Medical debt is any unpaid bill resulting from healthcare services, including hospital stays, surgeries, emergency room visits, dental work, lab tests, imaging, ambulance rides, and prescription medications. It is the most common type of debt sent to collections in the United States, affecting tens of millions of people. Unlike a car loan or credit card balance, medical debt often comes as a surprise, arising from a single illness or accident rather than a planned purchase.
How Medical Debt Happens
Medical debt doesn’t always stem from being uninsured. Many people with health insurance end up owing significant amounts because of deductibles, copays, coinsurance, and services their plan doesn’t cover. A plan with a $3,000 deductible, for example, means you pay the first $3,000 of covered services out of pocket each year before insurance starts sharing costs. If you need an MRI, a specialist visit, and a minor procedure in the same year, you can hit that threshold quickly.
Out-of-network charges are another common source. If a surgeon is in your insurance network but the anesthesiologist who assists isn’t, you could receive a separate, higher bill from the anesthesiologist. Federal law now limits some of these surprise charges (more on that below), but gaps remain. Billing errors also play a role. Incorrect procedure codes, duplicate charges, and failure to apply insurance correctly can inflate a bill well beyond what you actually owe. Always request an itemized statement before paying or setting up a payment plan.
What Happens When a Bill Goes Unpaid
After you receive care, the provider typically sends a bill once your insurance has processed (or denied) the claim. You usually get 30 to 60 days to pay before reminders start. If the bill remains unpaid after several billing cycles, often around 90 to 180 days, the provider may turn the account over to an internal collections department or sell it to a third-party debt collector.
Once a third-party collector takes over, the rules of the Fair Debt Collection Practices Act apply. Collectors must send you a written notice within five days of first contacting you, stating the amount owed and the name of the original creditor. You have 30 days from that notice to dispute the debt in writing. During that dispute window, the collector must pause collection efforts until it verifies the debt.
If the debt remains unresolved, the collector can eventually file a lawsuit. A court judgment against you could lead to wage garnishment or bank levies, depending on your state’s laws. The statute of limitations on medical debt, meaning the window during which a collector can sue, varies by state but generally ranges from three to six years.
Medical Debt and Your Credit Report
Medical debt can appear on your credit report once it’s been sent to collections. The three major credit bureaus (Equifax, Experian, and TransUnion) voluntarily agreed in 2023 to remove medical collections under $500 and to exclude paid medical collections entirely. They also implemented a one-year waiting period before any medical collection can appear on a report, giving you time to resolve billing disputes or work out a payment arrangement.
The Consumer Financial Protection Bureau finalized a rule in 2024 that would have removed all medical debt from credit reports. However, a federal court in Texas vacated that rule in July 2025, finding it exceeded the agency’s authority under the Fair Credit Reporting Act. As a result, unpaid medical collections of $500 or more can still show up on your credit report after the one-year waiting period. A collection account on your report can lower your credit score by 50 points or more, making it harder to qualify for mortgages, auto loans, and credit cards at favorable rates.
Protections Against Surprise Bills
The No Surprises Act, which took effect in 2022, provides significant protection if you have employer-sponsored or individual health insurance. The law bans surprise bills for most emergency services, even if the hospital or physician is out of network. You can only be charged your plan’s in-network cost-sharing amount (your normal copay or coinsurance) for emergency care, regardless of where you receive it.
The law also covers situations where you go to an in-network hospital but are treated by an out-of-network provider you didn’t choose, such as a radiologist, pathologist, or anesthesiologist. In those cases, the out-of-network provider cannot bill you for the difference between their charge and what your insurance pays. This practice, known as balance billing, was one of the most common sources of unexpected medical debt before the law passed.
Providers can ask you to waive these protections and agree to out-of-network billing, but they must give you written notice at least 72 hours before a scheduled service. For emergency care, they cannot ask you to waive protections at all. If you believe a provider has violated the No Surprises Act, you can file a complaint with the federal government at the number listed on the notice your provider is required to give you.
Hospital Financial Assistance Programs
If you receive care at a nonprofit hospital, you likely have access to a financial assistance program, sometimes called charity care. The IRS requires every tax-exempt hospital to maintain a written financial assistance policy that covers all emergency and medically necessary care. These policies must spell out eligibility criteria, how to apply, and how the hospital calculates reduced charges.
Eligibility is typically based on household income relative to the federal poverty level. Many nonprofit hospitals offer free care to patients earning below 200% of the poverty level and discounted care up to 300% or 400%. For a family of four, 200% of the poverty level is roughly $62,400 in annual income. The specific thresholds vary by hospital, but you won’t know unless you ask or check the hospital’s website, where it’s required to post the policy.
One important rule: once you qualify for financial assistance, the hospital cannot charge you more than the amounts generally billed to insured patients. That means you won’t be stuck paying inflated “chargemaster” rates that are sometimes three or four times what an insurer would negotiate. Hospitals are also prohibited from using aggressive collection tactics in the emergency department, including demanding payment before providing emergency treatment.
Negotiating and Reducing a Bill
Even if you don’t qualify for a formal financial assistance program, you can often negotiate directly with a provider. Hospitals and medical practices routinely accept less than the full billed amount, especially if the alternative is sending the account to collections and recovering only a fraction of the balance.
Start by requesting an itemized bill and reviewing every line. Look for duplicate charges, services you didn’t receive, or codes that don’t match your treatment. If you find errors, call the billing department and dispute them before paying anything. Once you’ve confirmed the charges are accurate, ask about a prompt-pay discount. Many providers will reduce the balance by 10% to 30% if you can pay in full or agree to a short-term payment plan.
If the total is beyond what you can afford, ask for a longer payment plan. Most hospitals and large medical groups will set up interest-free installment plans lasting 12 to 24 months. Get the terms in writing before making your first payment, and confirm that the provider will not send the account to collections while you’re making agreed-upon payments.
When Medical Debt Reaches Collections
If a bill has already gone to a collector, you still have options. Verify the debt first by requesting validation in writing within 30 days of the collector’s initial contact. Collectors sometimes pursue debts that have already been paid, were billed in error, or belong to someone else. Once verified, you can negotiate a settlement for less than the full amount. Collectors purchase medical debt for pennies on the dollar, so accepting 30% to 50% of the original balance is common.
If you reach a settlement, get the agreement in writing before sending any payment. The letter should state the settlement amount, confirm the remaining balance will be forgiven, and specify that the collector will report the account as settled or paid to the credit bureaus. Keep this letter indefinitely in case the debt resurfaces later.
Be cautious about restarting the statute of limitations. In many states, making even a small payment on an old debt or acknowledging it in writing can reset the clock, giving a collector a fresh window to sue. If a debt is close to or past the statute of limitations for your state, weigh this risk before making any payment or verbal commitment.