Medical Bills and Credit Scores

Unpaid medical bills can cause a serious damage to your credit score. In fact, medical collections are becoming increasingly common. In many cases, it’s a plain and simple case of miscommunication. Your insurance company and your medical provider are in negotiations over paying a recent hospital bill. You think it has been paid by your insurance, when in fact the bill goes delinquent, then overdue and then sent to collections. All of the sudden you have a collection account on your credit report.

Yours score immediately drops by 60 – 150 points, and your credit is hurt for the next 7.5 years. The collection account can stay on your credit report for up to 7.5 years if you don’t prove that it was a factual error, and you are still legally stuck with responsibility for the bill.

Assume nothing
Never assume your bill was covered. Stay in touch with the insurance company and the medical office until you are satisfied that the bill was paid. Remember – whether or not you have medical insurance, you are the one held responsible for paying the bill, and it’s your credit on the line in case that anything goes wrong.

If you receive a bill you thought was covered, contact the insurance company and the medical office for more information. Even if your insurance company is at fault, you will probably be better off paying the medical bill yourself before it’s sent to collection rather than continuing to deny the charge. Once the bill is sent to collection, the damage to your credit is done.

Paying the bill doesn’t mean you have to stop negotiating with your insurance company over the amount. It’s only done to prevent a collection account from appearing on your credit report.

If the account was already sent to collections, consider negotiating a Pay for Delete Agreement rather than settling. You may be required to pay the account in full, but it’s worth it.
If your medical bill was sent to collections in error, you can dispute the record if you can prove that the bill was sent to collections unlawfully (e.g. you were never billed directly for the amount before it was sent to collections). You will still need to pay the bill and the associated fees.

See how-to-pay-off-debt for tips on dealing with collection accounts.