Medical Debt: Your Options and Your Rights

Medical bills can arrive out of nowhere, be hard to read, and quickly feel bigger than your budget. At the same time, you may worry that a single hospital visit could wreck your credit score or lead to aggressive collection calls. The reality in 2025 is more nuanced: recent changes have reduced the impact of some medical debts on credit reports, federal laws limit many “surprise” bills, and nonprofit hospitals must offer financial help before using harsh collection tactics. But large or disputed balances can still follow you if you ignore them.

This article walks you through how medical debt affects your credit today, what protections you have against surprise bills and emergency denials, and step-by-step options to cut a bill down, get help paying it, or respond if it lands in collections. The goal is simple: help you protect both your health and your financial life, using the rules that already exist to your advantage.

How medical debt affects your credit in 2025

Medical bills and medical debt are not the same as regular credit card debt. A medical bill is what your provider sends after care. It becomes “medical debt in collections” only if it goes unpaid long enough that the provider sends it to a collection agency or sells it. By contrast, if you put a medical expense on a credit card or personal loan, that balance is treated like any other credit account and can affect your score as soon as it shows up — it is not protected by medical-debt rules.

Major credit bureaus have already limited how they report medical collections. Equifax, Experian, and TransUnion announced a three-part change that rolled out in 2022 and 2023. First, they stopped reporting paid medical collection accounts. Second, they added a one-year waiting period before any new, unpaid medical collection can be reported, giving you more time to resolve insurance issues or set up assistance. Third, they removed medical collection debts with initial reported balances under $500 from credit reports entirely.

Those bureau changes remain in effect even after a federal rule was struck down. In January 2025, the Consumer Financial Protection Bureau (CFPB) finalized a rule that would have banned medical bills from credit reports used by lenders and barred lenders from using medical debt in credit decisions. A federal judge in Texas later vacated that rule before it took effect, so it is not currently in force. The practical takeaway: medical debts over $500 that are more than a year old and in collections can still appear on your credit reports, but smaller, newer, and fully paid medical collections should not.

State laws may offer additional protections, but they vary widely. Several states have passed their own limits on how medical debt can be reported or used in credit decisions, while others have not. Some of those state protections are now being questioned in light of the federal court ruling, and litigation is ongoing. Because state rules can change quickly, it is smart to check your state attorney general’s or consumer protection office website for the latest local protections.

Medical debt is often error-prone, which is part of why regulators treat it differently. Studies cited by federal agencies show that medical bills frequently include coding mistakes, misapplied insurance rules, or duplicate charges, and consumers often do not even know a bill is in collections until they see a notice or a credit report entry. That is one reason bureaus added a one-year waiting period and removed smaller balances — they recognize that many “debts” are really unresolved paperwork or insurer disputes.

You can and should dispute medical collection items that look wrong. If a medical collection still appears on your credit report and you believe it is inaccurate, outdated, or should have been removed under the bureaus’ own policies, you can dispute it directly with the credit bureaus and, separately, with the collector. Include copies of any explanations of benefits (EOBs), receipts, or letters showing payment, charity-care approval, or balance adjustments.

Be mindful of how you pay — it affects both credit reporting and protections. Paying a provider or collector directly keeps the debt in the medical category. Moving a balance onto a general credit card, medical credit card, or personal loan can simplify payments but also converts it into standard consumer debt that is fully reportable and can affect your credit utilization rate (balances ÷ limits). Medical-specific protections, such as certain dispute rights or future rule changes, may not apply to that converted debt.

Regular credit-building basics still matter more than any single medical bill. On most scoring models, on-time payment history and revolving utilization carry far more weight than one collection account. Keeping credit card balances low relative to limits, paying all accounts on time, and avoiding new high-interest debt can offset some of the damage from a medical collection — especially if you are actively disputing errors or seeking assistance to resolve it.

If your score suddenly drops, check for medical collections first. Because medical collections have historically made up a large share of collection tradelines, reviewing all three major credit reports at least once a year — and after any big medical event — is a smart habit. You can get free reports at AnnualCreditReport.com and then focus disputes on any items that violate bureau policies or stem from clearly incorrect bills.

Bottom line: medical debt can still affect your credit, but less than before. Paid collections, small balances under $500, and debts less than a year old should not appear. Larger, older medical collections can still hurt your score, especially if they are truly unpaid. Treat any new bill as something to verify and resolve quickly, so it never reaches the credit-report stage.

Protection from surprise bills and emergency care rules

The No Surprises Act protects many patients from out-of-network “gotcha” bills. Since 2022, this federal law has limited surprise medical bills for most emergency services, certain non-emergency services at in-network hospitals, and out-of-network air ambulance services. In these situations, your cost sharing is generally limited to what you would have paid in-network, and disputes about the rest must be handled between your insurer and the provider, not billed to you as a huge balance.

