Medical Bills that have been sent to a Collection Agency

Dealing with Medical Bills that have been sent to a Collection Agency

Healthcare consumers are experiencing difficulty paying off their medical bills and the bills end up with a collection agency.  This is occurring more frequently due to the increase in deductibles and out of pocket expenses.  To begin, the following are results from a survey conducted by the Kaiser Family Foundation/New York Times.

  1. One in five working aged Americans with insurance has problems paying medical bills. Of uninsured, 53% reported having problems.
  2. Those facing problems paying medical bills, 44% insured and 45% uninsured said bills had a major impact on their families.
  3. Of those insured, 26% received a claim denial and 32% received care from an out of network provider.
  4. Those consumers with private insurance that were enrolled in a high deductible plan, 26% report they were experiencing bill paying problems compared to 15% with lower deductible plans
  1. The insured and uninsured consumers with medical bill problems, 31% said the bills they had problems paying reached $5,000, including 13% who said their bills were at least $10,000. One in four said their bills were $1,000 or less.
  2. 31% of the insured took money out of retirement, college or other long term savings to pay medical bills; 17% of the uninsured said the same. 17% of the insured and 11% of the uninsured consumers took out a loan.
  3. 62% of the survey participants said they are concerned about paying for medical bills if they had emergent service. 28% said they skipped tests, missed a follow up appointment or didn’t schedule an appointment due to uncertainty to pay.

The survey results are alarming and could get worse due to shifting of healthcare expenses to the healthcare consumer.  If consumers do not pay their bills, they could end up sent to a collection agency.  Consumers are confused due to the complexity of the medical billing process.  So, what happens when your healthcare provider sends your bill to a collection agency?  The following will help you navigate the process.

The Medical Billing Process

After you receive your service from your healthcare provider, the provider will bill your insurance company or you.  If your insurance company is billed, several actions will occur; they pay the bill correctly; they pay your bill wrong or they will deny the bill.  Most consumers will receive a bill from the healthcare provider and pay it.  Others will partially pay it or ignore it. Those that do not pay it run the risk of the bill being sent to a collection agency.2.

When the Collection Agency receives the Bill

As a consumer, you have certain rights that protect you through the Fair Debt Collections Practices Act, a federal law. Medical bills are covered under the law.  The following are several rules a collection agency or debt collector must follow.  Failure to comply with rules gives you the option to file a complaint.

  1. Written Notice

Within five days of contacting you, the debt collector must send the consumer a written notice telling you the amount of the debt and the name of the company you owe the debt.  The notice must explain the dispute process if you believe you do not owe the bill.

  1. Disputed Debts

If the consumer disputes the debt, the debt collector must verify the debt in writing prior to restarting the collection process.  The consumer must receive answer to the dispute in writing.

  1. Written Notice for No Further Action

The debt collector must cease to contact the consumer if the consumer sends a letter requesting the debt collector to do so.

  1. Collection Calls

Collection calls cannot be made early in the morning or late at night…before 800am/after 900pm.  Calls at work are not allowed when the consumer makes it clear the employer disapproves.  Numerous calls per day are not allowed by the debt collector.

  1. Verbal Abuse or Threats

Neither are allowed.

  1. Relatives, Friend, Co-Workers or Neighbors

The debt collector can call the people above to find out your address, telephone number and where you work.  They cannot discuss your debt.

  1. Collecting More than the Consumer Owes

A debt collector cannot ask for more money from the consumer than they actually owe.

Paying a Medical Bill that is at a Collection Agency

A medical debt is just like any bill you receive with one exception; the consumer may not of planned for the expense and it is stressful situation.   As mentioned earlier, one in five adults in the United States has medical debt. Also, medical debt is becoming one of the major factors that consumers file for bankruptcy.  The following will guide healthcare consumers through the payment process


  1. Medical Bills the Consumer Owes that are not at a Collection Agency

Preventing the medical bill from being sent to a collection agency is the first proactive step.  In the Consumer Navigator Section of this Web Site under the Healthcare Consumer Discounts Tab, we walk the consumer through how to deal with medical bills.  We encourage the consumer to review this guide. Again, be proactive!  The last thing a healthcare provider wants to do is sent the medical bill to a collection agency.  The healthcare provider must pay the collection agency a fee.  Remember, if a medical bill is assigned to a collection agency, the chances are very high you will not be welcomed back to that doctor or facility.

  1. Medical Bills at a Collection Agency

When the consumer starts to receive bills from a collection agency, the following steps should be followed.

  1. Make sure the medical bill is correct. If not, use the Written Notice or Dispute option in Section II above.
  2. As like medical bills that are not sent to a collection agency, they are negotiable.
  3. If you cannot pay the medical bill in full, ask for a payment plan. Most collection agencies will agree to this option and they are usually interest free.
  4. If the consumer is having difficulty with the medical debt, it may be advisable to contact a professional settlement firm.
  5. If appropriate, secure a loan from the organization of the consumers choice.
  6. If appropriate, use saving accounts.
  7. If the consumer believes they cannot pay the medical bill, request a charity application. The consumer may qualify for a charity program offered by the healthcare provider.
  1. If the consumer believes they cannot pay the medical bill, request a Medicaid application. The consumer may qualify for a Federal or State program.

Medical Bills and Your Credit Report

Medical bills that have been sent to a collection agency will appear on your credit report.  Normally, it will take 30 days for the medical bill to appear on the consumers’ credit report.

Medical bills will affect your credit score negatively.  Medical debt is mostly uncontrollable.  This means, most companies granting credit look at medical debt differently because it is uncontrollable.  There are two credit score version currently in use; Version 8 and Version 9.  Most companies are using Version 8.  This means medical bills are weighted more heavier than they will be in Version 9.  Version 9 will not be a solution but will help level the playing field when medical debt is concerned.

Paying off you medical debt, when at a collection agency, will not change your credit score because it is still showing on the consumers credit report.  It will show paid and the credit granter will take that into consideration.


Medical bills will became larger and more frequent in the future due to the shifting of healthcare cost to the healthcare consumer.  Healthcare consumers must become very proactive in managing and planning for medical debt.



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