What Happens if You Can’t Pay Medical Bills? A Useful Guide

You have a medical emergency and have to make a trip to urgent care or to the hospital. You get the care that you need and find that you have a huge medical bill waiting for you.

That scenario plays out all too often. About 33% of all American workers have some kind of medical debt. What’s even more shocking is that 28% of those people owe more than $10,000. That makes it unlikely that they’ll be able to pay their medical bills.

Read on to discover what happens if you can’t pay medical bills.

The Medical Office Will Try to Collect

Here’s what typically happens with medical debt. You have medical services performed. If you have health insurance, the medical provider will send your bill to the provider for reimbursement.

As long as the medical provider is in your insurance company’s network and the services are covered by your insurance plan, you’ll pay your co-pay and anything up to your deductible.

If the provider is out-of-network, you’re not going to be covered. That’s more common in emergency situations. The hospital may be in-network, but the doctor on your case isn’t, resulting in a huge medical bill.

You’ll get billed for the amount that the insurance company doesn’t cover. If you don’t have insurance, you’re responsible for the entire bill.

You’re likely to get calls and letters over the next few months to try to settle the debt. Depending on the steps you take, you either have a plan to handle the medical debt or the collections process escalates.

Medical Debt Collections

At a certain point, the medical office or hospital will give up and write the debt off. They’ll either send your account to a collections agency or sell your debt at a loss.

In either case, the debt collectors function like sharks surrounding a piece of chum. They’ll circle around you and pressure you into paying.

Once your account lands with a collection agency, you need to work with the agency directly to take care of the debt.

Medical Debt and Your Credit Score

One common question is whether or not medical debt has an impact on your credit score. Experian, Equifax, and TransUnion have agreed not to show late medical bills on your credit report until after 180 days.

How to Handle Medical Bills

Collections calls are scary, especially when you know that you’re not in a position to pay. There are some steps you can take to ease your mind and take care of the debt.

Check Your Health Insurance Policy

The first thing you need to do is to verify that the debt is really yours. You’ll need to contact your health insurance company to find out what was covered by insurance, and what the co-pay is.

You may have a low monthly premium policy, but you have a very high deductible to meet before anything is covered. With that in mind, you would have to pay to meet your deductible.

You’ll need clarification from your insurance company to find out the details of your medical bill.  

Contact an Attorney

You may be in a situation where you had an accident and can’t work. You may have had an accident at work or an accident that simply wasn’t your fault.

You still need medical care, but you’re having enough trouble putting food on the table and paying rent.

If you’re in a pending court case, like a personal injury case, you could have an attorney file a letter of protection. Read more here to find out more about that.

Know Collections Laws

Collection agencies are notorious for using scare tactics to intimidate you and force you to pay them. Some of these tactics aren’t legal.

Knowing the collections laws gives you a bit of power to call the collection agency out when they use illegal means to collect a debt. You can also report the agency to the Consumer Protection Bureau and the Washington State Department of Licensing.

For example, an agency can’t call you more than 3 times a week in Washington. Other states may not have similar laws, so if you’re outside of Washington, you’ll want to check with your state’s licensing bureau.

Agree to a Payment Plan

If you do have some income and you can pay off some of the medical debt, you can make an agreement with the hospital or the collection agency to pay off the debt.

You may be able to make monthly installment payments until the debt is paid off. You want to make sure that the debt gets handled, but doesn’t put you under too much financial strain to make the monthly payments.

File Bankruptcy

This is seen as the nuclear option, but it may be the only way to relieve your medical debt. Bankruptcy is a legal proceeding that allows you to get a fresh financial start and clear your medical and personal debt.

You have to be able to show that you don’t have the means to pay your medical debt and pay for an attorney to file the paperwork.

Bankruptcy shouldn’t be taken lightly and should be a last resort. It will stay on your credit report for 10 years, though the impact on your credit score will diminish over time.

Take Out a Loan

Another way to get help with medical bills is to take out a loan. Loans for medical bills are a popular way to take care of the outstanding bill and have a fixed monthly installment payment.

What Happens If You Can’t Pay Medical Bills?

Medical bills are a big financial burden for many Americans. What happens if you can’t pay medical bills? It depends on how you handle your debt.

If you do nothing, you can ruin your credit and have the debt sent to collections. Taking action early will help you avoid that fate.

Americans don’t just struggle with medical debt, personal debt and tax debts are major issues, too. Read this article to find out what happens when you owe money to the IRS.