What Happens If I Don’t Pay My Hospital Bill?

Unpaid hospital bills can cause significant stress. A hospital bill represents charges for medical services received in a hospital setting, including emergency care, surgical procedures, and overnight stays. Unlike other forms of debt, medical debt often arises unexpectedly. Understanding the potential consequences and available solutions is the first step toward managing it effectively.

Understanding Immediate Repercussions

When a hospital bill remains unpaid, initial consequences involve additional charges. Hospitals or their billing departments may apply late fees or interest to the outstanding balance. This can cause the debt to grow larger than the original service charge.

If the bill continues to go unpaid, the hospital’s internal billing or collections unit will begin contacting the patient. These communications, including phone calls or letters, aim to collect the debt directly.

If internal collection efforts are unsuccessful, the hospital might transfer or sell the debt to a third-party debt collection agency. The collection agency assumes responsibility for pursuing payment. Patients can expect further communication, such as letters and phone calls, from these agencies.

Impact on Your Credit Profile

Unpaid hospital bills can affect a person’s credit score. Medical debt, once in collections, can be reported to the major credit bureaus: Experian, Equifax, and TransUnion. This can decrease a credit score, impacting future financial activities.

Recent changes altered how medical debt appears on credit profiles. As of July 2022, paid medical collection debt is no longer included on consumer credit reports. Unpaid medical collection debt does not appear on a credit report until one year after it is sent to collections.

As of April 2023, medical collection debt under $500 is no longer included on consumer credit reports. These changes mean many consumers may see an improvement in their credit scores, as a significant portion of medical collection accounts have been removed. A lower credit score can affect eligibility for loans, housing applications, and insurance rates.

Potential Legal Consequences

Unpaid hospital bills can lead to legal actions. A hospital or collection agency can initiate a lawsuit against a patient to recover the outstanding debt. If the court rules in their favor, a court judgment is issued.

A court judgment can lead to wage garnishment. Wage garnishment is a legal process where a portion of earnings is withheld from a paycheck and sent to the creditor. Federal law and some state laws limit the amount that can be garnished from wages.

Beyond wage garnishment, a judgment can allow funds to be seized from a bank account through a bank account levy. A property lien might be placed on assets, such as real estate. This means the property cannot be sold or refinanced without satisfying the lien.

A statute of limitations sets a time limit for filing a debt collection lawsuit. This timeframe varies by state, ranging from three to ten years. While the debt does not disappear, the creditor loses the legal right to sue to recover it.

Strategies for Managing Medical Debt

Managing medical debt begins with reviewing the bill for accuracy. Request an itemized bill listing every charge and billing code. Compare this bill with the Explanation of Benefits (EOB) from the insurer to identify duplicate charges, incorrect services, or services not received. Question any discrepancies, such as charges for items not documented or incorrect quantities.

Negotiating with the hospital is important for outstanding balances. Many hospitals offer financial assistance or charity care programs for eligible patients. Contact the hospital’s financial aid department to inquire about these programs and required documentation. Setting up an affordable payment plan directly with the hospital’s billing department is another option, allowing payment over time in manageable installments, often without interest. Some hospitals may offer a discount for a lump-sum payment if a significant portion can be paid upfront.

Dealing with collection agencies requires protecting consumer rights. Patients have the right to request debt validation from the collection agency, requiring proof that the debt is owed and accurate. This request should be made in writing. Negotiate a settlement for a lower amount, ensuring any agreed-upon terms are in writing before payment.

Bankruptcy can be a last resort for overwhelming medical debt. Both Chapter 7 and Chapter 13 bankruptcy can discharge or reorganize medical bills, offering financial relief. While bankruptcy impacts credit for several years, for some, eliminating substantial debt outweighs this consequence. Seeking professional help from credit counselors or patient advocates can provide guidance. Patient advocates can help review bills, communicate with providers and insurers, and even negotiate on a patient’s behalf.