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A hospitalization or medical treatment can carry a price tag that packs a serious punch, with Americans owing an estimated $220 billion in healthcare debt.

If you’re among those unable to pay medical bills, insult can get added to injury in the form of damage to your credit score. That’s because once a medical bill becomes delinquent, many hospitals and individual medical providers will send it to collections.

Even though unpaid medical bills might affect your credit report, there are steps to take to potentially lessen the impact.

Do Medical Bills Hurt Your Credit?

Unpaid doctor or hospital bills typically don’t automatically hurt your credit score. Because most health care providers do not report to the credit bureaus, medical debt would have to get sent to collections in order to eventually appear on your credit report and have a potential effect on your credit score. The point at which medical providers will sell the debt to a collection agency is after it’s 60 to 120 days past due, depending on the provider.

The Consumer Financial Protection Bureau (CFPB) has been working to lessen the impact of medical debt on credit. As things currently stand, the three credit bureaus — Experian®, Equifax®, and TransUnion® — have set a one-year waiting period from the date of service until the medical debt is included on a consumer’s credit report. This is intended to make sure there’s enough time to solve any disputes with insurers and allow for delays in payment.

The three major credit bureaus also no longer include unpaid medical bills in collections on a person’s credit report if the amount owed is less than $500. And in even better news, medical debt that was in collections but is now paid off isn’t included on credit report (usually, collections accounts take seven years to drop off a report).

On top of all that, some scoring models don’t weigh medical debt as heavily as they do other types of debt when calculating credit scores. In fact, some models may exclude unpaid medical debt entirely. So while medical bills can affect your credit, the effect might not be as drastic as other types of unpaid debt.

As of mid-2025, the courts were weighing whether other guidelines about medical debt and credit would be enacted. It can be wise to research whether new rules have gone into effect if you are dealing with this kind of debt.

Can Medical Bills Be Removed From My Credit Report?

Unlike other types of debt, medical collections debt will no longer appear on your credit report once it is paid. Unpaid medical debt, however, can appear on your credit report for up to seven years if it remains unpaid. Fortunately, as time goes by, the account in collections counts less toward your credit scores.

If your bill was sent to collections by mistake, you may be able to have it removed by proving the error. Collect as much evidence as you can to make your case, such as credit card or checking account statements. You also might ask for payment records from your medical provider’s billing office.

You can file a dispute with the credit bureau that’s reporting the error. The credit bureau will then investigate and respond to you within 30 days. You may also receive email updates from the credit bureau regarding the status of your dispute.

Does Paying Off Medical Collections Improve Credit?

If you pay off medical collections debt, it will get removed from your credit report, which will have a positive impact on your credit score, and potentially a significant one. This is a recent change — previously, paid medical collections debt remained on credit reports for up to seven years.

One option to explore if you’re seeking to pay off your medical collections debt and thus get it removed from your credit report is to get your health insurance company to pay the debt. If you have reason to believe your insurance company should have paid a medical bill, ask your insurer to reconsider your insurance claims.

What to Do if You Can’t Pay Your Medical Bills

If the balance on your medical bill is your financial responsibility, but you’re unable to pay it, there may be ways to relieve your medical debt. Here are some options to consider:

•   Ask the medical provider to set up a payment plan. Discuss this option with your medical provider to find a plan that is manageable with your monthly budget.

•   Review your explanation of benefits the insurance company provides. Look out for billing errors or consider negotiating some of the medical charges, both of which could lower the total amount due.

•   Consider getting a temporary part-time job. This may help bring in extra income that you can put toward the medical debt.

•   Get assistance from a patient advocate. This might be an option worth considering if you can’t get the provider to budge on the payment.

•   Apply for a personal loan. Medical debt is one of the common uses for personal loans. If you can secure a personal loan that has a lower interest rate than credit cards, this may offer another option for payment.

   You may see these loans called medical loans. And note that your personal loan approval and the interest rate you’re offered on the loan will depend on your credit record and other factors.