Out-of-network emergency care at the closest ER is usually protected. If you have a medical emergency and go to the nearest emergency department, the No Surprises Act generally bars the hospital and doctors from “balance billing” you for the difference between their charge and what your plan pays, even if they are out of network. You still owe your normal in-network copays, deductibles, and coinsurance, but not an extra out-of-network surcharge for that emergency visit. State laws may add more protections on top of these federal rules.

Certain non-emergency services at in-network facilities are also covered. When you schedule care at an in-network hospital or surgery center, it is common for some providers who treat you (like anesthesiologists or radiologists) to be out of network without your knowledge. The No Surprises Act generally prevents those out-of-network providers from balance billing you for covered services tied to that in-network facility, unless you give specific, advance consent to waive protections — something you should be very cautious about signing.

Uninsured and self-pay patients have “good faith estimate” rights. If you are uninsured or choose to pay out of pocket, you have the right to receive a written good faith estimate (GFE) of the cost of scheduled non-emergency services. If your final bill for a provider or facility comes in at least $400 higher than that estimate, you may be able to use a federal dispute process to challenge it.

EMTALA guarantees emergency screening and stabilization, regardless of ability to pay. Separately from billing laws, the Emergency Medical Treatment and Labor Act (EMTALA) requires Medicare-participating hospitals with emergency departments to provide a medical screening exam and necessary stabilizing treatment to anyone who comes to the ER with a possible emergency medical condition, regardless of insurance status or ability to pay. Hospitals generally cannot delay that screening or stabilization to ask for payment or check insurance.

EMTALA does not erase the bill — it protects access to care first. After you are stabilized or transferred appropriately, the hospital can still bill you and pursue payment under its normal policies. EMTALA is about making sure you are treated in an emergency, not about forgiving the cost. However, it can be relevant if you are ever pressured for payment before getting emergency evaluation or treatment, which may violate the law.

Nonprofit hospitals must have financial assistance and fair collection policies. Under Internal Revenue Code section 501(r), tax-exempt hospitals must adopt a written Financial Assistance Policy (FAP), publicize it, limit amounts charged for emergency or medically necessary care to FAP-eligible patients, and make “reasonable efforts” to determine if a patient qualifies for assistance before using extraordinary collection actions like lawsuits, wage garnishment, or credit-bureau reporting.

You are allowed to ask for that financial assistance policy and an application. Hospitals must describe eligibility criteria, how to apply, what documentation is required, and what help is available (such as free care or sliding-scale discounts). They also have to provide translations in communities where many patients speak other languages, and they cannot jump straight to harsh collection tactics without first screening for assistance under their FAP.

State and local programs may supplement federal protections. In addition to federal law, some states have their own charity-care rules, hospital pricing limits, or extra surprise-billing protections. Legal aid organizations and state consumer agencies often publish plain-language guides to these rights. Because these rules are specific to where you live and can change, it is important to verify them for your state rather than assuming federal protections are the whole story.

Combining these protections gives you leverage before a bill turns into debt. Together, EMTALA, the No Surprises Act, and hospital FAP requirements mean you can insist on emergency treatment, challenge some out-of-network and surprise charges, and request formal screening for financial assistance — all before a bill is sent to collections or reported on your credit. Using those tools early is often the difference between a manageable bill and a long-term debt problem.

Lowering or erasing a medical bill: practical steps

Step 1: Get a detailed, itemized bill and your insurance Explanation of Benefits (EOB). Ask the provider for an itemized statement listing dates, services, and billing codes. Then request or download your EOB from your insurer for the same visit. Compare line by line, looking for duplicate charges, services you did not receive, coding that seems unrelated to your visit, or anything insurance marked as “not covered” for unclear reasons.

Step 2: Challenge obvious errors and ask for a corrected claim. If you see mistakes — for example, the wrong date, the wrong provider, or a procedure your doctor says you did not have — contact both the provider’s billing office and your insurer in writing. Ask the provider to correct and resubmit the claim, and ask your insurer to review the claim for possible coding or network errors. Keep notes on who you spoke with and when.

Step 3: Use your right to appeal insurance denials. If your insurer denies or underpays a claim you believe should be covered, you usually have at least 180 days to file an internal appeal, and many plans also offer an independent external review if the internal appeal fails. Include your doctor’s supporting letter, relevant medical records, and a copy of the benefit language or clinical policy you believe applies. Track appeal deadlines carefully; missing them can limit your options.

Step 4: Apply for hospital financial assistance (charity care) if your income qualifies. For nonprofit hospitals, ask specifically for the Financial Assistance Policy and an application. Under 501(r), hospitals must explain who qualifies, what discounts or free care are available, and how to apply, and they must evaluate your eligibility before pursuing extraordinary collection actions. Even if your account has been referred to collections, you can often still apply and have the balance adjusted.

