Ethan Rhodes
Medical debt is a debt that arises from a visit or interaction with a healthcare provider, such as a hospital, clinic, doctor, or nurse. Two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute need. When a medical debt goes to collections, the new account can appear on your credit report and hurt your credit score. If you are unable to come to an agreement with the provider and they sell your debt to a collection agency, the unpaid collection account can remain part of your credit history for seven years from the original delinquency date. In this case, it is important to understand your rights and protections when it comes to medical bills and collections.
| Characteristics | Values |
|---|---|
| What to do if you can't pay your medical bill | The provider can sue you for payment or sell your debt to a collection agency |
| How to avoid medical collection agencies | Treat your medical bills like any other debt: honestly and responsibly. Make the effort to understand the charges and check if you've been double billed for any services or if there are any unauthorized charges |
| How to pay off medical debt | Contact the doctor or medical facility immediately to discuss your options. They may be willing to set up a payment plan for you |
| How to dispute a medical bill | You have the right to ask a debt collector to verify that you owe the debt. If the bill is incorrect, contact the creditor as soon as you receive it to begin rectifying the issue |
| How medical debt impacts your credit score | Medical debt can lower your credit score, which can hurt your ability to get loans. Unpaid medical debt stays on your credit report for seven years |
| How to protect yourself from unfair practices | Debt collectors cannot contact you around the clock, and you have the right to tell them to stop. They must comply with the laws that apply to debt collection, like avoiding harassing or abusive calls |
| How to report unfair practices | Contact the Consumer Financial Protection Board or submit a complaint to the CFPB |
| How to check your credit report | Request a free copy of your credit report from annualcreditreport.com or by calling 1-877-322-8228. You can request a free report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year |
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What You'll Learn
Hospitals and your rights
As a patient, you have certain rights that you should be aware of when dealing with hospitals and healthcare providers. Firstly, you have the right to be treated without discrimination based on protected characteristics such as age, race, ethnicity, religion, sex, gender identity, or sexual orientation. This right to non-discrimination extends to everyone, regardless of their ability to pay for healthcare. Respectful conduct by healthcare providers includes addressing patients by their preferred name and providing adequate privacy during examinations. Additionally, patients have the right to privacy under the Health Insurance Portability and Accountability Act (HIPAA) of 1996, which means that others cannot access your medical records without your express consent, except in specific situations, such as sharing information with another physician actively involved in your treatment or with insurance providers paying for your care.
Furthermore, patients have the right to informed consent, which means you should be provided with sufficient information about your medical condition, treatment options, potential risks and benefits, costs, and other relevant details in a language you understand, without coercion or pressure. Once you have this information, you have the right to make your own decisions regarding your treatment. This informed consent is sometimes documented, especially for clinical research or surgical procedures, to confirm your understanding of the benefits and risks involved.
In terms of financial considerations, nonprofit hospitals are legally required to offer financial assistance programs, and many providers are open to arranging payment plans. If you are uninsured or self-pay, it is important to understand the charges and costs upfront. You can also inquire about financial assistance policies or "charity care" if your income qualifies. Additionally, be cautious of unexpected out-of-network medical costs and debt collection scams. If you receive an illegal surprise medical bill, you can contact the No Surprises Help Desk or seek help from the Consumer Financial Protection Board.
It is also worth noting that medical debt can impact your credit score and remain on your credit report for several years. However, recent changes by major credit bureaus have been made to prevent some medical debt from appearing on credit reports, especially for paid medical bills or debts under a certain amount. Understanding your insurance coverage and staying proactive in managing your medical bills can help you avoid collection agencies and protect your credit score.
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Debt collection scams
Recognizing Scams
Firstly, understand that scammers often use intimidation, lies, and harassment to coerce you into paying debts that may be completely fake, cancelled, discharged, forgiven, or beyond the period for collection. A legitimate debt collector will know your personal information, such as your address, social security number, birthday, and the details of the debt you owe. On the other hand, a scammer will likely not have this information and will try to obtain it from you. They may also refuse to provide their company's mailing address, phone number, or other identifying details.
Your Rights
It is important to know your rights under the Fair Debt Collection Practices Act (FDCPA). You have the right to dispute a debt and request verification. Debt collectors cannot harass you to pay a debt that is not yours, and they are prohibited from lying, threatening you with false consequences, or posing as government officials. Legitimate debt collectors will not ask for your personal financial information, and they will accept normal, traceable payment methods. If a collector is pushing for immediate payment through untraceable methods like gift cards or wire transfers, be very cautious.
Taking Action
If you suspect a scam, take action by requesting information from the collector and verifying the details of the debt. Contact your state attorney general and state regulator to learn more about the collector and confirm the validity of the debt. You can also submit a complaint to the Consumer Financial Protection Bureau (CFPB) or contact your local law enforcement agency for further assistance. Additionally, reach out to credit reporting agencies to place a fraud alert on your credit reports, making it harder for identity thieves to open accounts in your name.
Medical Debt
Medical debt, which arises from unpaid medical bills, out-of-pocket expenses not covered by insurance, and high-cost treatments, can also lead to collection agencies contacting you. It's important to communicate with your healthcare provider or hospital to set up affordable payment plans and avoid collection agencies. If you feel your rights are being violated, seek help from the Consumer Financial Protection Board, and remember that you have legal protections against surprise medical bills.
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Payment plans
If you are unable to pay your medical bills, it is important to act as soon as possible to prevent the debt from showing up on your credit report. Medical debt is typically turned over to a collection agency after 90-180 days, depending on the provider's practices.
