If you think you’re immune to damage from a collection account on your credit report because you pay your bill on time, think again. Medical bills that you don’t know about could be hurting your credit, and the odds are not in your favor. An estimated 30 million Americans were contacted by collection agencies for unpaid medical bills in 2010, according to the Commonwealth Fund.
We’ve written extensively about medical bills and the havoc they can create on your credit. You’ve responded by sharing your stories about sky-high bills, insurance processing delays and mistakes, and dealing with collection agencies who collect this type of debt on our blog and in the Credit.com Forum.
Here we pull together our best advice for dealing with these problems.
Unfortunately, some patients are under the impression that medical bills somehow don’t affect their credit, or are treated differently when their credit scores are calculated. That’s simply not true. A single collection account – even for a $15 copay – can cause your score to plummet. Just ask the Cobbs, a couple in Illinois whose plan to refinance their home was derailed when they discovered their credit scores were too low. The cause? A billing snafu resulted in them being sent to collections for several copays.
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And don’t think that just because you have insurance, you’re immune. Even with excellent insurance, your bills may not be covered, as one man found out when he got an $83,000 bill from an “out of network” surgeon after he accidentally sliced off his finger with a table saw.
Make sure you review one of our most popular articles on this topic, where we debunk four medical billing myths that may wind up costing you big time:
Myth 1: As long as I am making payments on a medical bill, it can’t be sent to collections.
Myth 2: I have to be notified before a medical bill is turned over for collections.
Myth 3: Medical collection accounts are treated differently than other types of collection accounts when credit scores are calculated.
Myth 4: I need to pay off these debts to clean up my credit.
There’s no way to completely prevent one of these bills from turning into a collection account on your credit, and there is no sure-fire cure for fixing it when it does happen. But that doesn’t mean you have to sit by helplessly while it destroys your credit rating.
You Have Rights
Anytime you are contacted by a collection agency, you have the right to written confirmation of the debt, as well as the right to dispute it. That’s your right under the federal Fair Debt Collection Practices Act. Debt collectors aren’t allowed to break the law when contacting you about a bill from a doctor or hospital. If you know your rights, you’re in a better position to stand up for them.
Under the federal Fair Credit Reporting Act, you also have the right to dispute inaccurate information on your credit reports. But you have to know how to properly dispute an item on your credit report to get results.
Routine office visits should be straightforward, especially when all you owe is an office visit copay. But as one of our readers who worked in medical billing for many years pointed out, it’s often up to the patient to double check that all the charges are billed and paid properly.
If you really want to understand why medical billing is such a mess, you’ll want to read our interview with a physician who is speaking out about the problems he and his patients encounter all the time: An Insider’s Guide to the Insane World Of Medical Bills. Be sure to check out his tips for saving money on prescriptions, even if you have insurance.
Sent to collections over a disputed bill, or before you even received a bill? One of our readers was able to stop a medical bill from damaging her credit. Other readers have even replicated her success. And don’t miss our piece about how to fix your medical bill problems.
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Help for Hospital Bills
Hospital bills totaling thousands of dollars aren’t unusual. If you get a very large bill you can’t afford to pay, you first want to find out whether you are eligible for financial assistance. New rules in the Affordable Care Act offer some protection for patients at nonprofit hospitals.
What if a hospital is pressuring you to pay more than you can afford? After Michelle racked up a $7,000 hospital bill she was told she needed to pay $200 a month immediately. The problem? On her disability income, that was simply impossible. Michelle needed advice on how to negotiate her bill and to make sure she was getting thefinancial assistance she needed.
Or maybe you simply believe you were overcharged. Blake was billed almost $2,000 for a short visit to the ER for a sprained pinky finger, and wanted to know what his options were for protecting his credit if he refused to pay the bill, which he found outrageous.
Another option is to to try to negotiate down the balance on a large hospital bill. After he received a $30,000 bill from a visit to the ER when his daughter injured her leg, Brett Goldstein became something of an expert on how to negotiate medical bills. He shared what he learned with our readers.
And if you have been in a car accident, you will need to make sure you aren’t blindsided by bills that wind up in collections.
[The Credit.com Forum: Your Medical Bill Questions Answered]
Can Congress Help?
Congress is considering the Medical Debt Responsibility Act, proposed legislation that would require medical bills to be removed from credit reports 45 days after they are paid, provided the original amount is $2,500 or less. It has bipartisan support, but has been slow to make its way through the legislative process. Learn more about Medical Debt Responsibility Act and how you can weigh in. The Consumer Financial Protection Bureau is also examining the issue.
Are you dealing with medical billing problems that have affected your credit? Share your story in the Credit.com Forums!
