How to Fight a Medical Bill in Collections

Medical bills in collections can cause confusion and stress. Understanding how to address these debts is important for financial stability. This article provides guidance for individuals facing medical bills in collections.

Understanding the Medical Bill and Collection Process

A medical bill enters collections when a healthcare provider transfers an unpaid balance to a third-party collection agency, typically after 60 to 120 days. Distinguishing between the original provider’s billing department and an independent collection agency is important, as rights and resolution approaches may differ.

Medical bills can enter collections even with health insurance. Reasons include medical coding errors, administrative mistakes, or lost paperwork. Insurance denials, where the insurer declines coverage, also contribute to unpaid balances. Misunderstandings about an Explanation of Benefits (EOB) can leave patients unaware of their financial responsibility until a collection bill arrives.

Upon receiving a collection bill, review it for accuracy. Compare listed services with your medical records. Look for discrepancies in dates, procedures, or billed amounts. Identifying errors early can provide a basis for disputing the debt.

Gathering Information and Documents

Before engaging with a collection agency, gather original medical bills from the healthcare provider. These bills detail services received and initial charges, serving as a record of the alleged debt.

Also gather the Explanation of Benefits (EOB) from your health insurance company. The EOB outlines what your insurer covered, denied, and your remaining financial responsibility. Comparing the EOB with the medical bill reveals if the claim was processed correctly or if discrepancies exist, such as out-of-network services or deductibles.

Relevant medical records verify procedure necessity and corroborate billed services. Gather any prior correspondence with the healthcare provider or insurer. This documentation helps build a detailed timeline and supports your dispute. Obtain medical bills from the provider’s billing department, EOBs from your insurer’s portal or by request, and medical records from the provider’s medical records department.

Disputing the Debt with the Collection Agency

After gathering information, formally dispute the debt with the collection agency by sending a “debt validation letter.” This letter should state you are disputing the debt and request specific information to validate its legitimacy.

A debt validation letter asks for details like the original creditor’s name, the exact amount owed, and proof of the agency’s right to collect. Under the Fair Debt Collection Practices Act (FDCPA), the collection agency must cease all activities until they provide this validation. This provides a temporary reprieve from calls and allows time to review the information.

Send the debt validation letter and all subsequent correspondence via certified mail with a return receipt. This provides official proof that the letter was sent and received. Maintaining copies of all letters and certified mail receipts creates a verifiable paper trail.

Negotiating and Resolving the Debt

After validating the debt, or if no dispute is warranted, negotiate with the collection agency or original healthcare provider. Offer a lump-sum settlement for a reduced amount. Agencies may accept 30% to 80% of the original debt, especially if acquired cheaply. Starting with a lower offer, such as 25% of the total, can be a negotiation tactic.

If a lump-sum payment is not feasible, negotiate a manageable payment plan. Agree to pay the debt in smaller, regular installments over a specified period. Ensure monthly payments are within your budget to avoid defaulting. Some healthcare providers may offer interest-free payment plans, which can reduce the overall cost.

A “pay-for-delete” agreement involves the agency removing the entry from your credit report in exchange for payment. Agencies are not obligated to agree, and its effectiveness varies. Prepare specific information, such as the validated debt amount and your financial situation, to support your offer. Obtain any negotiated agreement in writing before making payments to ensure clear terms.

Addressing Credit Report Impact

Medical collections can impact credit scores, though recent changes have softened this effect. Unpaid medical bills generally do not appear on credit reports until 365 days unpaid. Medical collections under $500 should not appear on consumer credit reports. If a medical collection account is paid, it should be removed from credit reports entirely.

Regularly monitor credit reports for accuracy. You are entitled to a free credit report once every 12 months from Experian, Equifax, and TransUnion via AnnualCreditReport.com. Some agencies offer weekly free access. Reviewing these reports allows you to identify inaccurate or outdated collection entries.

If you find an inaccurate or outdated medical collection entry, dispute it directly with the credit bureaus. Contact Experian, Equifax, and TransUnion to initiate a dispute, providing supporting documentation like proof of payment or evidence of error. Credit bureaus must investigate and remove unverified or incorrect information. Following up to ensure the account is reported as “paid in full” or removed after settlement protects your credit standing.