How Do Medical Bills Affect My Credit?

If you’ve ever struggled to pay a medical bill, you’re not alone.

About 18% of Americans have delinquent medical bills on their credit reports, and collection accounts held $140 billion in medical debt during 2020, according to a recent study. And a majority of those who struggle to pay medical bills have health insurance, another report shows.

Unpaid medical bills can eventually affect your credit. But the credit bureaus treat medical debt differently than other delinquent debt, so it can be confusing to figure out how your credit scores will be affected. Here’s what you need to know about how medical bills affect credit and how to avoid credit problems due to medical debt.

Shouldn’t My Insurance Cover These Charges?

If you have health insurance and you receive a medical bill, you may assume your insurance company should be covering the charges. But that’s not necessarily the case.

Every health insurance plan has a deductible, which is the amount you’re responsible for paying before the insurance kicks in. If your health plan has an annual deductible of $2,000, you may be required to pay for all healthcare services until you’ve reached that $2,000 amount for the year.

Don’t just ignore the bill and assume—or hope—insurance will cover it. Instead, call the healthcare provider and your insurance company to find out exactly what charges are covered, and how much you need to pay. If you pay the portion you owe by the due date, the medical bill will never affect your credit.

What Happens if I Don’t Pay a Medical Bill?

If you are unable to pay a medical bill, the hospital or healthcare provider may eventually turn your account over to a collection agency. Most of the time, a healthcare provider will not do this until your account is 60, 90 or 120 days past due.

Normally, when you have a bill turned over to a collection agency, it can affect your credit right away. Because late payments can negatively affect your credit score, bills that end up in collections have often already damaged your score. However, medical bills are different.

When a medical bill goes to collections, the credit bureaus provide a 180-day waiting period before the collection account will appear in your credit history. That’s because medical bills often take weeks or months to be approved and paid by insurance companies, and medical coding and billing errors frequently delay the process further.

If you believe your medical debt has been sent to collections, use the 180-day waiting period to clarify any errors, talk to your provider and insurer, and try to set up a payment plan. It may take a long time for medical debt to show up on your credit report, but once they show up in collections, they can stay on the report for seven years.

How Can I Protect My Credit from Medical Bill Collections?

You can protect your credit by paying all bills on time. But if medical bills are too high for you to pay in full by the due date, you have some options.

If you can’t pay on time, call your medical provider or hospital and ask them to help you come up with a payment plan. There’s no way to know when the provider will turn your debt to collections, so if your account is 30 days past due, it’s a good idea to go ahead and make the phone call. Most providers are willing to help you set up a payment plan or negotiate a lower balance if you are committed to working with them.

You could also pay the medical bills with a credit card or personal loan, which will allow you to make payments over time. However, you will have to pay interest on the balance, and the balance will be included on your credit report, but it won’t show up as a delinquent account so long as you make the payments on time.

Finally, you might consider hiring a medical billing advocate. These professionals work with healthcare providers and insurance companies to help resolve medical bills on your behalf. You’ll have to pay for the service, but it can save you thousands of dollars, as well as time spent calling insurers and providers’ offices.

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