Medical Debt

How It Works

Medical debt differs from other consumer debt in critical ways: it is usually unplanned, the "prices" are not known upfront, and the amounts can be devastating even for insured patients. In 2023, the three major credit bureaus agreed to remove paid medical debts and debts under $500 from credit reports. Several states have passed medical debt protection laws limiting interest rates on medical debt, requiring hospitals to offer financial assistance before pursuing collections, and prohibiting certain collection tactics. New federal rules are further restricting the impact of medical debt on credit scores and lending decisions.

Related Terms

• Charity Care (Financial Assistance) — Free or reduced-cost hospital care provided to patients who cannot afford to pay — all nonprofit hospitals are required to have financial assistance policies.
• Good Faith Estimate — A written estimate of expected charges for scheduled healthcare services that uninsured or self-pay patients have the right to receive under the No Surprises Act.
• Surprise Medical Bill (Balance Billing) — An unexpected bill from an out-of-network provider — often occurring during emergencies or when an in-network hospital uses out-of-network specialists without the patient's knowledge.