Medical Bill Sent to Collections? Know Your Rights and What to Do
Finding out that a medical bill has been sent to collections can make an already stressful financial situation feel much worse. You may start receiving letters or phone calls from a collection agency. You may worry about your credit. You may feel pressure to pay immediately, even if you don’t understand where the balance came from.
But a medical bill entering collections does not eliminate your rights, and it does not necessarily mean the amount being collected is correct.
Medical debt can reach collections because a patient couldn’t afford the bill. It can also get there after an insurance problem, billing error, missed financial assistance opportunity, incorrect network determination, or other unresolved dispute.
Before paying or entering into a payment agreement, figure out exactly what happened.
What happens when a medical bill goes to collections?
Healthcare providers generally bill patients for balances they believe remain after insurance payments, contractual adjustments, and other applicable reductions. If the balance remains unpaid, the provider may eventually refer the account to a third-party collection agency or take other collection action.
At that point, you may be communicating with a company that had nothing to do with your original medical care.
That change can make the debt seem more official or final. It isn’t proof that every step leading to the balance was correct.
A collection agency may be attempting to collect exactly what the provider says you owe. The more important question is whether the provider’s original balance was accurate in the first place.
Start by identifying the debt
Before discussing payment, determine exactly what the collector says you owe and where the debt originated.
Under federal debt collection law, many third-party debt collectors are required to provide consumers with information about the debt they are attempting to collect. This commonly arrives in a validation notice.
Review the notice carefully and compare it with your own records. You should be able to identify the original healthcare provider, the amount being collected, and enough information to determine whether you recognize the debt.
Look for basic discrepancies:
A provider you don’t recognize
An incorrect amount
A service you don’t remember receiving
Payments that appear to be missing
Insurance payments or adjustments that were not credited
A balance you previously disputed or believed had been resolved
If something doesn’t match, investigate before paying.
Go back to the original medical bill
Collections may be where you discovered the problem, but the problem may have started months earlier.
Find the original medical bill. If you had health insurance, locate the corresponding Explanation of Benefits, or EOB, from your insurer.
An EOB is not a bill. It explains how your insurance company processed the healthcare claim, including what the provider charged, what the insurer allowed, what insurance paid, and what the insurer determined could be your responsibility.
Compare those numbers with the amount now being collected.
If the provider says you owe $3,000 but your EOB says your responsibility was $800, you need an explanation before treating the collection amount as valid.
If you don’t have the original bill, ask the provider for a copy. If the statement does not show enough detail to understand the charges, request an itemized bill.
For a more detailed walkthrough of reviewing medical charges, see Medical Bill Too High? How to Lower It Before You Pay in the Patient Survival Guide.
Check how insurance processed the claim
A medical debt may exist because your insurer denied all or part of the underlying claim.
Review the EOB for denial codes or explanations. If something was denied, determine why.
The problem may involve medical necessity, missing documentation, coding, network status, prior authorization, a coverage exclusion, or another insurance requirement.
That distinction matters because some problems can be corrected and resubmitted. Others may require an appeal.
If the insurance decision was wrong and is later reversed, the amount you actually owe could change substantially.
If your insurer denied coverage you believe should have been provided, see Health Insurance Denied Your Care? Here’s How to Appeal.
If the dispute involves authorization for treatment, see Prior Authorization Denied? What to Do Next.
Contact the original healthcare provider
Even after an account has been referred to collections, contact the hospital, physician practice, laboratory, imaging center, or other provider that originally billed you.
First, find out what happened to the debt.
Some providers hire collection agencies to pursue balances while retaining ownership of the account. In other cases, debt may be transferred or sold. That distinction can affect what the original provider is still able or willing to do.
Explain that you are reviewing the balance and ask whether the provider can still investigate the account.
Useful questions include:
Does your organization still own this debt?
Can you review the account for billing or insurance errors?
Can an insurance claim still be corrected or resubmitted?
Is financial assistance still available?
Can I apply for a hardship reduction?
Can the account be recalled from collections if the underlying issue is resolved?
Policies vary by healthcare organization. The point is not to assume that the collection agency is automatically your only avenue for resolving the problem.
Ask about financial assistance
If the debt originated with a hospital, ask for its financial assistance policy.
This is especially important if you never applied for assistance when you first received the bill.
Tax-exempt hospitals are subject to federal requirements involving written financial assistance policies and certain billing and collection practices. Individual hospitals establish eligibility requirements within those rules, so the amount of assistance available can vary significantly.
Do not assume that financial assistance is limited to uninsured patients or people with extremely low incomes. Depending on the hospital’s policy, insured patients facing substantial out-of-pocket costs may also qualify for some form of assistance.
Ask for the eligibility requirements and application.
If you previously submitted an application or believe collection activity began while financial assistance was still being considered, tell the hospital and ask it to review the account.
Determine whether surprise-billing protections apply
Some medical debts originate with unexpected out-of-network bills.