Recommended: How to Get Approved for a Personal Loan

Being Proactive About Medical Bills

Just because you made your copay at the doctor’s office doesn’t necessarily mean the bill is settled. Additionally, the fact that the provider has billed your health insurance company doesn’t automatically mean the amount will be accurate or even paid.

•   If you haven’t received a statement from your medical provider’s billing office within a few weeks of your appointment or hospital stay, it might be a good idea to call for a billing update. Catching errors early in the billing process can help keep medical bills off your credit report and in turn, prevent medical bills from affecting your credit score.

•   If you know ahead of time that you won’t be able to pay the entire amount owed, contacting the provider’s billing office and trying to negotiate a payment plan may be a good first step. If you can come to an agreement, it’s a good idea to get it in writing. If you can’t reach an agreement, start exploring other options, making sure to weigh the pros and cons and crunch the numbers, such as with a personal loan calculator.

•   Should a collection agency employee contact you about a bill that you think has been paid or should have been paid by insurance, stay calm. Ask if you can call back with information that shows there’s no open balance.

The Takeaway

If you have unpaid medical bills on your credit report, focusing on getting them paid has the potential to make a real difference in your financial future. Staying on top of medical bills can mean extra vigilance, but the effort is worth it to keep medical debt from affecting your credit. You might work out a payment plan or take out a personal loan when medical debt is too high to pay out of pocket.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Can medical debt ruin your credit?

Yes, medical bills can negatively impact your credit if they are turned over to collections, but there are recent changes to how they’re reported. While unpaid medical bills can be sent to collections and potentially affect your credit score, once paid, they come off your report. Also, the three major credit bureaus no longer include medical debt under $500 on credit reports.

Do medical bills fall off after 7 years?

Unpaid debts that are in collection typically stay on your credit report for seven years. However, if you pay medical debt that’s gone to collection, it is treated differently. It comes off your credit report.

Can you ignore medical debt?

It’s not wise to ignore medical debt or any debt, for that matter. Unpaid debt can accrue interest and penalties and can be put into collection, which can harm your credit score. It can be a good idea to talk to your medical provider about negotiating your bill or setting up a payment plan if you cannot pay your debt. Or you might consider a personal loan.

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SOPL-Q225-106

When your home energy usage peaks in the summer and winter, you could be surprised by a higher energy bill — and might have to scramble to cover the cost. Signing up for budget billing with your utility providers can eliminate these unexpected cost surges and make it easier for you to plan your monthly expenses.

However, budget billing may not be right for everyone. Below, we’ll explore what budget billing is, how it works, its benefits and drawbacks, and how to set up budget billing on your own — without any help from your provider.

Budget Billing Defined

Budget billing is an alternative, optional payment program for utilities like gas and electricity. By opting into budget billing, you will pay the same predictable amount each billing cycle, regardless of how much or how little energy you actually used.

With budget billing, you can avoid the roller coaster-like highs and lows of utility billing — where costs can skyrocket during sweltering summers and frigid winters. For many, this makes building a monthly budget much easier.

To opt into budget billing, call your utility provider or check out the website for information about what programs are available.

How Does Budget Billing Work?

Energy prices and usage fluctuate throughout the year. This can make it difficult to anticipate what your gas, electric, water, and other utility bills will be each month. Depending on where you live and how harsh the seasons are, you might be in for a surprise on a few bills each year.

Budget billing eliminates those bill fluctuations. Instead, your utility provider analyzes past energy usage for your residence (usually over the prior 12 or 24 months) to estimate an annual total. The company then divides that total into 12 identical payments for the upcoming year.

Of course, it’s unlikely that your energy consumption will be exactly the same as it was the previous year. And with inflation rates and unpredictable weather events, the price of electricity, natural gas, and oil could increase over time. To account for this, your utility provider will track your actual energy usage throughout the year and calculate what you would owe (sometimes called a “true-up amount”).

