A hospital or physician's office's first attempt at collecting payment for your medical debt is directed to your insurance company. If you do not have insurance or your insurance company doesn't cover the full amount you owe, your healthcare provider will pursue you for payment.
Facts
A healthcare provider may call you at home or at work and send you written reminders that you have yet to pay your overdue debt. This is often enough to elicit a payment from some individuals. If you do not pay the bill directly to the healthcare provider or work out a payment plan, the hospital or doctor's office will likely sell the debt to a collection agency.
Significance
A collection agency may report the debt to the credit bureaus, causing damage to your credit score. It may also sue you. If the creditor wins its lawsuit, it may petition the court to grant it permission to garnish your wages and bank accounts. In some states, a collection agency can even place a lien against your home after winning a judgment against you.
Misconceptions
Many individuals believe that healthcare providers cannot provide collection agencies with their personal health information since the sharing of such information with third parties is strictly prohibited by the Health Insurance Portability and Accountability Act (HIPAA) of 1996. This, however, is not the case. HIPAA allows providers to share private medical information when attempting to procure a payment.
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