Can I get medical debt lowered or forgiven?
By Jackie Lam
Reviewed by Kimberly Rotter
Jan 30, 2023
Read time: 11 min
Medical debt is the most common type of delinquent account reported to the credit bureaus.
Medical debt doesn’t affect your credit the same way as other debt (special rules help you avoid credit damage from medical debt).
You might be able to get your medical debt forgiven or resolved.
As if the medical emergency wasn’t bad enough, now you’re looking at an invoice that you don’t know how you’ll pay. Medical debt can come on quickly and in large amounts—like, really large amounts. If you’ve received medical care and gotten a big bill for it, you might be wondering what to do. You can manage your medical debt. Learn how to:
Lower your medical debt
Understand the collections process that will likely ensue
Know your rights as a consumer
Use resources to help resolve your debt
Consider other debt solutions to address your medical debt
Let’s demystify medical debt together below.
What is medical debt?
Medical debt is the money you owe to a healthcare provider (or a collection agency) for receiving a medical service or product. While a $20 copay is technically considered a medical debt, what we’re talking about are the medical debts that are overwhelming, hard to pay off, and bring on high levels of stress.
Medical debt affects millions of people. In fact, 41% of adults in the US are saddled with some form of medical debt. It is the most common type of collection account found on credit reports, with COVID-19 only making matters worse. So even though you may feel lonely, know that you’re not alone—and that you’ve got help.
Medical debt forgiveness through your insurance provider
One way to resolve medical debt is to get the creditor to reduce the amount you owe. You might be able to do this by securing more insurance coverage.
If you had medical care that wasn’t covered by your insurer, it’s worth the effort to have your claim reconsidered. Anytime a claim is denied or rejected, you can file an appeal.
First things first: there is a difference between a denied claim and a rejected claim.
Get your rejected claim back into the system
A rejected claim didn't get processed because of missing or inaccurate information. Maybe a couple of numbers got transposed, or your name was misspelled. Get to the bottom of the error and resubmit the claim.
Appeal a denied claim
A denied claim means that the insurance company won't pay the claim. There are hundreds of reasons an insurance claim might be denied. Maybe the treatment wasn’t considered medically necessary, or maybe you were supposed to get it preauthorized. You’ll have to find out why they denied your claim to know the best way to appeal the decision. Sometimes you can fix the error or otherwise convince them that you are entitled to coverage.
If your claim is denied, the insurer has to explain the reason for the denial. They also have to tell you how you can dispute the decision. Whether your appeal is handled by the insurer or by a third party depends on the nature of the denial. An outside third party will handle it if:
There is disagreement about the medical judgment
The insurer thinks the treatment was experimental
The insurer believes you gave false information on your application for insurance
Appeals for other types of denials will be handled by your insurer.
More ways to lower your medical debt
You might be surprised at the results you can get from being organized and proactive. Here are some ways you can advocate for yourself and potentially lower costs:
Look over your billing statements for errors. Carefully review your billing statements and comb through them for errors. Mistakes made during the billing process do happen—more often than you might realize. If you spot something, reach out to the hospital, doctor, or medical provider as soon as possible.
Ask for a payment plan. Request a payment plan, which can help break down your bill into more manageable chunks. The beauty of these installment plans is they often come with no or low interest. Reach out to your medical provider to see what is possible.
Request a superbill. See if you can get a superbill, which is an itemized, detailed list of services that you can use in filing your claim directly to the insurer. This might help you fight for more coverage.
Work out a discount. In the eyes of the medical provider, getting some money is better than getting no money. Contact the provider and explain your financial situation. See if they're willing to lower what you owe.
What is the Medical Debt Forgiveness Act?
The Medical Debt Forgiveness Act makes medical collections less harmful to your credit standing. It’s not a single law that passed, but rather a starting point for some changes designed to help people with medical debt.
Here are some laws that might work in your favor:
A medical debt can’t be reported to the credit bureaus until it is delinquent for one year. Other kinds of delinquencies are typically reported when the first late payment is 30 days past due.
Paid-off and settled medical collection accounts will be removed from your credit history. Other kinds of collection accounts normally remain in your file for seven years, even if you pay them off.
Medical debts under $500 won’t hurt your credit. There is no minimum dollar amount for reporting other kinds of collection accounts.
These rules give you a better chance of getting back on your feet financially. They do that by helping to protect your credit standing so that you have more options and can make the best financial decision for your situation.
Medical debt in collections
When a medical bill goes to collections, the hospital or medical provider has handed your debt over to its collections department or an outside collections agency. This department or agency is tasked with getting money from you. They will likely reach out to you with written notices, texts, emails, and phone calls.
While it's a most unpleasant experience being contacted by a debt collector, know that you do have rights. Under the Fair Debt Collection Practices Act (FDCPA), debt collectors may not:
Contact you before 8 a.m. or after 9 p.m. unless you agree to it
Contact you after you have requested in writing that they stop
Harass you, treat you unfairly, or lie to you
The No Surprises Act, effective January 1, 2022, gives you even more protection. For instance, you shouldn’t get an unexpected bill for emergency services from a medical facility or healthcare provider that you had no clue was out-of-network for your plan. You can dispute the bill if that happens. You can also dispute your bill if it’s significantly higher than the estimate you were provided.
Medical debt forgiveness programs
Solutions exist for medical debt problems. If you aren't able to swing paying off that medical bill, consider these options:
Depending on the state you live in, there might be laws that require the hospital to offer need-based financial assistance.
Each state has its own laws covering financial assistance, and the options vary greatly. For instance, you might find that you have the right to get access to:
Financial assistance funded at the state level
Free or discounted care
Discounted health care (if you're low-income)
Community health center (if you are in need)
Some of this assistance hinges on your income.
