What to Do With a Medical Bill You Cannot Pay

Before you pay a medical bill you cannot afford, check it and ask about financial assistance. The CFPB says to confirm you owe the bill and that the charges are right, and it warns that doing nothing can bring late fees, interest, debt collection, lawsuits, garnishments, and lower credit scores. Then ask the provider for its financial assistance policy. Nonprofit hospitals are required to have one, and the IRS sets a minimum waiting period before they can use aggressive collection tools.

1. Step 1: Check that you owe it

The CFPB starts with basic questions. Have you already paid it? Could the provider or a collector have confused you with someone with a similar name? Then check the charges. If something looks wrong, ask for an itemized list and compare it to the care you got.

Questions the CFPB suggests:

• Are the charges accurate, and do they match the services you received?
• Does the bill reflect what your insurer paid and what the provider expected insurance to cover?
• Is any charge marked out-of-network when it was not?
• Is the same service or treatment billed twice?

Call the billing office, whose number is on the statement. Doing this quickly can avoid late fees and interest. If you disagree with how your insurer handled a claim, you have the right to an internal appeal and an external review, and your explanation of benefits tells you how.

2. Step 2: Check whether it is a surprise bill

Per the CFPB (page last reviewed December 2023), since January 1, 2022, the No Surprises Act protects insured patients from certain out-of-network charges, including for emergency services. The CFPB notes that some services, such as ground ambulance transportation, are not covered by that law.

3. Step 3: Ask for financial assistance

Financial assistance, often called charity care, means free or discounted care. The CFPB says the Affordable Care Act requires 501(c)(3) nonprofit hospitals to have a written financial assistance policy and an emergency medical care policy. The policy must say who is eligible, how charges are calculated, and how to apply. A for-profit hospital may also have a program, so ask.

The CFPB's steps:

1. Ask for a copy of the policy. It must be provided free.
2. Fill out the application. Expect to show income, such as last year's tax forms or a pay stub, and expenses like rent, utilities, and credit cards.
3. Ask how long processing takes and what happens to the bill meanwhile.
4. Tell any debt collector you are applying and ask them to pause collection.
5. Follow up with the billing department.

Some states add their own charity care laws. The CFPB names California, Connecticut, Illinois, Maine, Maryland, Nevada, New Jersey, New York, Rhode Island, and Washington as states whose protections apply to all hospitals. You can still apply if the bill is already in collections.

4. The timeline hospitals must follow

Under IRS Section 501(r)(6), a nonprofit hospital must make reasonable efforts to find out whether you qualify for assistance before taking "extraordinary collection actions." Those include selling your debt, reporting you to credit bureaus, suing, placing a lien, or garnishing wages.

The clock starts at the first post-discharge billing statement:

The hospital must also send a written notice at least 30 days before starting such actions, which can push the real start past day 120. It may keep accepting applications after day 240. Once it receives a complete application, it must pause those actions until it decides, then notify you in writing. If you qualify, it must refund overpayments above what you owe (unless under $5) and take reasonable steps to reverse collection actions already taken.

5. If you still owe something

The CFPB lists these options for a remaining balance:

• Negotiate the bill down to an amount you can afford.
• Ask for an interest-free repayment plan.
• Look for nonprofit help with medical bills and drugs.
• Be careful with credit cards or medical credit cards, since high interest can cost you and may remove your ability to negotiate.

Older adults enrolled in the Qualified Medicare Beneficiary program should not be billed for Medicare-covered services, including deductibles and copayments.

6. Key takeaways

• Verify the bill and request an itemized statement before paying.
• Nonprofit hospitals must have a written financial assistance policy, free on request.
• The IRS rule gives 120 days before extraordinary collection and a 240-day application window.
• Tell collectors you have applied and ask them to pause.
• The CFPB advises being careful with credit cards or medical credit cards for a medical bill, and notes an interest-free repayment plan may be better.