If you overpaid for the year, the provider may reimburse you for the amount you paid above your actual energy use or they might issue you a credit on an upcoming bill. If you underpaid for the year, you’ll typically have to pay the outstanding balance or the extra will be folded into your upcoming bills.

Either way, the utility provider will use the past year’s worth of data to calculate a new monthly equal billing amount for the year ahead. Some providers may update bill amounts quarterly, rather than annually. Be sure to ask your provider exactly how their budget billing works.

Recommended: Can You Change the Due Date of Your Bills?

Does Budget Billing Save You Money?

Budget billing does not save money on utility bills. It just makes your monthly payments more predictable. Some months, you will likely pay less than what you actually owe. In others, you could be paying more than what you would owe.

Having a predictable line-item in your budget may make it easier for you to handle other monthly expenses or keep you from needing to dip into your emergency fund to cover an especially high energy bill.

Factors That Impact Savings

So is budget billing worth it for eclectic and other utility bills? It can be. While the payment program itself doesn’t lower your energy costs, equal billing programs can still have a positive impact on your finances. Some factors to consider:

•   Energy efficiency: If you become more energy-conscious after enrolling and reduce your consumption, you could end up with a credit at year-end.

•   Rate fluctuations: If utility rates rise during your plan term, your fixed payments might be temporarily lower than actual usage costs.

•   Personal budgeting habits: Budget billing can help you avoid missed payments or overdraft fees, potentially saving you money indirectly.

Advantages of Budget Billing

Budget billing can offer several benefits to households looking for financial stability and easier budgeting. Here’s how it may help you out:

Easier Budget Management

Paying a fixed amount to your utility providers each month makes it easier to build — and stick to – a monthly budget. With predictable bills, you’ll know how much money to set aside each month for utilities. You’ll also know how much is left for other expenses, as well as for savings and retirement contributions, debt repayments, and investments.

Less Financial Stress

If seeing an unusually high total on an email statement or paper bill can send you into a panic, you may appreciate the stability afforded by budget billing. Budget billing won’t save you money, but when you know what to expect each month, you might rest a little easier.

Reducing Late Payment Penalties

If you receive a high energy bill that you can’t afford to pay, you may have to dip into emergency savings, or just pay the bill late. The latter could result in late payment penalties.

With budget billing, you won’t have to worry about a spike in your monthly energy bills and may feel comfortable putting the bill on autopay, which further ensures you never miss a payment.

Predictable Monthly Expenses

This predictability of budget billing supports overall financial planning. It can be particularly helpful for individuals on fixed incomes, such as retirees or those relying on government assistance.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

Drawbacks of Budget Billing

As helpful as budget billing can be for some families, there are also some cons to consider:

Potential Fees

Some utility providers charge a fee to enroll in budget billing. On top of the startup fee, the provider may charge ongoing fees for the service. If that’s the case, budget billing will actually cost you more money than a traditional billing program. It’s a good idea to ask about fees before signing up for any new program.

Chance You Could Underpay

With budget billing, you can end up underpaying throughout the year and, in turn, owing money to your utility provider. This can occur if your actual energy consumption ends up being more than your budget plan accounts for, or if rates rise sharply during the year.

But if you didn’t pay enough each month, you’ll owe whatever remains. If it’s a sizable amount, you may have to rely on a credit card to cover other expenses or take money out of savings to pay off the bill. Many people enroll in budget billing to avoid such surprises to begin with, so this can be counter-productive.

Complacency

When you’re on a budget billing plan, you might get used to a relatively low electric bill in the summer and be tempted to blast the AC. Similarly in the winter, it could be tempting to get all toasty by cranking up the heat, since you won’t feel the financial repercussions of those decisions until much later.

If you don’t think you can be responsible with energy consumption without the threat of a high bill looming over you each month, budget billing may not be the right fit for you.