The way to find out if you qualify is to reach out to the hospital and ask what programs and resources are available. Talk to a human, explain your situation, and see what can be done.
Charities and non-profit organizations
By law, non-profit hospitals are required to offer financial assistance programs. Further, charities such as veterans groups, local businesses and churches, and foundations can provide assistance. For instance, the PAN Foundation (Patient Access Network), Rx Hope, Patient Advocate Foundation, and the Leukemia & Lymphoma Society all might be able to help if you qualify for their program.
There are typically income limits and geographical restrictions to qualify for medical debt forgiveness or financial assistance.
As a rule, the government doesn’t offer free funds to people struggling with medical bills. However, special programs crop up now and then. Since the start of the COVID-19 pandemic, the Department of Veteran Affairs (VA) has refunded or canceled about $1 billion in copayments for over 1.5 million veterans in need. Further, the American Rescue Plan (ARP) has knocked out all out-of-pocket medical costs for veterans who were enrolled in VA healthcare.
Beyond this pandemic-related assistance for veterans, there is no federal medical debt forgiveness program. Even so, if you know you’ll need treatment in the future, you can try to line up assistance in advance. Organizations to check with include:
Children's Health Insurance Program (CHIP), for children in families that earn too much to qualify for Medicaid but not enough to afford private health insurance
Healthcare.gov or the health insurance marketplace for your state, to see if you qualify for low cost health insurance
Medicaid (for people with limited financial resources)
Medicare (for people over 65, or under 65 with certain conditions)
Supplemental Security Income (for people who are over 65, blind, or have a medical condition that prevents working)
Financial assistance programs from state and local agencies - find these by doing an online search for “financial assistance for medical debt in [your state or county]”. The best resources will have a .gov address.
Resolve your medical debt with a debt resolution program
An affordable way to resolve outstanding debt is to go with a pro. Choose a professional and reputable (won't charge fees until you succeed) debt resolution company. You don’t need to take out a loan or have great credit to qualify.
The Achieve Resolution program starts with a free debt evaluation. Our expert team will learn about your situation and develop a personalized plan to help you break free from that suffocating medical debt.
Here’s how it works:
Make a single monthly payment into a dedicated program account that is used to save funds for settlements
Reach a certain balance to settle your debts, one by one, for less than you owe
Achieve debt resolution experts negotiate with creditors on your behalf
60% of Achieve members resolve their first account within three months. So it might not be long before you start seeing results, too.
Yes, you can get out of medical debt. With the right plan, dedication, and support system, you can tackle this challenge head-on and put medical debt in the past.
Other alternatives to medical debt forgiveness programs
Medical debt forgiveness isn’t always possible, but you can tackle your debt and improve your financial situation in other ways. Here are two options to consider:
Debt consolidation loan
With a debt consolidation loan, you use the money from one loan to pay off multiple smaller loans. If you pay off higher-interest debt with a lower-interest consolidation loan, you can save money on interest charges.
A debt consolidation loan could simplify your medical debt payoff and relieve stress by replacing multiple monthly payments with a single payment.
This might be a strategy to consider if you’re keeping up with payments but you want to give yourself some breathing room. The single monthly payment is often lower than the total of all the required monthly payments on the debts you want to pay off.
Achieve's personal loans are simple and fast and can be a smart choice if you want to consolidate your debt. You can get an interest rate discount if you use most or all of the funds to directly pay off creditors. Funding typically takes 24 to 72 hours, you can set your payment date to best suit you, and you get to choose your own payment terms—two, three, four, or five years.
Home equity loan
If the amount you owe on your current mortgage is less than the value of the home, you might be able to tap into that value and pay off your medical debt with a home equity loan.
A home equity loan is also called a second mortgage. Your home is collateral against the loan, just like with a primary mortgage. A major perk is that it's usually easier to get approved for a home equity loan, and the interest rates can be lower than other types of financing. A home equity loan could be a solid way to pay off your medical debt.
With an Achieve home equity loan, you can borrow $15,000 to $150,000.
While medical debt can feel crushing, solutions are out there. It's best to understand exactly what medical debt collections mean for your credit and financial situation and see what medical debt forgiveness options and other debt solutions you might qualify for. You got this!
Jackie is an Achieve contributor. She is an accredited financial coach (AFC®) who has written for Business Insider, BuzzFeed, CNET, USA Today's Blueprint, and others. She coaches artists and freelancers.
Kimberly is Achieve’s senior editor. She is a financial counselor accredited by the Association for Financial Counseling & Planning Education®, and a mortgage expert for The Motley Fool. She owns and manages a 350-writer content agency.
Frequently asked questions - Medical debt forgiveness
Is forgiveness of medical debt taxable?
Yes, unless you are insolvent when your debt is forgiven.
When part or all of your debt is canceled or forgiven, or your debt is discharged for less than you owe, the amount that was canceled may be taxable. However, if the IRS determines that you were insolvent, or your liabilities exceeded your assets at the time your debts were forgiven, those forgiven amounts will not be added to your taxable income.
Can medical bills in collections be forgiven?
Absolutely. You can request medical bills in collections to be forgiven partially or in full. How? Do the brave and bold thing and reach out to the debt collection agency. Explain your situation, including why you can't afford to pay your medical debt, and see what options they're willing to offer you. You can also get help from a professional debt resolution service like Achieve Resolution.
Is medical debt forgiven on your credit report?
Yes, medical collections are removed from your credit report once they are satisfied. If you had medical debt that went to collections, but you resolved it, either by paying it off or settling it, it will no longer be reported as a collection account. Other kinds of forgiven debt can negatively affect your credit score for seven years.