It’s not uncommon to have an unexpected medical emergency. Some Americans have comprehensive health insurance policies that cover most of their bills, but not everyone is lucky. Americans owe $220 billion in medical debt. Three million people in the country owe a debt of over $10,000.

If you have a medical bill in collections, the financial stress can be significant. However, there are many ways to deal with medical debt, such as by setting up a payment plan, settling the debt for less than you owe, or seeking financial assistance.

What Happens When Medical Bills Go to Collections?

Medical debt goes to collections when a bill remains overdue even after several months. It’s important to know that even if you’re on a payment plan with your creditor and are paying down your bill through monthly payments, it doesn’t guarantee that your bill won’t go to collections. However, it’s also important to be aware of your rights under the debt collection laws.

If you’re not paying the bill on time, or if you don’t pay off the entire debt in full within an acceptable time frame to the original lender, you may find your medical bill in collections. For this reason, make sure to get the terms of any payment plan your provider offers in writing.

Do Medical Bills in Collections Impact Your Credit Score?

If you have a medical bill over $500 and you don’t pay it off within one year, it can have a negative impact on your credit even if you’re making regular monthly payments. Bills under $500 don’t appear on the credit report.

Medical bills in collections can remain on your credit report for seven years from the original delinquency date. However, you may be able to prevent it from going to collections by getting familiar with the details of your insurance plan and its explanation of benefits, reading all communications from your healthcare provider, and paying off your bills within one year of receiving them.

How Long Do Medical Bills Stay in Collections?

Unpaid medical bills will stay in collections until you pay them off. Once they’re in collections, it’s best to act quickly and come up with an agreement with the collection agency to pay it off.

Medical bills in collections can lower your credit score, so it’s important to do everything you can to avoid them going to collections. If you believe the collections account is inaccurate, you can dispute the collection and have it removed from your credit report.

Is There a Statute of Limitations on Medical Bills?

The statute of limitations on medical bills varies by state but can range from three to ten years. However, keep in mind that even if the statute of limitations has passed, unpaid debt can still impact your credit score for seven years.

Be sure to consult with a lawyer to know about your rights and protections against debt collection practices. The 2021 Medical Debt Forgiveness Act states that a consumer protection agency can’t add medical debt to your credit report if the debt is less than a year old or if it was settled or paid in full.

Debt collectors must also notify you before they report medical debt to the consumer reporting agency.

8 Tips To Deal with Medical Bills in Collections

It’s best to avoid medical bills from going to collections by paying them off in a timely manner. However, if they’re already in collections, here are a few tips to deal with them.

1. Find Medical Bills in Collections

Start by finding information about all medical bills in collections. Get your free credit reports from all three credit bureaus and review them to find information on which accounts are overdue and in collections.

You can also contact the billing administrator at the hospital or healthcare provider to get details about overdue bills, including how much you owe, how long they’re overdue, and what options are available to pay them off.

2. Negotiate with Collection Agencies

Negotiate with collection agencies to either work out a payment plan or settle your debt for less than you owe. Always get the agreement in writing to ensure there are no problems later.

Create a budget to determine how much you can afford to pay, either in terms of monthly payments or lump sum, before you contact the collection agency.

3. Get Financial Assistance

If you’re struggling to pay medical bills, there are many financial assistance options available. Nonprofit hospitals offer charity care and, in some cases, may even forgive your entire debt if you qualify.

Your debt level or income may qualify you for reductions in treatment costs. Explore all available options to reduce your debt load.

4. Use Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA)

Most legitimate medical expenses can be paid using a Flexible Spending Account (FSA) or Health Savings Account (HAS). However, some expenses may not qualify, such as supplements, non-prescription medications, weight loss programs, and insurance premiums.

Be sure to accurately track all your medical expenses and only use the accounts only for qualified expenses. The expenses should be accrued while the account was open. In the case of an FSA, you can only reimburse yourself in the year you incurred the expenses.

5. Avoid or Reduce Payments Obligations

You may be able to reduce your payment obligations by hiring a medical bill advocate. A billing advocate can help you save hundreds of dollars, but they do charge a fee. If you have unmanageable medical bills, an advocate can sort through your bills, identify insurance company errors, and negotiate them on your behalf.

Some nonprofit organizations and churches also offer advocacy assistance if you can’t afford to hire one.  

6. Consider Challenging Medical Bills in Collections

When you have a medical bill in collections, it’s important to first validate the debt. This means that the collections agency will need to show that the debt belongs to you.

Another option is to get a copy of your credit reports and review it to find any inaccuracies. Check the names, dates, balance owed, and other debts. If there are any errors, send a credit dispute letter to the credit reporting companies.  

If the credit bureau can’t verify the information, the collection item may be dropped from the credit report.

7. Negotiate a Settlement

Another option is to settle your medical debt for less than you owe. Consider working with a debt relief company to negotiate on your behalf.

A professional can contact the collection agency on your behalf to negotiate a lump sum settlement amount. Debt settlement can help you save thousands of dollars since you’ll often be able to settle your account for 50% before fees.

8. Look for Grants or Financial Aid

If you need help paying medical bills in collections, here are a few resources to consider:

  • Check to see if you qualify for CHIP, Medicare, or Medicaid.
  • Reach out to nonprofit organizations like the Patient Advocate Foundation or CancerCare for assistance.
  • If you’re a veteran, you may qualify for financial hardship assistance for help with repayment plans, copayment exemptions, and more.
  • Check to see if you qualify for charity medical care.

Pay Off Your Medical Bills in Collections

Medical emergencies can often leave you with large bills that are difficult to pay off. If you find yourself in medical debt you can’t repay, it’s best to take precautions and contact your medical provider as soon as possible to explore your options.

Medical debt collections can damage your FICO score, but it’s possible to pay them off through payment plans and settlements. Other options to deal with unpaid medical debt include borrowing a personal loan or using a medical credit card. If you use a card, make sure to pay it off quickly to avoid credit card debt.