Possible End-of-Year Adjustment

At the end of the program — usually a year after it kicks off — the utility company will calculate what you actually owed for the year, based on your energy consumption. If you overpaid, you’ll get a credit on a future bill (nice!).

But if you didn’t pay enough each month, you’ll owe whatever remains. If it’s a sizable amount, you may have to rely on a credit card to cover other expenses or take money out of savings to pay off the bill. Many people enroll in budget billing to avoid such surprises to begin with, so this can be counter-productive.

Recommended: Money Management Guide

What Happens If You Are Billed Incorrectly?

Mistakes can happen with budget billing just like with standard billing. It’s important to know how to handle billing errors to protect your finances.

Steps to Resolve Billing Disputes

While every utility company’s dispute process varies slightly, here are the general steps to take if you have an energy billing concern or dispute:

•   Review your bill: Carefully examine the charges, usage history, and any billing adjustments.

•   Gather supporting documentation: If you think you’ve been billed incorrectly, you’ll want to collect previous bills, meter readings, and anything else you feel supports your claim.

•   Contact customer service: Reach out to your utility provider’s customer service department and clearly explain your issue or concern. Ask for clarification and, if necessary, request a correction or adjustment.

•   File a complaint: If your issue doesn’t get resolved, you may need to involve an external agency, such as an energy ombudsman or a regulatory body like the Public Utility Commission.

Can You Make Your Own Budget Billing System?

If your utility provider doesn’t offer budget billing — or if you prefer more control — you can create your own system.

DIY Budgeting Strategies for Utility Bills

By handling budget billing yourself, you can avoid any potential fees the utility provider might have charged you. You can also create a budget billing system for all of your utilities combined. Here’s how:

•   Track historical usage: Sign into your accounts and look at historical data to determine your average monthly cost for each utility. Combine those numbers to get your average total monthly utility costs. Use this amount when building your monthly budget.

•   Set up a separate utility fund: Open a savings account (ideally a ​​high-yield savings account) and deposit a fixed amount each month based on your average utility usage. If your first bill comes in and is less than your monthly budgeted amount, pay the bill and keep the extra funds in the account — you’ll need them later.

•   Automate savings: Set up automatic transfers to your utility fund for consistent budgeting.

•   Monitor your monthly usage: It’s a good idea to assess your usage every few months and adjust your contributions if it changes significantly.

This approach gives you the benefits of budget billing without relying on your utility provider.

Alternatives to Budget Billing

In addition to, or instead of, budget billing, there are other strategies to manage high utility costs and smooth out your expenses.

Energy Efficiency Programs

Many utility providers offer free home energy audits, rebates on energy-efficient appliances, and deals on HVAC systems and other home improvements. Reducing your overall energy usage can permanently lower your monthly bills.

Seasonal Savings Strategies

You can save on utility bills by lowering energy consumption during high-use seasons. Simple actions like sealing drafts around windows and doors, adjusting your thermostat, and turning off unused lights and electronics can lead to significant savings. For more sustained reductions, consider upgrading to LED lighting, installing a programmable thermostat, and adding insulation to key areas like the attic, walls, and crawl spaces.

The Takeaway

Budget billing is a helpful tool for households that want more predictable utility payments. While it doesn’t reduce your energy costs directly, it offers peace of mind, eases budgeting, and helps prevent missed payments. However, there are some downsides to consider. These include potential fees, underpayment risks, and the need for year-end reconciliations.

Before enrolling in a budget billing program, it’s a good idea to review the pros and cons and understand how it can affect your finances each year.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Do all utility companies offer budget billing?

Not all utility companies offer budget billing, but many do — especially larger electric, gas, and water providers. Availability often depends on your location, the specific utility company, and your account history. Budget billing is typically offered to customers with a good payment record and at least 12 months of usage history. To find out if your provider offers this option, check their website or contact customer service directly for eligibility requirements and enrollment details.

Am I better off budget billing or not?

