Medical Bills, Collections and Your Credit Score

Many people don’t realize that their credit report may contain medical bills in collection that can seriously effect their credit score. Even if you’ve been paying your credit cards, mortgage, rent and other reportable lines, you may be surprised that medical bills carry their own weight when reported. Fortunately, you have more leeway when addressing these bills than other regular credit lines. In addition, they can be more easily removed from your credit report after they’re paid off. You should however monitor your credit report to make sure they are removed. Don’t forget to check all three major credit reporting agencies: Equifax, Experian and TransUnion.

According to the Consumer Financial Protection Bureau, approximately 31.6% of adults in the US have collection accounts on their credit reports. That’s an astounding 1 out of every 3 Americans. Medical bills account for over half of all collections with an identifiable creditor. So, it stands to reason, you may have a medical bill in collections. Even more probable if you’ve moved and aren’t receiving your bills. After attempts to contact you via mail and or phone without arrangements being made by you, they will be reported to the credit agencies. 

This can be really damaging to your credit history as it can affect your borrowing interest rates, your ability to secure financing, and secure employment as many employers pull your credit report. 

Areas that you need to be aware of:

1. Just because you have insurance and possibly good insurance, it doesn’t mean you will not owe anything. I would suggest you review your Explanation of Benefits (EOB) to get an idea of your responsibility. If in doubt about a bill, contact the medical provider as well as the insurance provider in the event of incorrect billing.
2. It is possible to be paying on a medical bill and it is still sent to collections. This can be extremely frustrating. If you’re making small payments or pay even a few days late, the bill can be sent to collections. Fortunately, you can call the collection agency and make payment arrangements with them. You are given a grace period. They typically give you 180 days before they report to the credit agencies. If you pay it off and are on time you can generally avoid it hitting your credit report.
3. Protections under the Affordable Care Act give patients at a non-profit hospital time to apply for assistance before any extraordinary measures are taken. However, remember any unpaid balances can and probably will be reported. I’ve seen bills hit a credit report with only a few dollars outstanding. The hit to your credit score is the same regardless of the amount!
4. Be sure to make payment arrangements with the medical provider and get a copy of it in writing. Then pay off the bill according to the agreement. I will say over and over again, keeping a copy of agreements/arrangements that you have with your insurance company and provider makes good business sense in the event you find a discrepancy and need documentation at a later date. 

Managing Collection Calls

Whenever you’re contacted by a collection agency on behalf of a medical provider, have them send you a written confirmation of and a detailed itemized list of the debt as well as the right to dispute it. You have this right but you must do it in a timely manner. Again, make sure the bill is accurate. Compare it to the EOB. You should not be responsible for paying more than your responsible amount referenced on the EOB. After you’ve paid, keep a copy of the payment confirmations for a few weeks in the event you need to reference the transaction. It isn’t unheard of for things to cross in the mail, get lost, or even have payments applied to the incorrect patient account. 

If you’re concerned about your credit and or bills, get a free credit report one time a year for free through credit.com. Credit.com will also provide an easily understandable breakdown of the information on your credit report. Additionally, the credit agencies can give you pointers as to how to establish and repair your credit history. Credit is a very integral part of our financial lives. Keeping a good credit history can present options such as cheaper car insurance, and better interest rates on personal loans. 

Make it a habit to review your credit reports regularly, Don’t assume you don't owe anything for medical visits. Ask for payment arrangements early and stick to them. Be proactive and free up time to do the things you’d rather be doing and not worrying about collections and your credit report.

If you have concerns about managing the financial impact of myeloma consider working with a Myeloma Coach. Myeloma Coaches are either a myeloma patient or caregivers willing to share their personal experiences and resources to help others. Myeloma Coaches have experience in a variety of areas, including financial resources.

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