Medical debt operates differently from other types of debt. Hospitals, especially nonprofit ones, are legally required to have financial assistance programs. Bills frequently contain errors. Balances are more negotiable than most people realize. The three major credit bureaus voluntarily removed paid medical collections and unpaid medical debts under $500 from credit reports starting in 2023 — though a broader CFPB rule that would have removed all medical debt was vacated by a federal court in July 2025.
Start with the steps most people skip.
Step 1: Request and verify the itemized bill
Before paying anything, request an itemized bill that lists every charge separately. Compare it to your Explanation of Benefits (EOB) from your insurer if you have coverage. Billing errors in medical bills are common — duplicate charges, incorrect billing codes, charges for services not received. If you find errors, dispute them with the hospital billing department in writing.
Step 2: Apply for financial assistance (charity care)
Tax-exempt hospitals are required by the IRS to have written financial assistance policies and must provide information about them without being asked. The CFPB recommends contacting the hospital’s billing department and asking directly:
- “Do you have a financial assistance program or charity care?”
- “Can I have a copy of your financial assistance policy?”
- “What are the income requirements to qualify?”
Income thresholds vary by hospital, but many programs extend to households earning up to 200–400% of the federal poverty level. Some cover costs entirely; others provide sliding-scale discounts. You can apply even after the bill has been sent to collections.
Step 3: Negotiate the balance
Hospitals frequently accept less than the billed amount, particularly for patients without insurance or with high out-of-pocket costs. Two approaches:
Ask about the Medicare rate. Hospitals accept Medicare payments that are typically 40–60% of what they bill uninsured patients. Asking the billing department to match or approach the Medicare rate for the same services is a documented tactic — it works often enough to be worth trying.
Offer a lump-sum settlement. If you can pay a portion upfront, many hospitals and collection agencies will accept a reduced amount to settle the debt in full. Get any settlement agreement in writing before making payment.
Step 4: Set up a payment plan
If you can’t pay in full, request a payment plan. Most hospitals offer them; many offer zero-interest plans. The CFPB recommends:
- Asking specifically for a zero-interest plan before agreeing to any terms
- Keeping the monthly amount affordable — overcommitting creates a different financial problem
- Getting the terms in writing
Step 5: Know your rights if it goes to collections
Medical debt that ends up with a collection agency is still subject to the Fair Debt Collection Practices Act (FDCPA). Collectors:
- Cannot call before 8am or after 9pm
- Must stop contacting you if you send a written request to cease contact
- Must provide written verification of the debt if you request it within 30 days of their first contact
Under rules that took effect in 2025, the major credit bureaus (Equifax, Experian, and TransUnion) no longer include medical debt under $500 on credit reports, and the CFPB has proposed additional rules that would remove most medical debt from credit reports entirely (check cfpb.gov for current status of this rulemaking).
Credit and medical debt
If medical debt is affecting your credit:
- Dispute any medical debt on your report that you’ve already paid or settled
- Contact your state attorney general if a hospital violated its financial assistance policy — this is a legally enforceable obligation
If you’re struggling with medical debt and other debts simultaneously, consider talking to a nonprofit credit counselor (look for NFCC-member agencies) who can help you prioritize.
Summary: what to do first
- Get the itemized bill and check for errors
- Ask about charity care / financial assistance — apply if you might qualify
- Negotiate the balance (Medicare rate question, lump sum)
- If necessary, negotiate a zero-interest payment plan
- Know your FDCPA rights if it reaches collectors