When Can Medical Bills Be Sent to Collections?

Medical bills can be confusing, leading to questions about financial obligations and potential debt collection. Understanding the process from healthcare provider to collection agency helps patients navigate this system. Knowing typical processes and patient rights allows individuals to manage healthcare finances and address concerns proactively, helping avoid negative consequences of unpaid medical debt.

Understanding the Medical Billing Process

The medical billing process begins after a patient receives care, with the provider generating charges for services. These charges are typically submitted to the patient’s insurance company for processing, which can take 30 to 60 days or more. Once processed, the insurance company issues an Explanation of Benefits (EOB) to the patient, detailing coverage and remaining patient responsibility, including deductibles, co-pays, or co-insurance.

The healthcare provider then sends a bill to the patient for any remaining balance. Patients should review this initial bill and compare it against their EOB for accuracy. Medical bills often contain errors, such as duplicate charges or incorrect coding. Unpaid balances can stem from the patient’s insurance plan design, like high deductibles, or administrative errors in billing or claim processing.

Providers usually allow a grace period before considering a bill delinquent, typically 30 to 60 days from the first bill date. During this time, providers may send follow-up invoices. Many facilities offer payment plans or financial assistance programs. Engaging with the provider’s billing department early can clarify charges and prevent escalation toward collections.

Criteria for Sending Medical Bills to Collections

Healthcare providers generally do not immediately send unpaid medical bills to collection agencies, allowing a significant period for payment. Most hospitals or clinics wait 60 to 120 days from the first bill before escalating the account. Some providers might extend this to 180 days, depending on internal policies. Nonprofit hospitals are required by the IRS to provide patients up to 240 days from the initial billing date to apply for financial assistance, though they may still send bills to collections earlier.

Once a medical bill is sent to collections, specific timelines apply before it can appear on a patient’s credit report. The three major credit bureaus impose a 365-day waiting period after a medical bill is sent to collections before it can be reported. This grace period allows patients time to resolve disputes, secure insurance payments, or arrange payment plans before their credit score is impacted. As of April 2023, medical debts under $500 are generally no longer included on credit reports, and paid medical debts are removed.

A bill can still be sent to collections even if a patient is making small payments or paying late, unless a formal payment arrangement is in place. Providers are typically required to notify patients before sending a bill to collections, often through multiple reminders. If a bill is being disputed with the provider or an appeal is underway with the insurance company, collection efforts should generally pause until the dispute resolution process is complete.

Patient Protections and Recourse

Patients have several protections and recourse options when facing medical bills. A first step is to dispute inaccuracies by requesting an itemized statement from the provider. Patients should compare this itemized bill with their Explanation of Benefits (EOB) to identify discrepancies, such as duplicate charges or services not rendered.

The No Surprises Act, a federal law effective January 1, 2022, protects against unexpected medical bills, particularly for emergency or out-of-network services. Under this act, if the billed amount exceeds a good faith estimate by $400 or more for uninsured or self-pay patients, the patient has the right to dispute the charge, and collection efforts must cease during this dispute.

Negotiating with the healthcare provider or collection agency can alleviate medical debt. Many providers establish interest-free payment plans, allowing manageable installments. Patients can also inquire about a discounted lump-sum payment. Many hospitals, especially nonprofit facilities, offer financial assistance or charity care programs based on income and family size, which can reduce or eliminate financial responsibility.

Once a medical bill enters collections, federal laws like the Fair Debt Collection Practices Act (FDCPA) govern how collection agencies interact with consumers. This act prohibits abusive, deceptive, or unfair collection practices, including harassment, false statements, or attempts to collect amounts not actually owed. Patients have the right to request validation of the debt, requiring the agency to provide proof that the debt is legitimate. If a medical debt is inaccurate or violates laws like the No Surprises Act, debt collectors may face legal liability. For support, resources like patient advocates, consumer credit counseling services, or organizations such as the Health Consumer Alliance can provide guidance in navigating medical billing and collection issues.