By Trish Pearson
Insure Your Future
Trish Pearson
People who are struggling with medical debt will find some relief in that it will no longer be included on credit reports from Equifax, Experian and TransUnion – even if the outstanding debt has been on the report for many years.
Interpreting benefit statements and medical bills can be confusing. Some people will pay a bill for fear that it will impact their credit score. Often, they don’t understand how the amount due was determined or if all the insurance credits have been applied. Medical debt has not been reported since July 1, and the credit bureaus are increasing the amount of time from six months to a year before medical debt in collections appears on a credit reports.
This is good news for those in the process of negotiating or paying a medical debt, as it gives the consumer more time to work out a payment arrangement. Beginning in January, the three consumer credit reporting agencies stopped including any medical debt under $500 on credit reports.
Consumer debt is often the result of overspending and living beyond one’s means. However, medical debt arises because of unforeseen and unavoidable circumstances. Medical debt should not be considered a true reflection of a person’s willingness or ability to pay back a debt. According to the Kaiser Family Foundation, one in 10 adults (about 23 million Americans) owe at least $250 in medical debt.
The challenge with handling medical debt is knowing what expenses you are actually responsible for after insurance has been applied. Medical insurance policies come in so many packages that it is hard to know whether the cost is subject to the deductible, copays or co-insurance (a percentage of the charge). The claims process can have a long timeline from point of sale (your appointment) to the insurance company, back to the provider which results in a bill to the patient. With the advent of electronic medical records and reporting, the charges are reflected immediately and show as an amount due before the insurance credit is applied. Never pay from “My Chart” unless you have a paper bill that reflects the same balance.
Medical bills can be complicated because there are so many entities involved. Here are some tips on managing medical bills:
First, request an itemized bill. If you weren’t expecting a bill for medical services or the total on your tab is higher than you anticipated, ask the billing department for more information including the billing codes for the care you received. If something doesn’t match your experience or the explanation of benefits you received from your insurance company, ask the billing department how you can dispute the charge.
Second, ask for a cash discount. Once you’re sure your bill is correct, ask the hospital if there is a cash discount for paying in cash, or if there’s a payment plan available. Often providers and hospitals offer a low- or no-interest payment plan. Avoid using a credit card that carries higher interest rates.
Third, seek financial assistance. Many hospitals have financial aid programs and advocates who can help patients with financial difficulty.
Fourth, check bills that are in collection for added fees. Some debt collectors will add new fees to scare you into paying more quickly. This is not allowed and should be reported to the state attorney general.
Above all else, do not ignore medical bills. They will not disappear and can impact your ability to borrow money or get credit in the future.