Medical debt is unlike any other type of debt — it’s rarely planned, often confusing, and can arrive in large amounts from multiple sources at once. It’s also the leading cause of debt collections in the United States. If you’re dealing with medical bills you can’t fully pay, here’s what you need to know.
Why Medical Billing Is Confusing
Medical bills are often inconsistent and opaque for several reasons:
- You may receive separate bills from the hospital, the doctor (or doctors), and the lab — even for a single visit.
- The amount billed (the “chargemaster” price) is almost never what anyone actually pays — insurance companies negotiate lower rates, and providers often discount for self-pay patients.
- Billing errors are common. Studies consistently find error rates of 40–80% in medical bills.
- The explanation of benefits (EOB) from your insurance company is not a bill — but it looks like one, creating confusion about what you actually owe.
Before paying any medical bill, verify: Is this the amount insurance says I owe, after their payment? Have any errors been reviewed?
What to Do When You Get a Large Medical Bill
- Don’t ignore it. Medical bills that go unpaid are eventually sent to collections, which can harm your credit (though recent changes — see below — have reduced this impact).
- Request an itemized bill. You have the right to a line-by-line breakdown. Review it for duplicate charges, incorrect codes, or services you didn’t receive.
- Compare against your Explanation of Benefits (EOB). If you have insurance, your EOB shows what the insurer paid and what you owe. The bill should match.
- Ask about financial assistance programs. Nonprofit hospitals are required by law to have charity care or financial assistance programs. Many for-profit hospitals also offer them. Ask explicitly — these programs are often not advertised.
- Negotiate. Medical providers routinely accept less than the billed amount. Ask if they’ll accept the Medicare rate, offer a self-pay discount, or reduce the balance if you can pay a lump sum.
- Ask about payment plans. Most hospitals and providers will set up an interest-free or low-interest payment plan. Get any plan in writing before making payments.
Medical Debt and Your Credit Score
Important changes in recent years have significantly reduced the credit impact of medical debt:
- As of 2023, the three major credit bureaus (Equifax, Experian, TransUnion) agreed to remove medical debt that has been paid from credit reports.
- Medical debt under $500 is no longer included in credit reports from the major bureaus.
- Unpaid medical debt now has a 12-month grace period before it can appear on your credit report — previously it was 6 months. This gives you more time to resolve billing disputes or set up payment plans.
- A 2024 CFPB rule proposed removing all medical debt from credit reports; check current status as implementation has been subject to legal challenges.
As a result of these changes, medical debt has less impact on credit scores than it used to — but large unpaid amounts can still cause damage and lead to collections activity.
If You Can’t Afford to Pay
- Apply for financial assistance. Nonprofit hospitals receiving federal funding must provide charity care to patients who qualify based on income. Income thresholds are often surprisingly high — some programs cover families up to 400% of the federal poverty level.
- Medicaid eligibility. If your income has changed, you may qualify for Medicaid coverage that can retroactively cover recent medical expenses in some states.
- Negotiated lump-sum settlement. Providers often accept 40–60 cents on the dollar for old unpaid bills, especially those already in collections. Get any settlement agreement in writing before paying.
- Medical credit counseling. Some nonprofit credit counseling organizations specialize in medical debt negotiation.
- Bankruptcy. Medical debt is dischargeable in bankruptcy. If the debt is large enough to threaten your financial stability, consulting a bankruptcy attorney is worth doing — an initial consultation is often free.
Medical Debt in Collections
If a medical bill goes to collections, you have rights under the Fair Debt Collection Practices Act (FDCPA):
- The collector must verify the debt if you request it in writing within 30 days of first contact.
- You can request they stop contacting you in writing — they must comply (though they can still pursue legal remedies).
- They cannot contact you at inconvenient times, threaten you with actions they can’t take, or use abusive language.
Never pay a collections account without first verifying the debt is accurate, understanding whether paying will help or hurt your credit (for older debts, paying can sometimes restart the statute of limitations), and getting any settlement in writing.
Preventing Medical Debt
- Know your insurance coverage before receiving care when possible — especially for planned procedures.
- Ask for cost estimates in advance for non-emergency care.
- Use in-network providers whenever possible.
- Build an HSA or FSA if your employer offers one — these accounts let you pay medical expenses with pre-tax dollars.
- Maintain an emergency fund specifically sized to cover your health insurance deductible.