What Happens When You Don’t Pay a Medical Bill?

Unpaid medical bills are a common financial concern, with approximately 20 million U.S. adults owing an estimated $220 billion in medical debt. Understanding the consequences of unpaid medical bills is important, as the process can escalate from initial provider efforts to debt collection and legal proceedings.

Initial Actions by Medical Providers

When a medical bill is generated, the healthcare provider typically begins an internal billing cycle. This involves sending initial statements and reminder notices if payment is not received. Providers may also contact patients by phone. Bills generally arrive 15 to 30 days after a service, allowing for insurance claims to process.

A medical claim is a request from the provider to the insurance company for payment, while a medical bill is the statement sent to the patient for their portion of costs not covered by insurance (e.g., deductibles, co-payments). Insurance processing affects this phase; delays or errors can prolong the period before a patient receives their bill. Most providers do not send bills to collection agencies until 60, 90, or 120 days past due, though this varies.

Debt Collection Agencies

If a medical bill remains unpaid after provider efforts, the account may be transferred or sold to a third-party debt collection agency. This typically occurs after 90 to 180 days. Once with an agency, individuals receive communications like letters and phone calls as the agency attempts to recover the balance.

Agencies remind individuals of outstanding balances and may negotiate repayment arrangements. They might offer to settle the debt for less than the full amount owed. The agency may also send a debt validation notice within five days of initial contact, detailing the original creditor and current amount due.

Impact on Your Credit

Unpaid medical bills can affect credit reports and scores, though recent changes have altered how this debt is handled. Medical debt typically does not appear on a credit report if it remains with the original provider. However, if the bill goes to a medical collection agency, it can be reported to credit bureaus.

A one-year grace period means medical bills sent to collections will not be added to a credit report for 12 months, allowing time to resolve the debt. As of 2023, medical debts under $500 are no longer included on credit reports. Paid medical collection accounts are also removed. Unpaid medical collection balances over $500 can negatively impact credit scores, potentially lowering a score by up to 100 points, and can remain on a credit report for up to seven years from the original delinquency date. A lower credit score can make it difficult to qualify for housing, loans, and other financial services.

Potential Legal Actions

If a medical bill remains unpaid, legal action is a possible escalation by the medical provider or debt collection agency. A lawsuit is a final step, typically pursued after other collection attempts fail. If filed, the individual receives a summons and complaint, formally notifying them of the legal action. This summons outlines claims and generally requires a response within 20 to 30 days.

If a judgment is obtained against the debtor, consequences can include wage garnishment, where earnings are withheld to satisfy the debt. Bank levies allow creditors to seize funds from bank accounts. A property lien might be placed on real estate, affecting the ability to sell or refinance. Individuals cannot be jailed for unpaid medical debt.