In the past, unpaid medical debts put a red mark on your credit score with long-term effects on your access credit. Small or large medical debts were logged, and if eventually paid, the blemish would remain on your report. Thankfully, advances have been made to alleviate the impact of certain medical debts on your credit score, thus cutting back on additional stressors (such as elevated blood pressure) which could further compound your journey back to health.
#1 – Know About The No Surprises Act
If you’ve ever been hit with a “surprise” medical bill, you must know about the No Surprises Act (NSA). On January 1, 2022, this act went into effect, which helps protect individuals from sudden and unexpected medical “surprises” come billing time. It protects participants in both group and individual health insurance plans. This act bans medical bills without prior authorization from emergency services or from any provider that is out of network. It also prohibits out-of-network cost-sharing for emergency and non-emergency services, such as copayments or out-of-network coinsurance. The No Surprises Act even protects individuals who receive care from an in-network facility; however, the provider(s) who treat them are out of their insurance network, such as an anesthesiologist or radiologist.
These unpleasant surprises usually occur after a severe illness in which costs of medical treatment were not discussed beforehand, or you had no opportunity to discuss care due to an emergency. Certain circumstances are out of your control, such as the ambulance taking you or your loved one to the out-of-network hospital or one medical professional on your emergency surgery team being considered out of network by your insurance policy.
#2 – Medical Debts and Your Credit Score
How can your medical debt affect your credit score? As a rule, medical providers don’t report an unpaid balance to credit agencies, however, if your account has gone past due, they will send the debt over to a debt collection agency. Once in the hands of the debt collector, they decide when to report the delinquency to the credit reporting agencies. Now potential lenders will see the collections in your name and your credit score will be impacted. These collections, whether paid or unpaid, have been in the past a mark on your credit report for up to seven years. As of July 1, 2022, however, all paid medical collections will be removed from your credit report.
VantageScore 3.0, one of the two big companies that calculate credit scores, will no longer consider medical collections in their calculations as of January 2023. Also, starting in 2023, if your medical collection debt is $500 or lower, it will not be shown on your credit report.
#3 – Make Payment Plans
If you’ve been hit with high-dollar medical bills, verify that the charges and insurance discounts are accurately applied. Care providers often mail out preliminary bills before any insurance benefits are applied.
Once you’ve verified your insurance has paid its portion, the next step is to contact your provider’s billing office and make plan payment arrangements you can afford. For smaller debts, you might be able to settle your bill by paying it today for 30-50% rather than paying the full price. If you cannot make any payments, ask about charity care programs at not-for-profit hospitals you can apply to.
Ignoring your bills won’t make them go away. Avoid the collection agency altogether and keep your credit score intact.
At Organized Instincts, our team of daily money managers will help you eliminate the blood pressure-elevating task of settling your medical provider bills. Schedule a no-obligation conversation today and learn how to understand the claims process and effectively deal with medical debts to keep negative marks off your credit report.
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