How to Manage Unpaid Medical Bills

Medical Bills
Rebecca LakeJun 12, 2022
Key Takeaways:
  • Unpaid medical bills may lead to stress, collection calls, and even loss of future treatments.
  • Learn about your health insurance options and programs to help you pay the medical bills.
  • If you are struggling with medical debt, consider debt relief options.

Unpaid medical bills can complicate your financial life if you're struggling to pay them. According to the Kaiser Family Foundation, an estimated 1 in 10 adults – or 23 million people – have medical debt. Collectively, they owe hundreds of billions of dollars in outstanding medical bills. 

If you have medical debt, you can't just ignore it, tempting as that may be. The good news is that you can make medical bills less burdensome.

What Happens if You Don't Pay Medical Bills?

Unpaid medical bills are a form of debt. As with other types of debt, including credit cards, student loans or personal loans, there are consequences when you don't pay. 

If your healthcare providers cannot collect payment from you directly, they may send your account to collections. The collection agency can then contact you by phone or mail to request payment for the past due debt. 

Now, what happens if you don't pay medical bills once they've been sent to collections? The debt collector could take things a step further and file a civil lawsuit against you. If the court issues a judgment against you, the collection agency can take action to force payment. 

Depending on which state you live in and what the debt collection laws allow, the debt collector might be able to garnish your wages or seize money in your bank account. 

Aside from that, a judgment for medical debt shows up on your credit reports. Judgments, delinquencies and collection accounts are serious derogatory items that do major damage to credit scores. That could make future borrowing difficult and expensive.

What to Do if You Have Unpaid Medical Bills

How you handle medical debt depends on your health insurance coverage (or lack of coverage). The first step is reviewing what your policy covers. Your insurance company may provide an Explanation of Benefits or Statement of Benefits after you receive medical care. This document should explain:

  • What health care costs your insurance covers
  • Cost of care received
  • What you'll be responsible for paying out-of-pocket

The Explanation of Benefits is not a bill. Your doctor or healthcare providers should send you an invoice for services, either by mail or electronically. If you get a statement that only has an amount due showing, follow up with a request for an itemized bill. 

Once you receive your medical bills, it's essential to review each one to understand what you've been charged for and why. You can also look for errors or mistakes, including:

  • Duplicate charges
  • Numerical errors
  • Charges for services you didn't receive
  • Charges for services you've already paid for

If you see any errors, you can contact your health care provider to have them corrected. You can also reach out to your doctors and your insurance company if you have questions about items on your medical bills or your Explanation of Benefits. 

You have a few options for dealing with unpaid medical bills, whether you have medical insurance or not. An estimated 8.6% of the population, or 28 million people, has no health insurance at all, according to Census Bureau data. Hospitals, doctors and other health care providers are often willing to work with uninsured patients to keep medical debt out of collections. 

Ask for a discount or try to negotiate the amount owed down. Your doctor or hospital might be willing to offer a discount if you agree to make a lump sum payment toward the balance by a specific date.

You can also ask about a payment plan. Healthcare providers often offer payment plans that let you pay something toward your medical bills each month. Your minimum payment is usually based on what you can afford. 

Setting up a payment plan adds a new expense to your monthly budget. But it can also help you avoid having unpaid medical bills land in collections. 

How to Get Help With Medical Bills When You Can't Pay

What happens if you can't afford to make the payments on your medical bills? If you absolutely can't afford to pay anything toward your medical bills, it's important to know your options.

Depending on your financial situation, you may be eligible for Medicaid or Medicare. Medicaid is a government program that offers health insurance to low-income individuals and families. The state determines eligibility for Medicaid, but it generally depends on your household size, income and financial resources.

Medicare is government-sponsored health insurance for seniors aged 65 and up, though it's possible to qualify if you're younger and have a disability. Both Medicare and Medicaid could help pay some or all of your medical bills if you're not able to do so financially. 

You can also check with your health care provider to see if they offer any type of income-eligible care or hardship program. Charity care provides free or low-cost health care for eligible patients. Like Medicaid and Medicare, your ability to qualify for charity care can hinge on your income and financial resources. 

Nonprofit organizations that offer financial assistance with medical bills are one more possibility. Organizations like the HealthWell Foundation, the Patient Access Network (PAN) Foundation and the Patient Advocate Foundation offer programs to help people in need afford their medical care. 

Should You Pay Medical Bills With a Credit Card or Loan?

Credit cards and personal loans are two options for paying medical bills if you don't have enough cash to cover them. You might consider either one if you've exhausted all other possibilities for getting help with medical bills. 

There are some things to keep in mind, however. Both credit cards and personal loans can charge interest. That can make paying medical bills more expensive in the long run unless you're using a credit card that offers a 0% APR on purchases. However, keep in mind that a 0% APR doesn't last forever. 

Opening credit card or loan accounts can also impact your credit scores. New inquiries can appear on your credit reports, knocking a few points off your score. Charging a large amount of medical debt to a credit card can also negatively affect your credit utilization ratio, which has an even more significant impact on your score. 

t's also important to think about what's realistic for your budget. Falling behind on your credit card or loan payments could hurt your score further. And those accounts could end up in collections as well. 

If you're behind on medical bills, seeking out debt relief could be better than charging up credit cards or loans. Debt relief companies can work with you and your creditors to help negotiate a debt settlement for medical bills. 

Debt settlement allows you to pay off debts for less than what's owed. While it isn't a perfect solution, as your credit score takes a significant hit, settling unpaid medical bills could keep you from having to file for bankruptcy. 

A bankruptcy filing can wipe out medical bills and other debts. But it can do lasting damage to your credit scores and creates a public record. If you prefer to keep your debt problems private, bankruptcy is not your best solution.

Frequently Asked Questions

Do unpaid medical bills affect credit?

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Unpaid medical bills can hurt your credit scores if those accounts are reported past due or sent to a collection agency. Your score may suffer even more damage if a debt collector successfully gets a judgment against you for the unpaid debt. Some credit scoring models ignore medical debt under $100. Small unpaid medical bills may not harm your credit score much or at all.

Once the medical provider has sold your debt to a collection agency, the collection agency must wait 180 days before reporting medical bills to your credit report. This provides you time to pay off your debt before it affects your credit score.

FICO® 9, the newest FICO® credit scoring model, and VantageScore® 3.0 and 4.0, the newest VantageScore credit scoring models, ignore collection accounts that have been paid, so when your medical debt is paid off, these scores may improve. (Even before the account is paid off, these three credit scoring models weigh medical collections less heavily than other types of collections.)

Can I file bankruptcy for unpaid medical bills?

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Medical bills can be included in a bankruptcy filing. Filing Chapter 7, for example, would allow you to eliminate those bills. But a bankruptcy filing can stay on your credit for up to 10 years. 

Should I pay medical collections?

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Paying off medical bills in collections can stop collection calls and help you avoid a lawsuit if a debt collector is threatening to sue. Paid collection accounts also have less negative impact on your credit scores. On the other hand, if old medical bills are close to falling off your credit score anyway and you're not in danger of being sued, you may be less motivated to pay those debts.