What Really Happens When You Refuse to Pay Medical Bills

Medical bills can be overwhelming, especially when they arrive unexpectedly after a health crisis. Many Americans find themselves wondering what would happen if they simply refuse to pay. At our financial advice blog, we’ve researched the consequences and options available when facing unmanageable medical debt.

The Reality of Medical Debt in America

Medical debt is a massive problem in the United States. Before 2022 changes in credit reporting, one in five Americans had medical debt on their credit reports, totaling a staggering $88 billion according to the Consumer Financial Protection Bureau (CFPB). The U.S. Census Bureau found that 19% of American households had medical debt in 2017, with a median amount of $2,000. For households without full insurance coverage, that debt was typically 50% higher.

When you receive a medical bill that you can’t afford, you might be tempted to ignore it. But before considering that route, it’s important to understand the timeline and consequences.

The Timeline: From Bill to Collections

You don’t immediately face severe consequences when you can’t pay a medical bill. According to Experian providers typically wait at least 60 days before sending unpaid bills to collections, and some may wait up to four months. This gives you a window of opportunity to work with your provider on finding a solution.

However, if you simply refuse to pay without communication, the consequences follow a predictable path:

1. You’ll receive multiple billing statements
2. Your provider will attempt to contact you
3. After 60-120 days, the bill may be sent to collections
4. The collection agency will begin contacting you
5. After 365 days in collections, the debt may appear on your credit report
6. Eventually, legal action could be taken

Verify That You Actually Owe the Bill

Before paying anything make sure the bill is accurate and that you actually owe it. Medical billing systems are notoriously complex and mistakes happen frequently.

Here’s what to check

• Request an itemized list of charges
• Verify that all charges reflect services you actually received
• Check if your insurance payments were properly applied
• Look for duplicate charges
• Confirm that no “out-of-network” charges appear for in-network services

If something seems wrong, contact the provider’s billing office immediately. The number should be on your billing statement. Acting quickly helps avoid late fees and interest while you resolve any issues.

Protection from “Surprise” Medical Bills

Since January 1, 2022, the No Surprises Act (NSA) protects patients from certain types of unexpected medical bills. This federal law prevents you from being billed the full out-of-network rate in situations like:

• Emergency services at out-of-network facilities
• Care at in-network facilities by out-of-network providers
• Air ambulance services

However, the NSA doesn’t cover all situations – ground ambulance services, for example, are NOT protected under this law.

If you believe you’ve received a surprise bill that violates the NSA, you can dispute it. Don’t just refuse to pay without investigating your rights first.

Options When You Can’t Afford to Pay

If you’ve confirmed the bill is accurate but still can’t pay, you have several options besides simply refusing payment:

1. Explore Financial Assistance Programs

Many hospitals offer “charity care” or financial assistance programs. The Affordable Care Act requires hospitals with 501(c)(3) nonprofit status to provide free or discounted care to eligible patients. Some states have additional charity care laws that expand these requirements.

Qualification typically depends on your income relative to the Federal Poverty Level. Even if you don’t think you’ll qualify, it’s worth applying – some programs are available to households making up to 400% of the poverty level.

2. Negotiate Your Bill

Don’t be afraid to negotiate! Medical providers often prefer getting some payment rather than sending bills to collections. You can:

• Ask for a reduced total if you can pay a lump sum
• Request an interest-free payment plan
• Inquire about prompt-pay discounts

3. Special Protections for Certain Groups

For older adults: If you’re covered by the Qualified Medicare Beneficiary (QMB) program, providers cannot bill you for services and items covered by Medicare, including deductibles, coinsurance, and copayments. If they do, call Medicare at 1-800-MEDICARE (1-800-633-4227).

For veterans: The VA offers financial hardship assistance, including repayment plans and debt relief. Contact the VA Health Resource Center at 866-400-1238 for help.

What Happens If You Still Refuse to Pay

Despite these options, some people may still choose to refuse payment. Here’s what typically happens:

Debt Collection

Medical debt is the largest type of debt in collections in America. Once your account is sent to collections (usually after 60+ days of non-payment), you’ll start receiving calls and letters from debt collectors.

The good news is that since 2022, the three major credit bureaus (Experian, TransUnion, and Equifax) allow a 365-day grace period for consumers to resolve medical debt in collections before it appears on your credit report. Additionally, paid medical debt in collections is removed from credit reports entirely, and medical debts under $500 won’t appear on credit reports at all.

Credit Score Impact

As of January 2023, medical debt in collections no longer factors into the calculation of VantageScore 4.0 credit scores. However, it can still affect other credit scoring models, and large medical debts over $500 that remain unpaid after the 365-day grace period will still appear on your credit report.

Legal Consequences

If you continue to refuse payment, the collection agency or provider may eventually sue you. If they win the lawsuit (which is likely if you truly owe the debt), the court might order:

• Wage garnishment (taking money directly from your paycheck)
• Bank account levies (taking money from your accounts)
• Property liens (claims against your home or other property)

Know Your Rights with Debt Collectors

If your medical debt is sent to collections, you still have rights under the Fair Debt Collection Practices Act. Debt collectors:

• Cannot contact you before 8 a.m. or after 9 p.m.
• Cannot call you repeatedly to harass you
• Cannot pose as someone else to trick you into paying
• Must provide verification of the debt if you request it
• Cannot threaten actions they cannot legally take or don’t intend to take

Also, remember that you have 365 days to resolve your debt before the credit bureaus are notified. If a debt collector tries to use credit reporting as a pressure tactic before this period is up, they may be violating your rights.

The Wiser Approach: Communication Over Refusal

Instead of flatly refusing to pay medical bills, a wiser approach is to communicate proactively with your healthcare provider or the billing department. Most providers would rather work with you than send your account to collections.

Here’s a step-by-step approach:

1. Review your bill carefully for errors
2. Contact the billing department to discuss your situation
3. Ask about financial assistance programs
4. Negotiate payment terms you can manage
5. Get any agreement in writing
6. Keep detailed records of all communications

Where to Get Help

If you’re struggling with medical bills and need assistance, several resources are available:

• Consumer Assistance Programs: Many states provide help for consumers experiencing problems with health insurance. Check your state health department website.
• Centers for Medicare & Medicaid Services: Offers detailed information about protections against surprise medical bills.
• State agencies: Your state attorney general or insurance department may offer helpful information and complaint processes.
• CFPB: If you have problems with debt collection or credit reporting related to medical bills, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).

Bottom Line: Think Twice Before Refusing to Pay

While refusing to pay medical bills might seem tempting when you’re facing financial hardship, the consequences can be severe and long-lasting. Instead, explore all available options for assistance, verification, and payment arrangements.

Medical billing systems are complex, and mistakes happen frequently. Before you decide not to pay, make sure you actually owe the amount being charged and explore all your options for managing the debt.

Remember that providers would generally rather receive partial payment than no payment at all. By being proactive and communicating openly about your financial situation, you may find solutions that help you avoid collections, credit damage, and potential legal action while preserving your access to healthcare in the future.

Have you ever faced overwhelming medical bills? We’d love to hear your experiences and solutions in the comments below!