Medical Debt

Medical debt is money owed for healthcare that has not been paid, whether it sits on a hospital's books, with a collection agency, or on a credit card that was used to pay a provider. It is the most common kind of debt in collections in the United States. About 100 million Americans carry some, and roughly 14 million owe more than $1,000. Most of it belongs to people who had insurance at the time of the care.

That last fact is the important one. Medical debt is rarely the result of no coverage; it is the result of deductibles, coinsurance, out-of-network surprises and billing errors on top of coverage. A family on a $6,000-deductible plan has one emergency and owes $6,000 they did not have. A hospital bill that was wrong by $1,200 goes to collections while the dispute is pending. Unlike most debt, medical debt is negotiable at nearly every stage: hospitals discount unpaid balances, collection agencies buy debt for pennies on the dollar and will settle, and many bills shrink or disappear when an itemized statement is requested and checked. Federal rules now bar the No Surprises Act balance bills from being collected at all, and the three credit bureaus stopped reporting medical debt under $500 and paid medical debt in 2023.

The takeaway: never pay a medical bill you have not seen itemized, and never assume a collection notice is correct. Request the itemized bill, check it against your explanation of benefits, apply for financial assistance if the hospital is nonprofit, and negotiate the remainder in writing. Most medical debt is smaller than it looks.