Medical Debt and Your Rights

Medical debt is one of the most common sources of financial hardship in the United States. Unlike debt from other consumer purchases, medical debt often arises from care that is urgent or unexpected, with costs disclosed only after the fact. Understanding your rights — what providers can and cannot do, how debt collection works, and what options you have before a bill becomes a serious problem — is important for anyone navigating the US health system.

Before accepting a bill as final

The first step when you receive a large medical bill is to verify that it is accurate. Billing errors are common in US healthcare. Request an itemized bill — a line-by-line list of every service, supply, and procedure, with billing codes and charges — and compare it to your Explanation of Benefits (EOB) from your insurer.

Check for:

• Services you did not receive
• Duplicate charges
• Incorrect dates or patient information
• Services billed at the wrong code (upcoding)
• Charges that should have been covered by your insurer

If you find discrepancies, contact the provider’s billing department with specific questions. Ask for corrected billing and, if needed, ask the provider to resubmit the claim to your insurer.

If you have insurance and believe a claim was wrongly denied, file an appeal with your insurer. All ACA-compliant plans must allow internal appeals and external review.

Financial assistance applications: don’t skip this step

If you received care at a nonprofit hospital and the bill is unaffordable, apply for financial assistance before assuming you owe the full amount. Under IRS 501(r) rules, nonprofit hospitals must offer financial assistance to patients below defined income thresholds, and they must give you at least 120 days after the first billing statement to apply before most collection actions can begin.

During this 120-day window, the hospital cannot sell your account to a third-party debt collector, report you to credit bureaus for the medical debt, or take other extraordinary collection actions. Use this window to apply for financial assistance, appeal any insurance decisions, and negotiate.

Request the Financial Assistance Policy (FAP) from the hospital’s billing or patient financial services department. Apply as early as possible.

Negotiating medical bills

Even if you do not qualify for formal charity care, negotiation is possible:

Request the self-pay rate. Hospitals must charge financial-assistance-eligible patients no more than the amounts generally billed to insured patients. Uninsured patients can ask for the self-pay rate, which is often a fraction of the list-price charge.

Offer a lump-sum settlement. If you can pay something but not the full amount, a lump-sum offer can sometimes be accepted at a discount — particularly once the account is older or has been transferred to collections.

Request a payment plan. Most hospitals offer payment plans. Ask for zero or low interest. Some nonprofit hospitals are required by state law to offer interest-free payment plans to patients below defined income thresholds.

Get everything in writing. Before making any payment as part of a settlement or agreement, get a written statement confirming the agreed amount and that the remainder will be waived. Do not rely on verbal assurances.

Your rights when dealing with collections

If your medical debt has been sent to a collections agency, the Fair Debt Collection Practices Act (FDCPA) applies. Your rights include:

• Debt verification: Within 30 days of first contact, you can request that the collector provide written verification of the debt — the original creditor, the amount, and your rights. The collector must stop collection activity while verifying.
• Communication limits: Collectors cannot call before 8 a.m. or after 9 p.m. local time. You can request in writing that they cease contact (though this does not eliminate the debt).
• No harassment: Collectors cannot use abusive language, make false statements, or threaten illegal action.

File complaints with the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) if a collector violates these rules. Many states have additional consumer protection laws with stricter requirements.

Medical debt and credit reporting

Federal rules governing medical debt and credit reporting have changed significantly in recent years. As of 2023, the major credit bureaus agreed to remove paid medical collections from credit reports, eliminate collection accounts below a defined dollar threshold, and extend the waiting period before reporting medical debt. The Consumer Financial Protection Bureau has also proposed additional rules that would further limit medical debt reporting.

For current rules on medical debt and credit reporting, check the CFPB website. If medical debt appears on your credit report in error, you have the right to dispute it with the credit bureau.