Budget billing can be helpful if you like a predictable utility bill each month. Knowing what you’ll spend may make it easier to budget for other expenses. However, budget billing does have its drawbacks, especially if the utility provider charges a fee for the service.

Can I budget bill for other areas of my budget besides utilities?

Yes, while budget billing is most common for utilities, you can apply similar strategies to other budget categories. For example, you can set aside a fixed monthly amount for irregular expenses like car maintenance, subscriptions, or annual insurance premiums. This method — often referred to as a “sinking fund” approach — helps smooth out large or seasonal costs over time, preventing expense spikes. Budgeting apps and spreadsheets can help you track and manage these monthly allocations effectively.

What happens if my actual energy usage is much higher than estimated?

If your actual energy usage exceeds the estimate used for budget billing, you’ll typically have to pay the difference during a reconciliation period — usually at the end of the billing year. Your utility provider may also adjust your monthly payment going forward to reflect your higher usage. While budget billing can help avoid seasonal spikes, it doesn’t eliminate your responsibility for actual costs, so it’s wise to monitor your usage and be prepared for possible adjustments.

Can I cancel budget billing if it doesn’t work for me?

Yes, most utility companies allow you to cancel budget billing at any time, though the process may vary. When you cancel, you’ll usually be billed for the difference between what you’ve paid and what you’ve actually used. This could result in a credit or a balance due. Be sure to ask your utility provider about any specific terms or timing considerations. If budget billing no longer aligns with your financial needs, switching back to regular billing is usually simple.

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SOBNK-Q225-105

An employee’s student loan repayment benefit from their employer is not taxed as income now through the end of 2025. Thanks to the CARES Act of 2020, employees are able to take advantage of up to $5,250 in tax-free student loan payment contributions from their employer. The Consolidated Appropriations Act, which was signed into law in December 2020, extended this tax break until December 31, 2025.

For employees lucky enough to work for a company that offers a student loan repayment program, the benefits of this perk are clear: Employees get “free money” from their employers to help pay down their student loans.

Employer Student Loan Repayment Benefit and Taxes

Under employer student loan repayment programs, employers help employees pay back their student loans in amounts that vary from company to company. This monetary assistance can be a great help to individuals struggling with student loan debt — and may even ultimately have an impact on the economy. However, prior to 2020, employer contributions were subject to both payroll and income tax, which means that for employees, the benefit wasn’t quite as big as it might first appear.

That changed in early 2020, when the Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded on this financial assistance by making all employer-match contributions up to $5,250 tax-free, exempt from both payroll and income tax.

While the measure implemented in the CARES Act was due to expire in January 2021, the Consolidated Appropriations Act signed by President Donald Trump in December 2020, extended that tax-free benefit for another 5 years, with a new expiration of December 31, 2025.

Understanding Employer Match of Student Loan Repayment

What is an employer student loan repayment program? It’s a way for companies to help alleviate their employees’ student loan debt burden by offering them a match (up to $5,250, tax-free) on payments they make toward their student loans every year. Employers make a regular contribution to an employee’s student loan balance, say $100 a month for example, while the employee continues to make regular payments.

In this way, employees can pay down more of their student loan balance and/or interest. Prior to the CARES Act, an employer’s student loan contributions were considered taxable income, but now through the end of 2025, they will be tax-free and fall under the same maximum (up to $5,250), as tuition reimbursement benefits from an employer.

There are a number of services available to companies who are looking to manage this kind of benefit. Just like the companies designed to help HR departments manage other benefits like health care, financial institutions can help assist with student loan repayment plans.

Recommended: Defaulting on Student Loans

Companies with Student Loan Repayment Benefits

The number of companies offering employer student loan repayment programs has doubled since 2021 from 17% to 34% in 2023. To get a sense of what kinds of programs different employers offer, here are several examples of companies who have this incentive in place:

•   In 2019, Chegg, the education technology company best known for online textbook rentals, offers its entry level and manager level employees $5,000 annually toward student loan debt. Higher-level employees receive up to $3,000.

