March 11, 2024

Medical Bills in the United States

Medical bills are a common challenge in the United States, affecting a significant portion of the population. According to a 2022 report from the Kaiser Family Foundation, an estimated 41% of Americans have some form of healthcare-related debt. How does this impact your credit, and what steps can you take to address this situation? Here are key insights you need to know about medical bills and their impact on your credit history.

1. Limited Impact on Credit Score:

In general, a medical bill has a limited impact on your credit score as long as it is paid on time. Medical providers typically don't report directly to credit agencies unless the bills are significantly overdue, at which point they might be handed over to debt collectors. Good news came in April 2023 when credit agencies removed medical debts under $500 from reports, providing relief for smaller debts.

2. Grace Period for Debts Over $500:

For medical debts exceeding $500, there is a 365-day waiting period before it appears on your credit history. This offers a window of opportunity to resolve the debt before it negatively affects your credit score for the next seven years.

3. Checking Medical Bills on Your Credit Report:

If you're concerned about a medical bill impacting your credit history, don't wait for a debt collector to confirm your fears. By law, you have the right to receive a free copy of your credit report from each bureau once a year. Currently, you can obtain free weekly credit reports at AnnualCreditReport.com. Verify that the medical bills you find truly belong to you, and if there are errors, dispute them to have them removed. However, if the debt is legitimate, the only way to address it is by settling it.

4. Actions to Take if You Have an Outstanding Medical Bill:

If you're facing a medical bill you can't pay or one that's already in collections and affecting your credit, here are some options to stabilize your finances:

• Speak with your healthcare provider before the bill goes to collections.
• Consider hiring a medical billing advocate who can negotiate on your behalf.
• Seek financial assistance through provider plans or government programs.
• Negotiate the debt with your provider for discounts or flexible payment terms.
• Explore the option of obtaining a credit card with 0% APR, ensuring you have a solid plan to pay off the debt on time and avoid impacts on your credit score.

In conclusion, dealing with medical bills can be a challenge, but understanding how they affect your credit and taking proactive steps can make a difference in your financial situation. With accurate information and options at your disposal, you can make informed decisions to effectively manage medical debts and safeguard your financial well-being.