When dealing with medical debt, you have several options to explore:
If you are unable to pay the entire bill at once, you can try to negotiate a payment plan with the hospital or clinic. Nonprofit hospitals are required by law to offer financial assistance programs, and many other providers are willing to work out payment arrangements. Hospitals may have agreements with certain banks that allow payments to be spread over 2-3 years at no interest, provided payments are made on time. It is important to get any payment plan agreed upon in writing.
Financial Assistance Policy
When speaking with a hospital, ask if you qualify for their financial assistance policy, also called "charity care". If your income qualifies you for this program, your bills could be significantly reduced or even forgiven.
Negotiate the Price
Even if you do not qualify for financial assistance, you could try to negotiate the price. Ask if you are being billed the "chargemaster rate" for a procedure. This is the full cost hospitals use with insurance companies, which is often reduced. You can ask to pay the lower rate given to insurance companies or Medicare. If you have a long-standing relationship with your doctor, try to deal directly with their office to reduce costs or work out a payment plan.
Review Your Bill
Medical billing can be confusing, and patients are sometimes billed incorrectly. Request an itemized statement from the clinic or hospital to review your bill for any errors. Once you identify a potential error, contact the medical provider or insurance company to explain what you think the mistake is. They must then review your bill for errors and notify you of the results within 30 days. If they find an error, they must refund any money you overpaid.
Contact a Collection Agency
If your medical debt has already been turned over to a collection agency, you can still negotiate a payment plan with them to avoid further action, such as a lawsuit. Contacting the collection agency as soon as possible can help resolve the situation quickly and prevent damage to your credit report and score. You may also be able to negotiate a settlement amount, where the agency settles for a smaller amount or cancels the debt. However, settling for less than the original amount is considered negative because you did not pay the full amount owed.
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Impact on credit score
Medical debt can negatively impact your credit score and remain on your credit report for up to seven years. It is considered a unique type of debt because consumers rarely plan for it, and billing and collection practices can be confusing and challenging to navigate. Medical debt is the most common collection type reported on consumer credit records, and it can affect your ability to secure loans, buy or rent a home, and even impact your insurance costs and employment opportunities.
The good news is that medical bills of $500 or less should no longer appear on credit reports, thanks to an April 2023 decision by major credit reporting agencies. However, unpaid medical debt over $500 can still show up on your credit report once it's turned over to collections, damaging your credit score. This debt is typically turned over to a collection agency after 90-180 days, depending on the provider's practices.
If you are struggling to pay your medical bills, it is essential to communicate with the provider or hospital. They may be willing to set up a no-interest repayment plan or reduce your bill. Nonprofit hospitals are required by law to offer financial assistance programs. It is also worth noting that debt collectors must comply with federal law and cannot collect amounts that aren't owed or make harassing or abusive calls.
To protect yourself, review your credit report regularly and dispute any inaccuracies. You are entitled to a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year. Additionally, if you believe a medical bill is incorrect, contact the creditor immediately to begin resolving the issue. Remember, making regular payments on medical debt does not guarantee that it will not be sent to collections if the debt isn't paid off within an acceptable timeframe.
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Resolving issues
If you have received a surprise medical bill, you should first contact the No Surprises Help Desk online or by phone. If you believe your rights are being violated, seek help from the Consumer Financial Protection Board. You can also request a free copy of your credit report from annualcreditreport.com or by calling 1-877-322-8228. Check this report to ensure the information is correct.
If you are unable to pay your medical bill, the provider can sue you for payment or sell your debt to a collection company. If you are in this situation, it is important to talk to the provider or hospital and set up a payment plan. Providers will often be willing to work with you to lower the amount you have to pay upfront or overall. You can also contact a patient advocate, who can help you apply for financial assistance programs, set up a no-interest repayment plan, or reduce your bill.
If you are contacted by a debt collector, you have rights and protections. Debt collectors are not allowed to ask you to pay charges that you don't actually owe, such as for services you didn't receive, charges that are inflated, or bills that were already paid. They also cannot make harassing or abusive calls, and they cannot call you around the clock. If a debt collector is engaging in these practices, you can take action to enforce your rights. You can submit a complaint about a problem with debt collection at consumerfinance.gov/complaint or by calling (855) 411-CFPB (2372). You can also sue debt collectors when they violate federal law.
If you are contacted by a debt collector, you should ask for an itemized bill, which will show each medical billing procedure code, the amount paid by your insurance, and the amount you owe. This will make it easier to tell whether the charges are accurate. Once you receive an itemized bill, look for charges that can't legally be collected, such as amounts that are inflated beyond legal limits, charges for a service that is more expensive than the one you received, or bills that were already paid.
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Frequently asked questions
If you believe you have received an illegal surprise medical bill, you can contact the No Surprises Help Desk online or call 1-800-985-3059 between 8 a.m. and 8 p.m. ET.
If you don't pay your medical bill, the provider can sue you for payment or sell your debt to a collection agency.
The collection agency may report the account to one or more credit bureaus, and this can remain on your credit history for up to seven years.
Communicating with the provider is key to making payments affordable and avoiding collection agencies. Some hospitals may be willing to set up a payment plan or spread payments over several years at no interest.
Debt collectors can only contact you about valid debts that you owe. They must comply with laws that apply to debt collection, such as avoiding harassing or abusive calls, and they must inform you of the credit reporting timeframe in their first written communication.
