Medical debt is a burden that can follow you beyond the hospital. After going through a traumatic injury or severe illness, healing might come with overwhelming medical costs. Over time, unpaid medical bills can negatively impact your financial health.

How Medical Debt Impacts Credit

After a bill isn’t paid on time for many months, the hospital or doctor’s office may turn your information over to debt collectors. Medical offices typically wait 60-120 days for no payment before going to collections. Since July 2022, you now have a year to pay your medical bills before it affects your credit reports.

However, once the grace period expires and debt collectors start contacting you about your debt, it will hurt your credit score. A poor credit score can affect your loan options, finding housing, or getting a job.

But there is good news. For the first six months of 2023, medical debts under $500 will not appear on your credit report. Also, paid medical collection debt should no longer appear on your credit reports. Before, the debt would last for seven years.

How To Remove Medical Debt From Your Report

Know Your Rights

Medical bills can be a tricky process. The No Surprises Act protects all patients from surprise costs and confusing payment processes. Let’s break down what specifically the No Surprises Act will make sure you have:

1. No cost-sharing (copayment, coinsurance, etc.) bills for emergency and non-emergency services outside of your network
2. No out-of-network charges and balance bills for supplement care (radiology, anesthesiology, etc.) by an out-of-network provider at an in-network facility
3. No surprise bills for emergency services, even if you are out of network
4. A clear notice from your healthcare provider about your out-of-network medical care costs and how you can avoid surprise bills

Don’t have insurance? The Act also ensures that patients without insurance receive an estimate of how much their care will cost BEFORE they receive it.

Check Your Credit Report

The three main credit bureaus, Equifax, Experian, and Transunion, offer free credit reports until December 2023. You can download your reports at AnnualCreditReport.com and check the sections “Collections” and “Account Information.” After December 2023, you can use the same website to get one free credit report per year.

Gather Documentation

If you’ve already paid your medical bill, gather evidence such as your credit card statements or doctor’s payment records. Every piece of documentation will help your case.

File a Dispute

You can file a dispute for free and as often as you need. You can file your dispute with all three major credit bureaus separately online, by phone, or by mail. For more information, visit each of their websites.

• Equifax
• Experian
• Transunion

Be prepared to give the following information to each bureau:

• Identifying Information - Name, date of birth, social security number, your current address, and other addresses from the past two years
• Identity Documentation - A copy of your government-issued ID and your bank statement or utility bill showing your name and address.
• Disputed Items - A specific list of everything you are arguing, an explanation, and a removal request.
• Disputed Items Documentation - A copy or scan of any evidence to support your request.

Ask Your Health Insurance To Pay For It

Before you receive your medical care, it is crucial to understand how much your insurance will pay or not pay. Once you receive your medical bill, review your insurance policy and billing to ensure your insurance paid the correct amount.

If they did not pay what they were supposed to, you could contact your health insurance provider with your supporting documents and evidence to resolve any errors.

Negotiate with Your Healthcare Provider

If you still have unmanageable, unpaid medical debt, contact your healthcare provider to negotiate a lower bill or a payment plan. If all goes well, get the new agreement in writing in case of future disputes.

You will have to pay your medical debts if you cannot negotiate a new number. However, pay your debt until the amount is under $500. If the amount is under $500, you have until the first half of 2023 to address the rest of your debt until it shows up on your credit report.

Tips to Avoid Future Medical Debts

• Build an emergency fund. Nobody can predict a sudden illness or injury. When you regularly save up some of your disposable income, you can account for any emergency without worrying about your finances.
• Know your insurance coverage. Contact your health insurance and review their policies before receiving any care. That way, when you have to pay out-of-pocket fees, you are already prepared.
• Research financial assistance. Based on qualifications, patients can receive financial help with their medical bills. Look into some hospital programs or charities that offer bill forgiveness or assistance.
• Contact a billing advocate. Medical bills can be a tiresome process. By hiring a billing advocate, they can handle your bills, find potential savings, and resolve any issues for you.
• Check your credit report yearly. Your credit report will list any debts that hurt your credit score. If you check your credit report regularly, you can catch any debts you need to take care of or fix any mistakes as soon as possible.

The Bottom Line

Dealing with medical debt can be a frustrating process. New policies that have been put in place are in patients’ favor. Your debt won’t have to affect your credit score immediately, but you must address any errors or unpaid debts in a timely manner. Otherwise, you will face negative effects on your credit. When you check your credit report regularly, do your research, and take the correct steps, you can recover without worry.