Step 5: Negotiate the remaining balance and seek a realistic payment plan. Once errors are fixed, insurance appeals are resolved, and financial assistance is applied, you are in a better position to discuss what is left. Ask whether the provider offers interest-free or low-interest payment plans, and get the terms in writing: total balance, monthly payment, start date, and any consequences of missing a payment. Avoid “deferred interest” medical credit cards unless you fully understand the fine print and can pay off the balance before the promo period ends.

Step 6: Request a discount if you can pay a lump sum. Some providers will reduce the overall bill if you can make a one-time payment, especially after insurance and charity care have already lowered the amount. If you are offered a settlement, be sure you understand whether it resolves the entire account, how it will be reported (if at all), and whether any remaining portion might still be sent to collections.

Step 7: Keep meticulous records in one place. Create a simple folder (physical or digital) for each episode of care. Include bills, EOBs, appeal letters, FAP applications, approval notices, and notes from every phone call. If a collector later claims you ignored the bill, your paper trail can show that you were actively disputing charges and seeking assistance.

Step 8: Be cautious about using credit cards or personal loans to “clean up” a bill. Converting a medical bill into standard consumer debt may stop collection calls in the short term but can increase interest costs, hurt your credit utilization ratio, and strip away some medical-specific protections. Consider this only after you have exhausted error checks, insurance appeals, financial assistance, and direct negotiation with the provider.

Step 9: If you feel stuck, consider nonprofit credit counseling or legal aid. Reputable nonprofit credit counseling agencies can help you review your budget, prioritize debts, and decide whether to negotiate further or consider options like a debt management plan. Legal aid organizations often have specific expertise in medical billing, hospital charity care, and debt collection lawsuits, especially for low-income patients.

Step 10: Act early — every month you wait narrows your options. The longer a bill sits unpaid, the more likely it is to accrue late fees, go to collections, or appear on your credit report once the one-year reporting grace period runs out. Even if you can only take a small step this week — like requesting an itemized bill or asking for the FAP — that action can significantly improve your position later.

If your medical bill is in collections: your rights and the 30-day window

Debt collectors must send you detailed information about the debt. Under the federal Fair Debt Collection Practices Act (FDCPA) and the CFPB’s Regulation F, collectors have to provide “validation information” that helps you identify the debt, including the name of the creditor, an itemization of the amount, and the date when your 30-day dispute window ends. This notice may arrive by mail or electronically, depending on how they contact you.

You generally have 30 days from receipt of the notice to dispute the debt in writing. If you send a written dispute or request for verification within the “validation period,” the collector must pause collection efforts until they provide verification, such as a copy of a bill or judgment. Failing to dispute within 30 days does not make the debt valid, but it can limit certain protections under the debt-collection rule.

Use that 30-day window strategically. When you dispute, be specific: explain if the debt is not yours, already paid, subject to charity-care review, part of an insurance appeal, or inflated with charges that were never explained. Include copies (never originals) of key documents and send your letter by certified mail or another trackable method. Keep copies of everything you send and any responses you receive.

Collectors are not allowed to harass you or lie about what you owe. The FDCPA bans threats of violence, obscene language, repeated calls intended to annoy, and false statements about the debt or legal consequences. It also restricts calls at inconvenient times and places (like very early or late phone calls or calls to your workplace if you say they are not allowed). You can ask collectors to stop contacting you, but doing so does not erase the debt or prevent them from suing; it simply limits communication.

A collection notice does not always mean you owe the full amount claimed. Collectors often buy debts in bulk or receive partial information from providers, and records can be incomplete or outdated. That is why the validation process exists. Sometimes, pressing for documentation leads to big corrections — for instance, removing charges that should have been written off under a financial assistance policy or adjusted after an insurance appeal.

If you are sued, respond — ignoring court papers is usually the worst option. A default judgment can open the door to wage garnishment, bank account levies, or property liens, depending on your state’s law. If you receive a summons, check the deadline to file an answer, contact legal aid or a consumer-law attorney if possible, and bring all your documentation to any hearing. In some cases, showing that the bill was inaccurate, not properly documented, or not screened for charity care may lead to a better settlement or dismissal.

Be careful about restarting statutes of limitation with partial payments. In some states, making a small payment on an old debt can restart the clock on how long the collector has to sue you. Before you agree to any payment on a debt that might be old, it is wise to find out your state’s statute of limitations for medical debts and talk to a legal professional or reputable nonprofit counselor if you are unsure.

Medical collections can sometimes be negotiated or settled. If the debt is valid but unaffordable, some collectors will agree to a reduced lump-sum settlement or a realistic payment plan. Get any agreement in writing before you pay, and keep proof of payment. Check your credit reports afterward to see how the collection is updated and dispute any reporting that does not match the agreement.

Throughout the process, keep focusing on your broader financial health. Even while dealing with a collection, try to maintain on-time payments on your active accounts, avoid new high-interest debts where possible, and keep your budget realistic. Medical debt is often the result of circumstances you did not choose, and rebuilding your financial footing is a long-term project, not a judgment on your worth.