Healthcare is expensive, medical bills incurred are consistently increasing for patients, and too often Americans are finding themselves in situations where they can’t afford to pay for their medical care provided. Unfortunately, there is a substantial amount of people here in the US who do not have the savings or the means to cover the healthcare required for emergencies or chronic illnesses.
Because medical bill amounts can be rather large, they can be intimidating and will often leave patients wandering “Can medical bills affect my credit?” The answer is yes. The difference is how, though.
How will unpaid medical bills appear on my credit report?
Unlike credit card debt, medical debt will not show up on your credit report after it’s been incurred and while it’s being paid on. In fact, your medical debt will not show up on your history until you’ve missed significant amounts of payments and it’s been turned over to a collection agency who then reported it to the credit bureaus.
What’s interesting is that your unpaid medical bills carry a lot less weight on your report and with potential lenders than other debt does. The Vantage Score 4.0, for instance, does not categorize your medical collections in the same way as other collection accounts. In fact, Vantage ignores any medical collections that are older than six months old and does not penalize medical debt as much as it will other types of debt.
Try to avoid medical collections with a payment plan
While we have established that medical collections will affect your score, but in a lesser way, it is still important to try and avoid collections as much as you can; this is not just to save your credit score, but also to save money on late fees and other charges associated with non-payment.
Try to be as proactive as possible with your medical bills – insurance companies and medical billers will appreciate your communicating with them in an effort to resolve the amount you owe in instances where you can’t afford to pay the whole amount at once. Offer or ask for a payment plan so you can pay a more affordable amount over time in order to settle your account. If your account has already been sent to collections, often your biller will cancel the collections action once you’ve established a payment plan.
It’s important that you get a copy of your payment plan in writing from the biller; this way if you have a collections problem down the line you have a record of the agreement. Be sure to make your payments on time as agreed.
Make sure your bill is correct and accurate
It’s always important to advocate for yourself when it comes to medical care and medical bills. Unfortunately, our health care billing system can be complicated, and even those billers who are experienced can make mistakes. When you receive a medical bill for services, be sure to request an itemized bill if it’s not already provided; this will allow you to review each part you are being charged for that’s comprising the bill as a whole. You’d be surprised how many mistakes you can catch when you do this.
When reviewing your bill, it’s also helpful to keep a copy of your EOB (explanation of benefits) handy so you can refer to what your insurance will and will not cover. You can also get information on costs to be expected in each area, your required deductible, and if any yearly maximums apply.
If you do find a mistake in your billing, don’t hesitate, bring the discussion up with your biller ASAP; don’t wait to point out mistakes after your bill has already been sent to collections as it may be too late at that point.