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Medical Bill Nightmares

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A trip to the emergency room or bad news from your doctor could result in thousands of dollars in medical bills. Those medical debts, in turn, can do big damage to your bank account — and they can hurt your credit as well. Medical bills don’t generally head straight for your credit report, since they’re not related to a loan you took out. However, many healthcare providers sell unpaid debts to collections agencies, usually after 90 days or so. And those accounts can wind up on your credit report and hurt your credit scores. Let’s break it down.  

Do Medical Bills Affect Credit Scores?

According to the Consumer Financial Protection Bureau, roughly half of all collection accounts on credit reports are due to medical debt, and these accounts can significantly damage consumer credit scores. A single collection can cause a decent credit score to drop by as many as 100 points. (Not sure where your credit score stands? You can view two of your free credit scores by visiting

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    Many patients don’t realize how easy it is for a medical bill to damage their credit. They don’t understand that:

    • Even if you are making payments on a medical bill, it may be sent to collections. (It’s a common misconception that if you pay something, they can’t send the debt to a collection agency. That’s not true.)
    • Medical bills sometimes turn up in collections because a patient doesn’t know (or isn’t clear on) what they owe. At that point, the damage may have been done.
    • Collection accounts are usually damaging, regardless of whether they are medically related.
    • Paying the collection agency may not fix your credit. In most cases, those accounts are reported for 7 years plus 180 days from the date of the delinquency that immediately preceded collection activity (More on this below).

    Can You Remove Medical Bills on Credit Reports?

    The best course of action is to prevent a bill from winding up in collections in the first place. That’s why it’s so important to make all your payments on time. But if you’re unable to do that, the next best thing is to ask a collection agency not to report the bill to the credit agencies right away. If you’re able to resolve your bill quickly, you may prevent it from appearing on your credit report.

    If you’ve received a collection notice and don’t believe it is accurate or fair, you can ask the agency to validate the debt under the Fair Debt Collection Practices Act. You may also dispute the bill with the three major credit agencies under the Fair Credit Reporting Act.

    Can You Consolidate Medical Bills?

    While it is possible to consolidate your medical bills through a debt relief program, you’ll want to be sure that you’re working with a reputable company who has your best interests at heart. If you find yourself struggling to pay unsecured debts such as credit cards, personal loans and medical bills, and you don’t think you can do it in the next five years, it’s a good idea to seek an expert who can walk you through your options. This may include a medical debt consolidation loan or another personal loan with a variable interest rate.

    Help on the Way for Your Scores?

    While medical debts can still severely damage your credit, changes over the last few years in the credit scoring and credit reporting industries have provided some relief to people with outstanding medical bills. Newer credit scoring models, including VantageScore 3.0 and FICO 9, ignore paid medical debts completely. More recently, as part of the National Consumer Assistance Plan — the result of a settlement brokered with 31 state’s attorneys generals — the major credit reporting agencies agreed not to report medical debts until 180 days after they were incurred, in order to give patients more time to resolve them. (The settlement was brokered in 2015 and the credit bureaus were given three years to implement the plan.)

    How to Avoid Medical Debt in the Future

    If you find yourself unable to repay medical bills or in the hospital without insurance, there are a few things you can do to avoid being stuck with an unmanageable amount of debt:

    1. Know your options: Evaluate all the insurance, Medicaid and charity options available to you. The time it takes to investigate possible alternatives to high medical bills is well worth it. Don’t be afraid to ask the medical billing office questions about your options. Keep asking if there is something you don’t understand about your insurance or financing choices.
    2. Review your bills closely: It is common to find double billings and errors on health care invoices. Take the time to closely review each of your bills and challenge any costs that you feel are incorrect. When you are challenging bills, however, be sure that the medical office is not selling your debts to collections while they are in dispute.
    3. Consider paying with credit card: Use your own low-APR credit card to pay for medical bills instead of opening a new account through the hospital. If possible, choose a credit card with a 0% introductory rate and a low APR after that period expires.
    4. Avoid financial traps: Pay your most important bills (such as your mortgage) first, before you pay medical bills. Never use a home equity loan to pay expensive medical bills. This type of loan can put your home at risk if you are unable to pay.

