Medical Bills Collection Laws 2021: Myths and Tips

Medical bills can be daunting. Around 67% of bankruptcies in the nation in 2019 were tied to medical issues and expenses. According to US Census data, almost one in five American households is dealing with medical debt, and the rate is higher for certain ages, income levels, and other demographics. One issue is that medical bills and collections laws can be confusing, and many people don’t know what their rights are or realize that medical debt is treated differently than other debt in some cases.

A woman calculates her medical bills at her desk and ponders medical bill myths.

Find out more about medical debt in this guide, which clarifies some myths about medical debt collections and offers some tips for dealing with medical debt.

In This Piece

5 Myths about Medical Bills and Collection Law

These five myths help you understand some common misconceptions about medical debt:

  • Insurance covers all medical debt
  • Any payment is good payment
  • Medical debt won’t hurt your credit
  • Medical bills are always accurate
  • You don’t owe right away

Myth: You don’t have to worry about medical debt if you have insurance.

Fact: Many insurance plans don’t cover all your medical expenses. You may have to pay a deductible before health insurance starts paying claims, and even after that, you may be left with a co-insurance amount. 

According to the Kaiser Family Foundation, the average family deductible for those enrolled in employer-sponsored health plans in 2019 ranged from around $2,600 to $4,600 per year. Deductibles for individual plans purchased through the marketplace can be much higher.

Even if your insurance kicks in to cover its portion of claims, you can be sent to collections for your part of medical debt. 

Myth: As long as you’re paying anything, you won’t be turned over to collections.

Fact: There isn’t a minimum amount you can safely pay to avoid an account being sent to collections. That doesn’t mean you can’t make a payment arrangement with your provider, though. Many hospitals, doctors offices, and other medical providers will make payment plans with patients. In that case, get the agreement in writing and pay as you promised. If you miss payments or don’t send the amount you agreed, the provider might send you to collections.

Myth: Medical debt won’t hurt your credit.

Fact: Medical debt won’t hurt your credit as much as other types of debt. Medical debt is treated differently than other types of debt when it comes to your credit. They won’t affect your credit score as long as you pay them.

Even medical debt that goes to collections doesn’t show up immediately on your credit report or impact your score. The Medical Debt Relief Act is a 2016 amendment to the Fair Credit Reporting Act requires a 180-day waiting period before medical collections can be reported on your credit history. This is meant to give people time to resolve insurance payment issues and take care of medical debts.

Some of the newer credit scoring models also weigh medical debt less than other forms of debt. That means a medical collections account might have a smaller impact on your score than another type of collections. 

Myth: Medical bills are always accurate.

Fact: Some professionals in the industry estimated that 80% of medical bills contain at least one small error. That means you can’t just assume your bills are correct and the provider and insurance company have everything covered. After seeking medical treatment, watch your mail for statements and bills and check over them well. And if you don’t get a bill, call your provider and ask about the account just to make sure. 

Myth: Providers have to wait a certain time period before turning you over to collections.

Fact: Depending on your agreement with a provider, your portion of the bill could be due upon receipt of services. If you don’t pay as soon as you get a bill, the provider could turn you over to collections. In most cases, medical providers do wait some period of time, which can range between 30 and 180 days on average. But there’s no guarantee, and you should always read the fine print of any financial documents you sign at your doctor’s office or other medical facility.

Tips for Dealing with Medical Bills

Any time you’re contacted by a collection agency, you have the right to written confirmation of the debt as well as the right to dispute it. That’s your right under the federal Fair Debt Collection Practices Act. If you know your rights, you’re in a better position to stand up for them.

Under the federal Fair Credit Reporting Act, you also have the right to challenge inaccurate information on your credit reports. But you have to know how to properly challenge an item on your credit report to get results.

Here are some best practices to consider when dealing with medical debt.

  • Never assume that you won’t owe. Ask your provider for details about costs, and follow up with your insurance company and provider even if you don’t get a bill.
  • Always ask for proof of what you owe. If a medical provider or its billing entity sends you a statement, it might not contain a detailed breakdown of all the charges. You have a right to receive that information, though. Request it in writing and review all the charges to ensure they reflect the services you received.
  • Compare bills to insurance EOBs. Your insurance explanation of benefits breaks down each charge. Typically, an EOB should tell you how much the provider charged, how much the insurance disallowed, how much the insurance paid, and how much you owe. Make sure what you’re billed for doesn’t exceed what the insurance said you owe.
  • Make payment arrangements as soon as possible. It’s never too early to talk to your provider’s billing department. Even if they aren’t sure exactly how much you owe, start asking about payment arrangements. Many providers have processes in place to create payment schedules or discount portions of your bill if you pay in advance.
  • Ask to make monthly payments on medical bills. You may be able to make monthly payments, but you’ll need documented proof that the provider or collector has agreed to this. That way, if they report a negative item on your credit report, you can dispute it by showing they agreed to the payments you’re making.

If you’re facing medical collections, you may need to consider what you can realistically pay. You might be able to settle the debt for less than owed or agree to payments with the collection. Always get everything in writing, and if you’re not sure where to start, consider consulting an attorney who helps consumers with medical debt collections. An attorney can help you understand what your options are and whether your account might be past any statutes of limitations. 

Dealing with Medical Bills in Emergency Times

During emergency times, rules and regulations around medical bills might change. Government interventions and hospital policies right now may make it easier for many people to seek much-needed health care due to COVID-19.

Go to the COVID-19 Guide

At a time when your personal finances might also be strained by loss of income or other factors, facing medical bills might seem daunting. But even during a crisis, you shouldn’t ignore this aspect of your health care. Instead, discuss options as early as possible with your provider, and let them know if you don’t think you’ll be able to pay. If you speak up proactively, medical providers can act early to help you access any assistance that might be available.

Medical debt can impact your credit score. And, if you don’t pay the debt, collectors could seek a lawsuit against you. Stay up to date on your credit report and score to ensure there aren’t medical debts lurking that could come back to haunt you. A good place to start is with the free Credit Report Card from

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