What Happens If You Don’t Pay Medical Bills?

Your health is more important than any credit score and when the unexpected happens (as it usually does), sometimes you have to pay a pretty penny just to get the health care you need. These medical bills put enormous financial strains on millions of Americans, especially those who are uninsured.

In fact, medical debt is the leading cause of personal bankruptcy in the U.S. You should never feel guilt or fear when you have to pay for treatments you or a loved one may need. We’re here to help you understand all your health bill payment options and questions. 

1. You may incur late fees and interest charges

Everything you need to know about the costs of your medical treatment lives in the details. Be sure to thoroughly read any and all documents before receiving medical care if possible (or as soon as possible if not). This way, you’ll understand what’s expected from you financially and the specific timeline.

If you start to miss payments, you may incur additional charges in either late fees or interest. The state you live in determines which of the two it will be, so be sure to ask about that as well! You always want to be prepared.

The best-case scenario is to understand your financial responsibility before you have any medical care. Ask questions like:

  • Is the facility in-network and how much does it cost?
  • Are all of the doctors and providers in-network?
  • Are there generic medications available rather than name-brand?

2. Medical bills can go to collections

If you don’t pay your medical bills after a certain period of time, the hospital may turn them over to a collection agency. Every hospital and region has its own timeline for when they would do this, however, it usually takes a while to get to this point.

First, any unpaid debt would first be reported as a delinquent. You’ll start to get calls and notices seeking payment, until eventually (if you continue to not pay), your debt will go to a collector. This happens after about 180 days of non-payment.

Long story short – pay attention to these threats from the hospital – collections will appear and negatively hurt your credit report.

3. It can remain on your credit report for 7 years

Medical bills will only affect your credit score after they remain unpaid for months and get turned over to collections. After a medical provider reports you to the three major credit bureaus, there is a six-month waiting period before that debt appears on your report.

Payment history has the biggest impact on your score, so failing to make timely payments will cause some serious damage. If the bill is less than six months old or you have paid it, then you can dispute the error with the credit bureaus. Otherwise, you’ll have to take a different approach to increase your score. And this involves figuring out a way to pay off your debt!

4. The medical bill collections agency might take you to court

This might be the worst kind of mail. (But birthday cards with checks, we love). If your collections account continues to go unpaid, you’ll be sent a court summons by the collection agency. This is their most efficient way of getting payment from you, because, who wants to go to court?

Don’t ever ignore these summons – doing so could result in wage garnishment, a lien on your property, or an attempt to freeze all or part of the money in your bank account. Yikes!

How to get help with hospital bills

With or without health insurance, paying your medical bills can be stressful. If you find yourself having trouble keeping up with the bills, there are a few different options to consider.

Communicate with the hospital and discuss your options

Communication is always key! And sometimes, medical billing departments can make mistakes. Start by reviewing your bill and checking for errors. If you haven’t already received an itemized bill, be sure to request one. You want a detailed overview of what you’re paying for. The most common errors that occur on bills include duplicate charges of the same service, clerical error like miscoding a bill, and general information like how many days you stayed at the hospital or listed services you did not use.

Make sure to set up an appointment to talk in-person with the billing department. They can remove any false charges and discuss payment options if you’re having any trouble. And believe it or not, you are in a position to negotiate. Ask if you can settle your bill for a lower amount than you owe, especially if you can pay a reasonable lump sum. If that doesn’t work, ask to create a monthly payment plan you can afford.

Ask if interest-free medical bill repayment plans are available

Medical providers – including hospitals, physicians, and dentists – can offer a payment plan for your bills if you’re struggling to pay them. This is one of the easiest ways to settle a bill. You simply pay the minimum amount the medical provider has agreed to. 

Ask if there are any billing charges or fees associated with the plan and see if a low-or-no interest repayment plan is possible. It may seem scary to ask, but it’s in both of your best interests. A hospital would rather receive their money over time than never get it at all!

Ask if you’ll get a discount for paying promptly

If you have the money to pay your medical bills but it still seems too expensive, talk with the hospital about a prompt pay discount. This is when they reduce the fees in exchange for you paying off the charges in full right away. Usually, the discount is around 10 to 20 percent off! And be sure to check if you can receive any other discounts for paying by cash or check. This will help avoid any credit card processing fees.

Apply for financial assistance – you may qualify for hospital bill forgiveness

Surprisingly, most people who qualify for financial assistance never apply! Don’t be one of those people. The Affordable Care Act requires that nonprofit hospitals make financial assistance available to low-income patients, and more than half the hospitals in the U.S. are nonprofit.

You’ll have to provide documentation proving your income, so things like recent pay stubs and proof of unemployment. And remember that hospitals can’t deny you for not providing documentation.

When to consider a medical loan

A medical loan is an unsecured personal loan that helps you consolidate all your health care costs or pay for planned or emergency procedures, like plastic surgery or dental work. They can also help with out-of-network charges and high deductibles. It’s only a good idea to get one after you’ve exhausted all of your other options.

Loan amounts can range from $1,000 to $100,000, which is helpful for larger amounts of medical debt. That said, you need to have excellent credit to qualify for one and they can be one of the most expensive ways of covering your medical expenses. Be sure to try getting a payment plan or medical credit card before taking this route!

Avoid using credit cards to pay off medical debt

Like any expensive purchase, you only want to use your credit card to pay for large bills if you’re completely sure you can pay back the credit card bill in full before interest starts to accrue. Doing so is only a slippery slope to more debt, collection notices, and lots of stress.

The best option is to always pay your medical bills with a check or debit card. Be sure to get a receipt so you can prove you paid and if you want to obtain any reimbursement through either a flexible spending account or health savings account if you have one.

Get a personalized financial action plan from one of our coaches – it’s free!

We always want you to remember your health is the most important thing! Don’t ever choose saving money on medical expenses over something that could save your life. If you feel yourself stressing out, know you don’t have to do this alone.

Talk to a professional who can help lighten the load of your medical debt. Our coaches are free to speak to and here to help you create a financial plan that will get you out of debt as quickly as possible.