    Consumer Advocates Push for Change  

    Over the past few years, the following regulations have been recommended by various consumer groups to improve patient’s rights and control potential abusive medical billings:

    1. Regulate charity care programs: Health care providers should have clear standards to follow in regards to providing free or reduced care to patients. Patients should be given a full disclosure of their financing and assistance options.
    2. Set clear income discount policies: Sliding-scale billing should be instituted to ensure that the poorest patients aren’t paying the most for their health care. The same discounts that insurance companies receive on medical bills should be applied to consumers.
    3. Establish reasonable payment programs: Medical offices could actually increase their billing returns by establishing longer repayment periods with monthly minimums tied to the patient’s income. Just as student loans are set with low interest rates and low monthly payments, medical debt repayment should be affordable.
    4. Restrict the sale of debts to collections: Medical debts should not be sold to collection agencies until payment negotiations have been completed and a set amount of time has passed. Also, the use of wage garnishment, property liens and judgments for medical bill collection should be restricted.
    5. Cap medical prices for low-income patients: Healthcare providers should not collect more than the actual costs of services from patients who are low-income or uninsured. Currently, these patients often pay inflated “sticker prices” for their medical care.
    6. Protect spouses from medical debts: Restrict health care providers from using common law doctrines to collect medical debts from spouses of patients, especially when these spouses are elderly or low-income.
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      • michael podobnikar

        I’m a retired physician. When a patient has a large hospital bill or Dr. bill, I suggest that they ask what the most popular HMO pays them for the same services, and ask for the same discounted fee. I think that making the uninsured make up for losses that they take from HMOs by charging the uninsured full price. is nasty. No Dr. will go hungry; but many patients will.

        • Credit Experts

          Great idea — thanks for suggesting that.

        • gar

          This should actually be the rule that a hospital is required to follow.
          But instead they bill a retail price that no insurance company on the planet would even consider paying.
          There’s some nasty people working in the financial departments of hospitals these days. And they run rough shod over people with no restraints put on their behavior.

      • guest

        Just got my husbands hospital bill today $215,000 – for 6 day stay in hospital – they reduced this to 35,000 – That is one year salary for me before taxes.. I guess I should of quit my job when he got sick – but knowing my luck we still would not qualify for any help – Just one RX – is 300.00 for 30 pills — now he is only on 15 different Medications . This all adds up.. If I get 2 job- I have to pay more for the Obanma Care insurance– have to tell my boss not to give my raise – I can not pay these bills – my credit is already ruined .. one more mark against it will not hurt it one bit..

        • anis

          Wishing healthy and happy life for you and your husband but I am extremely surprised that up to such extent people are mislead! With 35,000 yearly income you may have to pay very little or zero amount with tax credits towards Obama Care. Please explore what you are entitled to?

        • ChristineP

          Actually under Obama care your max out of pocket should only be around
          $6,600 individually or $13,200 per family annually. If you’re being billed for $35,000 they’re wrong.

      • jem5

        I have a doctor billing me two years after the fact for services that were paid at the time of the visit by co-pay through a collection agency? and some other amount that they cannot advise what it is. When calling they say it is for a visit and I say we paid a co-pay per insurance. Are you attempting to bill me over and above what you contract says? they say they will call back. In the meantime the collection agency says they will start court proceedings. I pay it and ask for a receipt. The doctor refused to give me a receipt and sends me a receipt showing some other amount that was paid by the insurance company. I have been trying for 5 years to get copies of accounting statements on my and my husbands accounts to no avail and only to be ignored. Because no receipt was given my flex spending is billing me back. I called them again only to be ignored and so have reported them to Attorney General and BBB. I think they billed me over and above contracted amounts. I have spent over 500 hours on this. Anyone know an attorney that can work on the plan of getting paid if they get anything out of this practice for me?

        • Gerri Detweiler

          I agree that it is time for you to talk with a consumer law attorney. The debt collection agency may be breaking the law and you may have a case for credit damage. Visit the website of the National Association of Consumer Advocates if you need help finding one in your area.

      • BillA

        I had a short stay in the hospital a few years back. The problem with billing is not the health care providers themselves – it is the third party billing companies they contract with. My insurer shot down about $6000 of charges as not pertaining to why I was in the hospital in the first place. About 6 months later I start getting bills from providers via these billing companies. The bills were for the same charges that the insurance company said were not valid. I called the medical providers offices – all three were not even aware that there was billing issues.

        The worst of the bills was a $750 charge from the ER department. The hospital admissions and ER are the same area. When you arrive they ask for some information and take BP and temp. You then wait until you are taken to your room. The bill that the insurer got was for the highest level of ER service – the same if I had come in with a gun shot wound and was near death. I came in for a planned procedure and could have taken a five mile hike when I arrived. The insurance company denied the bill as ER services would not be indicated on a normal admission. After three months of disputes the bill went away. My solution – make the provider equally liable for any billing that their contractors juice up and send out.

      • jimbino

        I’ve found that the best way to deal with Amerikan medical system is to get my medical care overseas, where it is far cheaper. Places like Cuba, Argentina, Brazil, Costa Rica, India, Thailand, Hungary and Czech Republic.

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