Image: Fotos Gov/BA, via Flickr
Gerri Detweiler Gerri Detweiler is Credit.com's Director of Consumer Education. She focuses on helping people understand their credit and debt, and writes about those issues, as well as financial legislation, budgeting, debt recovery and savings strategies. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.com.
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Do these fall off after 7 years of non-payment? My 822 credit score went bad after 2 brain hemorrhages and now disability so at this point my credit is wrecked for many reasons. I am not in a position to buy anything. It has been already 3 years, and there is no change in sight in my circumstances, can i just wait it out?
Maria
So sorry to hear what you’ve been through!
Collection accounts (including medical bills that go to collection) can only be reported for 7 years and 180 days from the date you fell behind on the original bill. After that time they must not be reported. As long as the collection agency has accurately reported the date, this will happen automatically.
The only way they can affect your credit longer than that is if they sue you and get a judgment against you. The judgment would have its own reporting period.
I have the situation of receiving several hospital bills, turned into a collection agency (who assigned their own account number to them) sending me a letter that they were taking me to court. I paid the bill, in full, prior to the court date, and called to make sure the court date was cancelled as they had been paid in full.
They assured me they would take care of everything and that the court date would be cancelled. This was in late 1999.
A week later, I received a letter from the courts saying that they had ruled against me as I did not appear in court. I took the receipt I was given by the collection agency to the court house, but since the account numbers were different, they would not believe me. I then called the collection agency (NCO Financial) who later reported that I had paid the bill to the courts, but did nothing to erase the judgement against me.
Will this judgement ever go away? tThe debt was paid prior to the court date!
Suzanne – Sounds like you’ve got a mess on your hands. It also sounds like the judgment creditor (in this case the collection agency) needs to fix this. They can likely correct it by filing a satisfaction of judgment showing it was paid in 1999. Since judgments that are paid or satisfied can be reported for 7 years, reporting it paid should do the trick.
If they won’t cooperate, I would encourage you to contact a consumer law attorney. If the collection agency broke the law – and it sounds like a possibility here – you may be entitled to damages and the collector will have to pay your attorney’s fees. In fact you may want to consult one anyway before you try to resolve this on your own.
Will you let us know what happens?
I surgery done May 2011. Yes I have set up a payment plan for my deductible which it was $1400.00. I sending the payments then they stop sending me my statement. So I didn’t send the payment in. So just received a call from a collection agency tell me I owe 1300.00. I need to pay them $416.00 for three mounts. Which I don’t have right now. I do not understand why they stop sending my statement and did not contact at all. I now have to find a way to get off my credit report. Please Advise me. Thank You:
Felicia – I wish I had better news for you but the hospital or doctor probably isn’t obligated to send you a statement each month. There simply aren’t any consumer protections here that I am aware of. When the statements stopped you should have called to find out what was going on. (I am not trying to lecture here, just explaining how this works.) So now you are stuck dealing with the collection agency. They aren’t required to accept what you can afford to pay. So you’ll have to try to work with the collection agency to get them to accept what you can afford. Even once it’s paid it will stay on your credit report for seven years. Having said this, you can try to deal with it in this way: Reader Stops Mysterious Medical Bill From Damaging Her Credit. Hopefully they will work with you.
I’ve been paying on a medical bill through a collection agency I still question the charges because when I received the statement in the mail it did not give me any explanation of the charges. The collection agency is trying to do a settlement with me, but they tell me I have 13 mo left to pay it in full. I have been making payments on time, but they are telling me to triple my payments monthly. I don’t know what to do.I feel so helpless because I can’t afford anymore than what I’m paying them.
Since you made payment arrangements already you admitted to the debt so it’s too late to dispute it but it seems like what you really need is a statement of the debt and payments to show how the payments are being applied.
I think what you are saying is the tripple payment offer was for the settlement. If you can’t afford that then just keep making your regular monthly payments.
my question is this,i had bypass an heart operation a year an half ago.now I;m being bother day today from collection agency.I;m on social security do to the fact i can not go back to working .the doctor don;t want me to go back. I was a over the road truck driver an made a good living but that is gone for good now.my problem is that I;m unable to pay what these collection agency want do to the fact it takes all the money from social security to live a pay the bills.I keep telling these people there is no money to give an when I do get back on feet I;ll pay them but they don;t seam to care.I have tried to find the help on this but just don:t known were to look for sure. any ideas or help will be helpful.
I have been paying the hospital directly every month on the bills owed and now they sent it to collection. They cash every check, everytime I send it so I dont know what to do.
Seems like they are trying to rip us off even more.
As well, I’m thinking of taking the Dr. to court or small claims because it was his mistake that resulted in the second hospitalization.
What advice
I admit, I forgot to pay off the balance of one my hospital bill and 4 months later the bill (in the amount of $125.00) got turned into collection. Is there anything I can do to avoid having this reported on my credit? This was a stupid mistake to forget.
Thanks,