Medical Bill Suddenly Appeared in Collections -- What Are My Options?

06/10/2015 05:07 pm ET | Updated Jun 10, 2016

This Q&A addresses questions from real patients about healthcare costs. Have a question you'd like to see answered? Submit it to


I recently got a phone call about a medical bill I had not previously received. It seems the hospital had an incorrect address on file, and though they sent four notices, I didn't get any of them. Now the $3,400 bill is in collections, and I can't pay it off in full. Is it too late for financial assistance? What are my options?


Those kind of phone calls are never pleasant. As if owing money isn't enough, now you have to deal with the collections process. But you're not alone. A 2014 NerdWallet study found that more than one-third of all money paid in 2012 to third-party collectors was for medical debt. Still, don't panic.

After you receive notice from the collection agency by mail, ask for validation of the debt. Do so in writing and send via certified mail. This request serves a few purposes, as the collector cannot contact you again until it provides validation or documentation that you do indeed owe the debt. So in addition to getting the legal verification in writing, it buys you some additional time, which is particularly useful if you plan on disputing the debt.

Request an itemized bill and check for errors.

As many as 80% of medical bills contain errors, according to some experts. Because of this, you should never accept a medical bill's "total due" at face value. Instead, try to determine what each itemized charge is for, look for duplicate charges and make sure you aren't being billed for services you didn't even receive.

Also, contact your insurance company to ensure that it paid its share. More than likely, the balance you owe is a combination of your annual deductible and your coinsurance, but having your insurance company explain how this works could uncover errors on their part.

Ask about financial assistance or charity care.

Charity care is the term used to describe hospital financial assistance programs. The specifics of these programs vary from hospital to hospital according to policy. Through charity care programs, hospitals often provide reduced-cost or completely free medical care.

At this point in the bill collection process, it could be out of the hospital's hands, particularly if it sold your debt to a third-party collection agency. But contact the hospital where you received treatment and ask to be sure. There is a chance, albeit small, that it's actually an in-house collections department still overseeing your account. Likewise, there is a small chance the hospital can call back your debt from an outside collection agency if the hospital recognizes its error in sending your bills to the wrong address.

If you have the option to work directly with the hospital, move quickly. Make sure you give them everything they need to make their decision on your eligibility for charity care, and follow up with a phone call to ensure you didn't leave anything out. Keep track of whom you talk with and the date, in case there are any questions at a later time.

Try to settle your account directly with the collections agency.

Ultimately, your goal is to get your account paid and out of collections. Under the latest version of the most commonly used credit scoring model in the U.S., known as FICO 9, medical collection accounts will soon carry less weight than other types of collection accounts and paid medical collection accounts won't impact your score at all. However, the collection action will remain on your credit report for seven years. This is important because while your FICO score carries significant weight in loan and credit applications, lenders, employers and others may look at your credit report as a whole rather than just your score. For more on the difference between your credit score and your credit report, go here.

If you can't work with the hospital, you'll have to resolve the issue with the collections company. You mentioned that you can't afford to pay the bill in full. However, collections agencies are often able to negotiate a lower total bill when you're willing to pay it off right away. Ask them to knock off any interest or penalties on account of you not having received any prior notice. If you are able to negotiate a lower balance due, get the agreement in writing. Likewise, when the account is paid in full, request written confirmation of such to keep in your records.

In the interest of getting your account paid, you may want to ask a friend or family member for a loan to pay off the debt in full.

Make payment arrangements.

As a last resort, talk with the collection agency about payment arrangements. These agencies are accustomed to working with customers to resolve their accounts and are typically pretty flexible in allowing monthly payments that fit your budget. Again, get the terms of any payment agreement in writing.

Remember, you want to get this bill paid and out of the collection agency's control as soon as possible, so reprioritizing your budget to accommodate bigger monthly payments may be in your best interest. If you're simultaneously juggling other debt -- like credit card debt -- try to keep all of your accounts in good standing. You don't want to force other accounts into collections as you focus on this one.

Do your best to keep the rest of your credit in good standing by making all payments on time and keeping your credit utilization to less than 30%. Going forward, tread cautiously when navigating the medical billing process: Follow up on missing bills, and ask questions of your medical providers and insurance company as they arise.

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