Updated: Apr 01, 2024

How to Avoid Having Medical Bills Go to Collections

Take these steps after you find out that your medical bills are now in the hands of a collection agency.
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Americans make more than 140 million visits to the emergency room each year, and each of those visits is expensive. A trip to the ER can cost more than $2,000.

Even non-emergency room medical bills can be rather expensive.

If you have a bad health year, it’s quite easy to rack up huge amounts of medical debt, especially if you don’t have insurance.

If you have trouble paying your medical bill, the bill might get sent to collections.

Here’s what you should do if that happens to you. The ultimate goal here is to avoid having a collections item from ending up on your credit report.

1. Speak to the Billing Department

If your medical bill gets sent to collections, the very first thing you should do is speak to the billing department of the hospital (or any healthcare provider).

Hospital billing departments may willing to work with you.

It’s possible that the medical bill wasn’t even intended to go to collections, so talking to the billing department can sort out the issue.

At the very least, you need to ask the billing department for a copy of your bill, as well as receipts for any payments you made.

2. Verify the Bill

Once you have a copy of the bill and receipts for payments you’ve made, go through each line-by-line. Make sure that you understand each and every charge listed on the bill.

If you don’t understand a charge, ask the billing department. If you feel like you’ve been overcharged, or charged for a procedure that never occurred, bring it up.

Healthcare providers, especially hospitals, generate hundreds of bills every day, so it’s not unusual to see an error when you look closely at your bill.

Also, make sure that the hospital has records for every payment you sent, and that the records are correct. If you made payments that aren’t on the record, work with the hospital to sort it out.

3. Contact Your Insurance Company

After you have a copy of your bill, contact your insurance company.

If you don’t have one already, request a copy of the statement of benefits for your visit.

This will summarize what the insurance company did and did not cover on the bill. It will also show how much the insurance company paid for each item on the bill.

If there’s anything the insurance company didn’t cover, ask why.

There might be a policy covering why the insurance company didn’t pay for a procedure, or it may have been an error.

Also ask if you notice that the insurance company paid for a portion of a billed procedure, but not all of it.

If you know what you’ve been billed for and what the insurance company has and hasn’t paid for, you might be able to get your insurer to pay for more of the bill by asking.

4. Negotiate the Balance

Once you’ve worked with your insurance company to make sure you’ve taken full advantage of your benefits, go back to the healthcare provider.

If you look closely at your summary of benefits from the insurance company, you might notice something surprising.

Insurance companies usually only pay a fraction of what the hospital charges for a procedure.

For example, if a hospital charges $1,000 for treating a broken bone, the insurance company might only pay $300 for the procedure. 

When the hospital sends you a bill, it will usually bill you for the full amount that it bills insurance companies.

The hospital almost never expects to get paid the full amount and is quite used to writing off a portion of the amount charged.

Contact the billing department and ask to negotiate your bill. You should be able to get the bill reduced by a large amount, just by asking.

It is okay to be upfront with your financial situation by explaining that you cannot afford to pay the entire bill. You can offer a lump sum payout to clear the debt.

For example, you can tell a hospital that you cannot afford the $2,000 at the moment. Then, say that you can pay $1,000 right now instead.

The worst-case scenario is that the hospital says no, leaving you in the same situation you were in before.

5. Ask to Set Up a Payment Plan

If you cannot make a large upfront payment, ask about setting up a payment plan. (You may still be able to negotiate on these payments.)

Hospitals are very used to this because most people cannot afford to pay a medical bill in full right away.

The hospital should be willing to work with you to come up with a plan that offers manageable monthly payments.

Another benefit of this is that you’ll be working directly with the hospital to make payments, rather than a collections company. Collections companies are notoriously predatory, and a pain to deal with.

Working with a hospital billing department on a payment plan is much easier.

6. Monitor Your Credit

Once you’ve set up your payment plan, keep an eye on your credit. Make sure that the collections account is removed from your credit report.

Also, keep an eye out for other medical bills showing up in collections.

You can check your credit report for free at AnnualCreditReport.com. You receive one free credit report from each of the three major U.S. credit bureaus -- Equifax, Experian, and TransUnion -- per year.

Other Options for Paying a Medical Bill

If you’ve incurred a large medical bill and your insurance won’t cover it in full, you’ll be left to pay the remainder. You can use these options to handle your medical debt.

Personal loans

If you don’t have much luck setting up a payment plan with the hospital you can create one for yourself by applying for a personal loan.

Taking out a personal loan can be expensive due to the interest charges, but will cost less than letting the bill go to collections.

Many lenders offer personal loans and you can use them for nearly any purpose. Paying medical bills is one of the more common reasons to open a personal loan.

Personal loans can be for as little as a few thousand dollars or as much as $100,000 or more. You can get a personal loan with payment terms ranging from 2 – 7 years.

The wide variety of loans available makes it easy to find a loan that will be suitable for paying off your medical debt.

Low APR credit cards

Another option is a low APR credit card -- preferably one with an introductory 0% APR. Many credit cards offer a sign-up incentive where they do not charge any interest for the first 12 – 24 months that the card is opened.

So long as you continue to make monthly payments on the card, you won’t incur any interest.

This can help you save a lot of money, so long as you are able to pay the bill in full before the promotional period ends.

Healthcare financing

Given the rise in healthcare costs in recent years companies specializing in healthcare financing have started to emerge.

Many hospital billing departments now work with companies that specialize in lending money to people who need help paying medical bills.

There are also healthcare financing companies that work directly with consumers, rather than hospitals.

These companies are familiar with medical bills and can help you read your bill and understand the charges.

They also understand that people who have recently visited the hospital are often unable to return to work quickly.

This means that these companies understand the unique issues that come with medical debt and are able to handle them. That experience means that they can sometimes offer better financing deals than a personal loan could.


Healthcare is incredibly expensive and the costs are continually increasing.

If you ever have an accident and require medical care, you might find yourself with a huge bill that you’re unable to pay.

Take the steps we’ve listed and you can minimize the size of your bill.

Once you’ve done that, you can start taking steps to get back to good health and pay off the bill.