With the advent of the Internet of Things (IoT), Artificial Intelligence (AI), and Machine Learning (ML)/Deep Learning (DL) algorithms, the landscape of data-driven medical applications has emerged as a promising avenue for designing robust and scalable diagnostic and prognostic models from medical data. Consequently, the realm of data-driven medical applications has garnered significant attention spanning academia and industry, ushering in marked enhancements in healthcare delivery quality. Despite these strides, the adoption of AI-driven medical applications remains hindered by formidable challenges, including the arduous task of meeting security, privacy, and quality of service (QoS) standards. Recent developments in Federated Learning (FL) have made it possible to train complex machine-learned models in a distributed manner and have become an active research domain, particularly processing the medical data at the edge of the network in a decentralized way to preserve privacy and address security concerns. To this end, this survey paper highlights the current and future of FL technology in medical applications where data sharing is a significant burden. We delve into the contemporary research trends and their outcomes, unraveling the intricacies of designing reliable and scalable FL models. Our survey outlines the foundational statistical predicaments of FL, confronts device-related obstacles, delves into security challenges, and navigates the intricate terrain of privacy concerns, all while spotlighting its transformative potential within the medical domain. A primary focus of our study rests on medical applications, where we underscore the weighty burden of global cancer and illuminate the potency of FL in engendering computer-aided diagnosis tools that address this challenge with heightened efficacy. Further augmenting our discourse, recent literature has unveiled the inherent robustness and generalization of FL models compared to traditional data-driven medical applications. We hope that this review endeavors to serve as a checkpoint that sets forth the existing state-of-the-art works in a thorough manner and offers open problems and future research directions for this field.