The federal No Surprises Act protects patients from certain surprise medical charges, including many emergency services and certain services provided by out-of-network clinicians at in-network facilities.
A common example is a patient who deliberately chooses an in-network hospital but later receives a separate out-of-network bill from an anesthesiologist, radiologist, or another clinician the patient did not knowingly select.
Not every unexpected medical bill falls under the federal law, and state protections may also apply.
If an out-of-network charge contributed to the debt, investigate whether the bill was legally permitted before accepting the collection balance as correct.
Understand your rights when dealing with debt collectors
Federal law regulates many third-party debt collectors through the Fair Debt Collection Practices Act and related rules.
Debt collectors generally cannot use abusive, deceptive, or unfair practices to collect a consumer debt. Consumers also have rights concerning information about a debt and procedures for disputing debts.
The details matter, including who is collecting the debt and when you respond.
If you receive a collection notice, read it rather than discarding it. Pay attention to information about disputing the debt and any applicable deadlines.
Keep copies of the notice and any response you send.
For current information about federal debt collection rights, the Consumer Financial Protection Bureau and Federal Trade Commission are better sources than advice from a collection representative, social media post, or random website.
What happens to your credit?
Medical debt and credit reporting have changed significantly in recent years, and the rules and industry policies continue to evolve.
That makes sweeping statements about medical debt and credit reports particularly dangerous.
Do not assume that every medical collection will automatically appear on your credit reports. Do not assume that medical debt can never affect your credit either.
Instead, check your actual credit reports and consult current information from authoritative sources.
AnnualCreditReport.com is the federally authorized source for obtaining free credit reports from the major nationwide credit reporting companies.
If a medical collection appears and you believe the information is inaccurate, investigate the appropriate dispute process rather than assuming the entry cannot be challenged.
Be careful about replacing medical debt with credit card debt
Paying a collection account with a credit card can make the collection problem disappear while creating a different financial problem.
A hospital or collection agency may no longer be calling, but the balance may now be subject to credit card interest and other terms that did not apply to the original medical bill.
Medical financing products can create similar complications. Understand the interest rate, fees, promotional periods, deferred-interest provisions, and consequences of missed payments before agreeing to financing.
Before moving medical debt onto another form of credit, determine whether the original bill can be corrected, reduced through financial assistance, resolved through an insurance appeal, negotiated, or placed on a manageable payment plan.
If you negotiate, get the agreement in writing
If you determine that the debt is valid and decide to negotiate a payment arrangement or settlement, understand exactly what you are agreeing to.
Before paying, confirm the total amount being resolved, whether the payment satisfies the entire debt, whether interest or fees apply, and what happens if a scheduled payment is missed.
Do not rely solely on a verbal promise.
Ask for the terms in writing and keep proof of every payment you make.
And don’t agree to a monthly payment you cannot realistically afford simply because someone wants an answer during a phone call.
Keep a complete paper trail
A medical collection dispute can involve the healthcare provider, insurance company, collection agency, financial assistance office, employer benefits department, credit reporting companies, or government regulators.
Keeping everything together makes it much easier to determine what happened and prove what you were told.
Save:
Medical bills and itemized statements
Explanations of Benefits
Collection notices
Insurance correspondence
Financial assistance applications
Appeal documents
Payment records
Emails and portal messages
Names of representatives
Dates and times of calls
Case and reference numbers
If a provider says an account will be recalled from collections, request confirmation. If a collector agrees to a settlement, get the terms before sending payment.
Your documentation becomes especially important when two organizations give you conflicting information about the same debt.
Where to get help
The right place to seek outside help depends on what went wrong.
The Consumer Financial Protection Bureau provides information about debt collection and accepts certain consumer complaints. The Federal Trade Commission publishes information about federal debt collection protections.
For disputes involving surprise medical bills, the Centers for Medicare & Medicaid Services provides consumer information and assistance related to the No Surprises Act.
Your state insurance department may be able to help with certain health insurance disputes. A state attorney general or state consumer protection agency may provide information about debt collection and consumer protection laws in your state.
If you receive health coverage through an employer, your benefits department may also be able to help investigate an insurance claim. Some employer-sponsored health plans are regulated differently from insurance policies purchased directly from an insurance company, which can affect where complaints and appeals are handled.
Nonprofit legal aid organizations and qualified consumer attorneys may be appropriate when a significant dispute cannot be resolved directly.
A collection notice is not the end of the investigation
Once a medical bill reaches collections, the natural impulse is to focus entirely on how to pay it.
Start one step earlier.
Determine whether the debt belongs to you and whether the amount is correct. Review the original medical bill and insurance claim. Investigate any denial. Ask about financial assistance. Check whether surprise-billing protections apply. Understand your rights when dealing with the collector.
Then determine how to resolve whatever legitimate balance remains.
A collection notice tells you that someone is attempting to collect a debt.
It does not prove that everyone involved got the debt right.
