By Amy Miller, AFC®
Medical debt is a growing burden on many Americans. According to a survey by Healthcare.com, about 35% of Americans (18 years and older) carry medical debt that negatively impacts their credit reports.
In April, Equifax, Experian & TransUnion announced the removal of any medical collection debt with an initially reported balance under $500 from all U.S. consumer credit reports. This change removed a large portion of all medical collection debt reported by these three agencies. This is in addition to last year’s announcement that all paid medical debt would be removed and that the time allotted for unpaid medical collection debt to appear on a credit report would increase from 6 months to 1 year. Although these are steps in the right direction, unfortunately, according to that same Healthcare.com survey, around 52% of Americans report medical debt over $1,000.00.
Because military members and their families are covered by Tricare, there are some misconceptions about their medical debt. According to the CFPB (Consumer Financial Protection Bureau), medical debt and collections on credit reports rank among the top concerns for servicemembers, Veterans, and their family members.
If you have medical debt and collections on your report, addressing it as soon as possible is important. Collection agencies may continue reporting to the credit bureaus up to 7 years from the first date of delinquency. The best way to address the debt depends on the debt itself (type, age of delinquency, etc.) and whether it is verified.
Here are a few steps you can take to address any medical debt reported to credit bureaus.
Request Verification of the Debt
Collectors must provide information about the debt including the name of the current and original creditors, the amount owed including any fees or interest, and how the debt can be disputed within 5 days of initial contact. This can be provided electronically or by mail.
You should use this information to compare personal records of appointments, procedures, etc. to determine if the debt is legitimate. If it is a debt that should have been paid by medical insurance, contact your insurance provider to have the claim reviewed and re-submitted for payment. Collections paid by insurance providers are required to be removed from your credit report. If the debt is legitimate, additional steps will need to be taken to address or settle it.
Disputing Medical Debt
Once account information has been received, a dispute can be filed within 30 days if the debt is not valid or is incorrect. It’s important to file quickly and in writing. Failing to do so within the allotted time frame may affect some consumer rights and protections. Once the dispute is received by the collector, it must stop all collection attempts until the dispute is resolved. If not disputed, the collection agency will assume the debt is valid and continue its attempts to collect.
Request an Itemized bill & negotiate
An itemized bill will detail the treatments or procedures received and the corresponding charges. Medical billing errors are common; look over the bill carefully to ensure it accurately reflects the treatments and procedures received.
It may be possible to negotiate the debt with collectors. They are often willing to work with individuals to settle the debt for amounts lower than the original bill, especially if the negotiated amount can be paid in full. This can often lead to a reduction of 30-50% of the debt.
The simplest way to address a collection debt when you are unable to pay it in full is to work out a re-payment plan. Most medical debt collectors are willing to spread the amount owed over a set period, sometimes with little to no additional fees. They typically prefer to get some money than none.
Seek Financial Assistance through Charity Programs
Non-profit hospitals must provide financial assistance to individuals that fall within certain income levels. They may also have special programs for military members and Veterans. This can vary from hospital to hospital and is typically not advertised and must be requested. For-profit hospitals and private medical and dental providers may but are not required to have similar programs.
Corresponding with Collectors
It’s important when addressing medical debt on your credit reports to keep good records and correspond in writing. Keep track of dates and times, the representative’s name or ID number, and what was discussed. This information can be used later if the debt is reported incorrectly or not removed.
Not sure what is reported on your credit file? Equifax, Experian, and TransUnion are providing free weekly credit reports through the end of 2023 via annualcreditreport.com.