assistance, also called “charity care,” is available from nonprofit hospitals. Many for-profit hospitals also offer programs that provide financial assistance to those who qualify.
7. Find special help if you’re a veteran
You may qualify for financial hardship assistance, such as repayment plans, copay exemption, debt relief, and other assistance, if you are a veteran. Check the VA’s website on financial hardship to learn what options are available to you based on your situation, as well as information on applying for relief. The VA also offers free debt counseling.
8. Use bankruptcy as a last resort
If you have no other option, bankruptcy can be a way to address your medical debt. Chapter 7 bankruptcy allows you to liquidate assets to help pay off your debt, while Chapter 13 bankruptcy reorganizes and pays all or some of your debts. However, bankruptcy can be costly, can take a long time (sometimes up to five years), and does significant damage to your credit score, so it should only be used as a last resort.
You have a maximum of 180 days (six months) to pay off your debt or make other payment arrangements before the provider can send the debt to a collections agency. Until then, the debt cannot be reported to the credit bureaus and it will not affect your credit score.
If you cannot afford to pay all of your medical debt at once, you may be able to work with the health care facility or collections agency to agree on a payment plan. This is when you’d pay a smaller amount of the total each month until all of the debt is paid off. It’s not guaranteed paying in installments is an option, but talk to your provider or the creditors to learn your options.
Medical bills that are unpaid typically aren’t reported to collections agencies for six months past the due date. Medical bills in collections that are less than $500 will not be added to your credit report so they will not impact your score. However, if your debt is more than $500 and you don’t pay it for one year or more, it will be reported to the credit bureaus and can decrease your credit.
If your medical debt has been reported to the credit bureaus and negatively impacted your credit score, it can impact buying a house. If you have any amounts in collections, it’s something you may need to deal with as you work with a lender. That said, unpaid medical bills alone likely doesn’t mean you can’t get a mortgage and buy a home. It just means it may make the process a bit longer or more complicated.