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

In the United States, the total amount of medical debt is staggering, with at least $220 billion owed. A significant portion of this debt—often in excess of $10,000—is borne by individuals struggling with large medical expenses. But what actually happens in the event of not paying these substantial medical bills?

Why Medical Bills Pile Up

Medical bills can be overwhelming and difficult to navigate. Several factors influence whether and how much you might owe, including your healthcare provider, your insurance coverage, and your eligibility for financial assistance or charity care. 

What Happens When You Don’t Pay Your Medical Bills

Ignoring your bills can lead to mounting late fees, interest, and potentially more severe consequences like debt collection actions, lawsuits, wage garnishments, and a negative impact on your credit score. 

Sudden Medical Costs

Medical emergencies often come without warning, leaving many grappling with sudden financial pressures if they aren’t prepared. This is particularly challenging when every penny of your monthly budget is allocated elsewhere. 

Facing Unexpected Medical Costs

Surprise medical bills can become a significant issue, especially if you previously assumed your insurance would cover more than it actually does. For those without any health insurance, the immediate financial burden can be even more daunting and have long-lasting effects.

Your Rights Under the No Surprise Act

Once you receive a medical bill, it’s important to scrutinize it carefully. Request an itemized statement and compare each charge against the services and treatments you received. 

Thanks to the No Surprise Act (NSA) of 2022, you’re also safeguarded against certain out-of-network charges, which can provide some relief.

Negotiating Medical Payments

If you find that the charges are legitimate and you indeed owe money, it’s time to explore payment options with your provider. Negotiating your medical bills is a feasible strategy. You might propose an interest-free payment plan or even settle for a lesser amount if you can pay some upfront. This could potentially erase the remaining balance. 

• Pro tip: avoid using a credit card for payment, as it could limit your bargaining power and increase your overall debt.

The Countdown to Debt Collection

In the U.S., medical debt is a major issue and frequently ends up in collections, making it the largest category of debt within the collection system. You typically have about 60 days, sometimes longer, before your unpaid medical debt is transferred to a collection agency. 

Stopping Medical Debt Before Collections

Before this happens, your healthcare provider should inform you of the impending transfer, giving you a critical window to prevent this move. Successfully stopping this process can spare you from the more challenging negotiations that come with dealing with collection agencies.

Are You Prepared for Debt Collectors?

Once medical debt is handed over to collections, the consequences can escalate quickly, potentially affecting your credit score and, in severe cases, leading to legal actions such as wage garnishments or liens against your property.

You need to understand your rights and options during this phase.

The 365-Day Debt Grace Period

Starting in 2022, the major credit bureaus—Experian, TransUnion, and Equifax—have instituted a 365-day grace period to resolve any debts in collections before they impact your credit report. 

After this period, if unresolved, debts may be recorded on your credit report, although debts under $500 are exempt. 

Recent Shifts in Debt Reporting

Any medical debt that does make it onto your report but is later paid will be also removed. Additionally, as of January 2023, medical debts in collections are excluded from the calculation of VantageScore 4.0 credit scores, offering some relief to consumers.

Medical Debt Tops Collection Lists

Medical debt is the most frequent cause for contact by debt collectors, with 59% of respondents in a Consumer Financial Protection Bureau (CFPB) survey indicating that it was their primary concern regarding past-due bills. 

The Fear of More Medical Debt

One distressing impact of medical debt is that it often deters individuals from seeking necessary medical care for fear of accumulating more debt. 

How To Approach Medical Billing

Many find themselves confused about who to pay or what charges are legitimate. To avoid this, always request an itemized bill from your healthcare provider before settling any payment, so you can confirm the charges with both your provider and your insurance.

Your Legal Rights vs. Debt Collectors

Regarding interactions with debt collectors, you should be aware of your rights. You have a 365-day window to resolve your debt before it is reported to credit bureaus, providing some leverage against undue pressure from collectors. 

Since the implementation of the No Surprise Act in 2022, you are also protected against bills from out-of-network services, which debt collectors are not allowed to enforce.

FTC Rules on Debt Collection

According to the Federal Trade Commission (FTC), there are strict rules governing how debt collectors can contact you: they cannot call repeatedly, must not contact you before 8 a.m. or after 9 p.m. in your local time zone, and they are prohibited from misrepresenting themselves.

Managing Medical Bills Proactively

To avoid unnecessary financial strain, it’s important to proactively manage your medical bills. Ensure that your bill is accurate by reviewing it closely and verifying all charges. To be on the safe side, seek out any financial aid or legal advice that could reduce your payment obligations.

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