Most of us have been there at one time or another. Waiting for a medical claim to be sorted out, and caught in the middle while the “powers that be” decide who is ultimately responsible for paying the bill. The insurer? You? And by the time all is said and done, that medical bill could already be considered past due – and you may not have a clue until it shows up on your credit reports.
Unpaid medical bills take a serious toll on the financial and credit health of millions of Americans. In fact, the most recent data from the Consumer Financial Protection Bureau (CFPB) revealed that 52 percent of all debt on credit reports is related to medical expenses – and a whopping 43 million of us are plagued by unpaid medical bills that weaken our credit scores. But take heart, an antidote is in the works! The painful financial consequences and ongoing spread of medical debt has triggered big changes in how credit bureaus will be reporting it.
Starting September 15, 2017, Experian, Equifax and TransUnion will initiate a 180-day waiting period before including medical debt on credit reports. This six-month window gives you and your healthcare providers and insurers time to resolve claim and billing disputes before your credit scores pay the price.
What if you already have a medical debt default on your credit reports? There is retroactive relief to be had. When the outstanding medical debt gets paid by your insurer, it will be removed from your reports and will no longer affect your scores. This is welcome news for the 15 million people for whom medical debt is the only blemish on their credit reports.
How did medical debt become such a credit killer? Medical bills that go unpaid are handled differently than past due bills for utilities, cell phone service, etc. Some healthcare providers waste no time in turning to collection agencies to chase down medical bills (as soon as 30 days after billing), while others may wait 180 days. Given the confusing medical billing process – and the difference in timelines between when providers file claims and insurers pay – it’s possible you may not even realize medical debt has been turned over to collections until it has hit your credit reports and compromised your scores.
Your credit scores are only as accurate as the information provided to the credit reporting bureaus. Whether you have medical debt or not, doing periodic “financial health checkups” can help you stay protected. Check your credit scores from TransUnion, Equifax and Experian, and examine your credit reports carefully for suspicious changes and errors – or medical debt that should be removed.