Home > Managing Debt > Scratching Medical Debt from Credit Reports: The Pros

Comments 1 Comment

Last year, my husband went to a cardiologist for a routine stress test. His father died at a young age from a heart attack, so he’s cautious. We called our insurance company ahead of time and they assured us that as long as the test was done for preventive reasons, it would be covered and paid for by the insurance company.

[Related Article: Scratching Medical Debt from Credit Reports-The Cons]

Three months later, the insurance company had not paid the bill and we found ourselves going back and forth between the medical provider, who insisted they had billed it correctly, and the insurance company, which told us it had not been billed as a preventive procedure and therefore would be our responsibility to pay. When the bill approached the 90 days-past-due mark, I began to worry that it would be turned over to a collection agency and wind up on our credit reports.

Fortunately, this story has a happy ending. I doggedly pursued the issue until the insurance company paid, and we avoided damage to our credit reports.

But millions of people are not so lucky, and do end up with medical collection accounts on their credit reports. Sometimes it’s due to billing battles, like the one we faced, while other times it is due to a bill that slips through the cracks and never even reaches the consumer before a collection agency calls. And of course, sometimes the bills are just too large to pay. The Commonwealth Fund found in one study, for example, that about one-third of those without health insurance had been contacted by a collection agency over a medical bill. Based on 46 million uninsured Americans, they estimate that “translates to potentially 15 million patients with bad credit records from medical debt.”

Once a collection account is reported on a consumer’s credit reports, their scores can drop dramatically. Under the Fair Credit Reporting Act, collection accounts may be reported for seven years and 180 days from the date the consumer first fell behind on the bill with the medical provider. Paying a collection account is not likely to improve one’s credit score and contrary to popular myth, medical collections are not treated differently than other types of collection accounts when credit scores are calculated.

It would be impossible for the credit reporting agencies to examine millions of collection accounts and then determine which medical bills “should” be reported because they demonstrate that the consumer is having trouble paying his or her debts (and therefore is a higher risk), and which shouldn’t be reported because they are the result of a medical bill malfunction or a badly broken health care system.

The Medical Debt Responsibility Act of 2011 would require that medical debts of less than $2500 be removed from consumer’s credit reports 45 days after they are paid or settled. This bill is both fair and necessary.

Think about it for a moment. If you find a mistake on your credit card bill, you have the right under federal law to dispute it and withhold payment until the credit card company investigates. The card company is not allowed to report you as delinquent during that investigation. But if you receive a medical bill that’s wrong, good luck. There is no “Truth in Medical Billing Act” to protect you.

That’s why the Medical Responsibility Act of 2011 makes sense. It will no longer allow the health care industry to force consumers to pay for their poor billing practices with bad credit that can last for years.

[Resource: Understand your exposure to Identity theft with the Identity Risk Score]

Image: takomabibelot, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team