Dealing With Medical Debt

A father holding his son on his shoulders.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

According to a 2018 Consumer Reports survey, almost 30% of insured Americans had medical debt sent to collections in a two-year time span. That number might sound high, but there are many reasons why medical bills go unpaid long enough to end up in collections.

For one thing, healthcare expenses are often costly and unplanned, leaving people struggling to pay their bills in a timely manner. And close to a quarter of people surveyed told Consumer Reports they didn’t realize there was even an amount due to be paid.

If you are dealing with medical bills in collections or are worried about a medical bill making it to collections, find out more below.

When Does Medical Debt Go to Collections?

First-party medical creditors—this is the organization that provided the healthcare service or the agency contracted to handle billing on its behalf—can typically send you to collections at any time. The key is that they must follow their own policies consistently.

In most cases, first-party medical creditors will send you at least one bill. Some may send multiple bills over the course of several months. At some point, if you don’t pay those bills, the account will go to collections. When that happens, it can be reported to the credit bureaus as a medical account in collections.

How Do Medical Bills in Collections Affect Your Credit?

There’s some good news: the 2017 changes to the credit reporting rules offer some provisions to help protect your credit from unplanned medical bills. Specifically, there’s a waiting period before medical debt can show up on your credit report and reporting on medical debt is removed from your credit report if it has been paid or is being paid by insurance.

The credit bureaus must wait at least 180 days after a medical debt is reported to them before they add it to your report. That provides up to 6 months for you to dispute medical bills, work with insurance companies or settle the debt with the creditor, if you choose, before it impacts your credit score.

In addition, if a medical debt does appear on your reports after the 180-day period but has been or is being paid by insurance, then it must be removed from the reports.

If medical bill collections do end up on your credit report and they are not paid by insurance, they may remain for up to seven years—even if they’re paid. However, they may not impact your score as much as other types of collections. Both the FICO Score 9 model and VantageScore 4.0 weigh medical debt less heavily than some other kinds of debt.

What Can You Do About Medical Debt in Collections?

Just because medical bills don’t necessarily have the impact on your credit score that other debts do, it doesn’t mean there’s no impact at all. Consumer Reports notes that almost one-fifth of Americans say their credit has been negatively impacted by medical bills in collections. Try some of the steps below to help resolve the matter and positively impact your credit history for the future.

Know What Your Insurance Covers

Start by ensuring that you really do owe this money. Review the explanation of benefits, also called an EOB, provided by your insurance company. You should receive an EOB statement from your insurance company anytime a provider bills medical expenses to your insurance. (Keep in mind that an EOB is not a bill.)

In most cases, insurance companies don’t allow the full amount a provider bills it for. Your EOB will show:

  • How much of the bill was allowed and how much was disallowed. Your provider must write off disallowed amounts and typically can’t bill them to you if they agreed to accept insurance payments.
  • How much of the bill was paid by the insurance company. This is the amount you do not owe and do not need to worry about.
  • How much of the bill is the patient’s responsibility. This is the amount you do owe, according to your insurance. If you’re being billed by the medical creditor for more than this, it could be a mistake.

If you don’t think you owe the amount being sought, you may choose to dispute it. Ask for documentation proving that you owe the amount. If the account is being reported on your credit report, consider sending a dispute letter to the credit bureau in question if you believe there is an error in the reporting.

Negotiate with the Service Provider

Once you understand how much you owe, you may choose to reach out to the provider to negotiate. You may be able to get a discount, particularly if you didn’t use insurance and you can pay a large sum toward the amount billed.

Negotiation with providers may work better earlier in the game, so it may be helpful to not put off this step. Make sure you know what you might owe and how you can pay it even before services are rendered, if possible.

Suggest a Suitable Payment Plan

If you receive a medical bill and you can’t pay it all at once, you may ask for a payment plan or suggest an arrangement. If you can pay the bill off in a short period of time, such as a few months, many medical providers will not send you to collections.

Use a Credit Card Only If You Must

Paying for medical debt with a credit card converts a bill with little to no interest to one that might come with a large amount of interest. Only use a credit card to pay medical bills if you have no other options.

Consider Seeking Debt Settlement

If the account has already gone to collections, you may try negotiating a settlement. In some cases, the older a debt is, the less likely the organization is to collect it. This could make it more likely to accept a smaller amount to consider the account paid in full.

Make sure you have the ability to make an immediate payment if you do negotiate a settlement. You may ask for the collections account to be deleted from your credit report in return for making the settlement payment, but not all collection agencies can or will do this. However, they do have to mark the account as paid, which looks better on your credit history than an unpaid account.

Whatever you do when settling a debt, get it in writing. You might need to demonstrate there was an agreement later.

Work with a Medical Billing Advocate

If you’re feeling overwhelmed by medical bills and all the information that comes with them, you might consider working with a medical billing advocate. These individuals help you understand your bills, appeal costs to hospitals and ensure your insurance company covers everything it should. That can help reduce the total cost of your medical expenses.

Regularly Check Your Credit Report

Staying on top of your credit report by checking it regularly is important, especially because you might never see a notice in the mail about your debt going to medical collections. When you review your credit regularly, you can respond to and handle negative items quickly and proactively, giving you a better chance at protecting or positively impacting your credit in the future.

Reach out to the credit consultants at Lexington Law if you want to learn more about your credit report and how you can work to improve your credit.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.