•   Estée Lauder, the cosmetics company, launched their student loan benefit program in 2018 by offering $100 monthly for payback, with a cap of $10,000 total.

•   In 2017, Fidelity, the brokerage firm, offers up to $15,000 in student loan repayment for its full-time employees, and up to $7,500 for part-time employees.

•   Also in 2017, Live Nation, entertainment and events, began contributing $100 monthly to student loans, maxing out at $6,000 in repayment.

•   Penguin Random House, the book publisher, reimburses up to $1,200 yearly (capped at $9,000) for student loans to full-time employees who have been with the company at least one year.

•   PwC, in the financial services industry, offers $1,200 annually and up to $10,000 total for student loan payments.

•   SoFi offers one of the more unique employer student loan repayment programs on the market, offering $200 a month in reimbursement with no cap.

Implementing a student loan repayment program with a matching contribution will depend on a company’s size and resources.

But this kind of incentive can appeal to potential new employees. Most companies do not require employees who leave the organization to repay the benefit. Paid out monthly, it can help with the most burdensome student loan payments, which some employees might find more valuable than, say, a year-end bonus.

So that employees can make the most of student loan repayment benefits and pay down loans in the most efficient way possible, it’s always a good idea for them to evaluate their current payment plan. For some individuals with federal student loans, switching to an income-driven repayment plan or consolidating their loans could make monthly loan payments more manageable.

For individuals with both private and federal student loans, it might make sense to consider refinancing your student loans through a private lender, such as SoFi. Refinancing combines multiple student loans — federal or private — into a single loan with one monthly payment. It can potentially lower your interest rate or give you access to more favorable loan terms.

That said, refinancing with a private lender means forfeiting access to federal loan benefits like income-driven repayment plans, deferment, and public service loan forgiveness. Nonetheless, if your credit score and earnings have improved since graduating from college, refinancing might be a way to pay less in interest with a lower interest rate and a shorter repayment term.

Save on Student Debt while Saving for Retirement

Helping employees pay down student loan debt, while also still saving for retirement, is a benefit that could really increase the appeal of an employer loan repayment program.

In 2018, the IRS cleared a path for employers to create a different kind of student loan payoff program that could help attract employees. The program was created by Abbott Laboratories, but companies of all sizes could use a similar approach.

The IRS allowed Abbott to help its employees save for retirement and pay down student debt with a program that allows employees who use at least 2% of their eligible salary to pay down a qualifying student loan to get a 5% contribution from Abbott annually into their 401(k).

Abbott’s program might inspire more employers to implement similar programs, where the company can make a tax-free contribution to the employee’s 401(k) on the condition the employee makes student loan payments.

The Takeaway

With the Consolidated Appropriations Act, which gave an extension of the rules set forth in the CARES Act, employer student loan repayment contributions up to $5,250 are payroll-tax and income-tax free until December 31, 2025. For individuals whose company offers such a benefit, this makes it more useful than ever before in paying down student loan debt.

Just like a 401(k) retirement match, a company that offers a student loan repayment program is basically offering you extra money. For many employees, even an extra $100 a month could be enough to help them get out of debt faster and feel more confident about their financial security.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Is the student loan repayment benefit taxable?

The employer student loan repayment benefit is not taxable through the end of December 2025. That means employees may get up to $5,250 in tax-free student loan contributions from their employer — if their employer offers the benefit — until December 31, 2025.

Is a loan repayment taxable income?

A student loan repayment benefit offered by an employer is not taxed as income through December 31, 2025, thanks to the Consolidated Appropriations Act, which was signed into law in 2020.

What is the student loan repayment benefit for employees?

The student loan repayment benefit for employees is offered by some companies to help their employees pay back their student loans. The amount an employer contributes differs from company to company. Employer contributions up to $5,250 are payroll-tax and income-tax free until December 31, 2025.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.