Patients dealing with the stress of medical treatment after an accident or sudden illness often face additional pressure from mounting medical bills. Even the cost of routine medical care can leave many families in debt. A 2019 study published in the American Journal of Public Health found that medical bills are responsible for an estimated 66.5 percent of personal bankruptcies in the United States.
Prevent the heavy burden of medical costs from ruining your credit score by dealing with your medical bills before the debt collectors start calling you.
How Do Medical Bills Affect Your Credit Score?
If you are overwhelmed with medical debt collection calls and are considering bankruptcy, it could have significant ramifications on your credit. (Bankruptcy could stay on your credit report for up to 10 years.) Before declaring bankruptcy, request free credit counseling from a local nonprofit agency. You can take other steps to prevent unpaid medical bills from affecting your credit score.
According to Experian, most healthcare providers do not report late payments to the three primary credit bureaus - Experian, Transunion, or Equifax. Instead, the medical providers sell the debt to collection agencies when a bill reaches 120 or more days past due.
The credit bureaus then extend a 365-day waiting period to give you time to resolve the medical debt before it appears on your credit report. The extra time gives you a buffer to find the best way to resolve any unpaid medical bills and free yourself of debt collection agencies.
Examine Your Bills and Explanation of Benefits Closely
The first thing to do is ensure you only pay for the care you received. Billing errors are common, so reviewing your bills is essential. Request an itemized bill and scrutinize each line.
- Did you receive the treatment or care listed?
- Are the insurance company and medical provider listed on the bill correct?
- Were you billed more than once for a service?
The insurance company pays according to the bills submitted by the service provider, so if the hospital bill or other health care bill is wrong, then your explanation of benefits (EOB), or insurance statement, will be wrong too. Call the number listed on the bill and resolve the issue immediately.
The medical field uses special medical record codes, and deciphering them can be challenging. For help, contact a medical bill advocate who specializes in reviewing medical bills for errors, disputing health insurance denials, and more.
Talk to Your Health Care Provider
The hospital or doctor’s office billing representative should be your first point of contact when you cannot afford a bill. Many hospitals have financial aid to help those who cannot afford their bill. If the billing representative can’t help, here are some alternative solutions you may propose.
- Charity care. If you must forego basic living necessities to pay your medical bill, ask if your care can be considered charity care and forgiven. You may need to provide proof of income.
- Emergency care protection. Under the No Surprises Act, Americans have certain protections. Specifically, you should not receive unexpected bills for emergency services from a healthcare provider or facility you did not know was out-of-network until you received the bill. See the Consumer Financial Protection Bureau for more information.
- Financial Assistance. Federal law requires nonprofit hospitals to offer financial assistance programs to low-income families. Ask if you qualify.
- Lower payment. Negotiate a lower amount by explaining how paying the entire bill will be a hardship.
- Payment plan. Propose a payment amount and schedule to meet your limitations.
Secure a Personal Loan or Use a Credit Card
These options are good for consolidating your bills but be careful because you will incur interest on the amount you already owe. Get an unsecured personal loan without your home, car, or other assets as collateral, so you do not lose them if you default.
Whether you opt for a standard credit card or a medical credit card, one accepted exclusively by medical providers, open a new one with a 6–12-month 0% APR introductory offer. Commit to paying off your medical debt without accumulating interest or additional credit card debt.
Everything is Negotiable
Medical providers want their patients healthy and safe, but it comes with a cost. The good news is that most providers are willing to accept a discounted but reasonable fee for their services. Feel free to negotiate - you only know if you ask.