What Happens If You Can’t Pay Your Hospital Bill?
Can't pay your hospital bill? Understand the process, manage medical debt, and find your way forward.
Being unable to pay a hospital bill is a common and distressing challenge. Unexpected medical emergencies or treatments can lead to significant financial strain. Navigating healthcare billing and debt collection can feel overwhelming. This article provides guidance on managing unpaid hospital bills.
Initial Steps for Managing Hospital Bills
Upon receiving an unaffordable hospital bill, a thorough review of the charges is the first proactive measure. Requesting an itemized bill from the hospital’s billing department ensures accuracy. Up to 80% of medical bills may contain errors, such as duplicate charges, incorrect codes, or services not rendered, making careful scrutiny valuable. Comparing the itemized bill against your Explanation of Benefits (EOB) from your insurance provider can help identify discrepancies and clarify covered services versus patient responsibility.
After reviewing the bill for accuracy, engaging directly with the hospital’s billing department is the next step. Many hospitals are open to negotiation, especially if you offer a lump-sum payment, which can result in a discount. If full payment is not feasible, inquire about setting up an affordable payment plan, often interest-free, to spread out the cost over months or years. Such plans allow manageable monthly installments tailored to your budget.
Hospitals, particularly non-profit facilities, offer financial assistance programs, often called charity care. These programs provide free or discounted services to eligible patients based on income and family size, with eligibility extending to individuals earning up to 200% to 400% of the federal poverty level. You can apply for these programs retroactively, even after receiving a bill. Some organizations and independent medical bill advocates can assist in reviewing bills, identifying errors, and negotiating with providers.
Understanding Collection Practices
If a hospital bill remains unpaid despite initial negotiation or financial assistance, the debt may transition to a third-party collection agency. This occurs after 90 to 120 days of non-payment. Once the debt is with a collection agency, you will communicate with them rather than the original healthcare provider. These agencies are distinct from the hospital’s internal billing department and operate under specific regulations.
Consumers possess rights under the Fair Debt Collection Practices Act (FDCPA), a federal law that governs third-party debt collectors. This act prohibits collectors from engaging in abusive, unfair, or deceptive practices, such as harassment, false statements, or misrepresenting the amount owed. You have the right to request validation of the debt; the collector must provide written proof, including the amount owed and the original creditor. Maintaining detailed records of all communications, especially those in writing, is advisable.
Unpaid medical debt, once in collections, can affect your credit score, though recent changes altered how this debt is reported. As of April 2023, paid medical collection debt is no longer included on consumer credit reports. Medical collection debt with an initial reported balance under $500 is also removed from credit reports. Collection agencies must wait a grace period, often up to one year, before reporting unpaid medical debt to credit bureaus, providing time to resolve the issue. However, unpaid medical debt over $500 that is more than a year old can still appear on your credit report for up to seven years.
Addressing Unresolved Medical Debt
Should medical debt remain unresolved through initial negotiation and collection efforts, hospitals or collection agencies may pursue legal action. Creditors have the right to sue for unpaid debt. If a lawsuit is filed, you will receive formal legal papers, typically a summons and complaint. Respond to these documents within the timeframe specified, often 20 to 30 days, to avoid a default judgment against you. Ignoring a summons can lead to the court ruling in favor of the creditor without hearing your side, potentially escalating consequences.
If a court judgment is entered against you, the creditor may then seek enforcement measures to collect the debt. These can include wage garnishment, where a portion of your earnings is directly withheld from your paycheck. Federal law limits the amount of disposable earnings that can be garnished. Other enforcement actions may involve bank account levies, allowing creditors to seize funds directly from your bank account, or property liens, which place a legal claim against your assets like real estate. While such actions are possible, some jurisdictions have enacted specific protections limiting wage garnishment or property liens for medical debt.
Considering bankruptcy can be a final option for individuals facing overwhelming medical debt when all other avenues have been exhausted. Medical bills are generally considered unsecured debt, similar to credit card debt, making them eligible for discharge in bankruptcy proceedings. Chapter 7 bankruptcy can discharge most medical debt completely within a few months, providing a fresh financial start. Alternatively, Chapter 13 bankruptcy involves a structured repayment plan over three to five years, with any remaining eligible medical debt discharged at the plan’s conclusion. Filing for bankruptcy triggers an automatic stay, immediately halting most collection activities, including lawsuits and garnishments.