Medical Debt: Special Rules You Need to Know

Medical debt plays by different rules

Unlike credit card or auto loan debt, medical debt has special legal protections at both the federal and state level. Changes in recent years have significantly reduced the impact of medical debt on your credit and your life. Here's what you need to know.

Medical debt under $500 no longer appears on credit reports

As of 2023, the three major credit bureaus (Equifax, Experian, TransUnion) no longer report medical debt under $500. This was a voluntary change by the bureaus, and it removed an estimated 70% of medical collections from credit reports.

The one-year waiting period

Medical debt cannot appear on your credit report until at least one year after it goes to collections. This gives you time to work with your insurance company, negotiate with the hospital, or apply for financial assistance — all before your credit takes a hit.

The No Surprises Act

Since January 2022, the No Surprises Act protects you from surprise medical bills in many situations:

• Emergency services at out-of-network facilities
• Out-of-network providers at in-network facilities (you didn't choose the provider)
• Air ambulance services from out-of-network providers

If you've received a surprise bill that might be covered, file a complaint at cms.gov/nosurprises.

Hospital financial assistance (Hill-Burton and charity care)

This is the biggest thing most people don't know: nearly every nonprofit hospital is required to offer financial assistance programs. You can apply even after treatment, and even after the bill has gone to collections.

• Hill-Burton facilities are federally obligated to provide free or reduced-cost care. Find participating facilities at hrsa.gov.
• Charity care / financial assistance — ask the hospital's billing department for their financial assistance application. Income thresholds are often higher than you'd expect (200-400% of the federal poverty level).

The itemized bill strategy

Before paying any medical bill, always request an itemized bill (not just a summary). Studies show that up to 80% of medical bills contain errors. Common issues:

• Duplicate charges
• Charges for services not received
• Incorrect codes (upcoding)
• Charges that should have been covered by insurance

If medical debt is already in collections

You still have options:

1. Request validation from the collector — they need to prove the debt is accurate
2. Check if the hospital's financial assistance program still applies (many allow retroactive applications)
3. Negotiate a settlement — medical debt collectors often accept 20-50 cents on the dollar
4. If it's under $500, verify it's not on your credit report (it shouldn't be)