High medical bills can be a big problem for most people, as only the best health insurance policies cover 100% of the cost of medical care. High medical bills are the leading cause of bankruptcy in the United States because of the legal and financial complications they can cause.
For this reason, at least 23 million Americans have medical debt, three million of whom owe more than $10,000 in medical costs. When you have medical debt, it is important not to run away from it and to explain your situation to the medical provider to reach a payment agreement.
Hospitals or health care providers are usually willing to negotiate terms for payment of large medical bills. However, it is vital to honor such agreements on both the timing and amount of each payment. Otherwise, the medical bills may go to collections.
Medical care without health insurance
When you do not have health insurance and need to receive medical care, you should try to reduce costs and make a payment plan. To reduce costs, you can explain to the doctor your current financial situation, and when it comes to hospital costs, you should carefully review all charges on the bill to avoid errors.
In some states, hospitals are required to offer discounts to uninsured patients. In addition, federal and state programs support low-income individuals and families who cannot afford to pay for the health care services they need.
Health care with health insurance
Health insurance will lower medical services costs, but you should read your insurance policy carefully to understand what charges are covered. If you believe any charges are covered and were not paid by your insurance policy, you should communicate on time and file an appeal during the time allowed for this, which is between 30 and 60 days.
If you have insurance, you should be prepared to receive denials on claims and delays in receiving responses so that sometimes you will have to pay the medical bill and later seek reimbursement.
In what cases can medical bills go to collections?
Most people with large medical debts choose to make monthly payments. However, if someone decides to pay a portion of the money or fails to meet the date agreed upon with the hospital, the medical bill will be sent to collections.
Likewise, if someone stops paying the bill completely, it will also be sent to collections. In both cases, it is very important to talk to the medical provider to reach new agreements and let them know your particular financial situation so that collection agencies can be avoided and payments will be affordable.
How are medical bills treated in collections?
Medical bills are treated differently than other bills sent to collections, especially regarding credit reporting, as they carry less weight in the score than other bills in collections.
In addition, these types of debts have a 180-day grace period before they are included in your credit report. These grace days give you time to figure out the best way to pay before the debt affects your financial life.
Finally, medical bills sent to collections are removed when they have been paid or when insurance pays them.
What to do when a medical bill goes to collections?
The first thing to do when a medical bill goes to collections is to contact the collection agency to arrange for payment. Some agencies are willing to settle the debt so that you will pay a portion of the total amount. It would help if you tried to pay the debt in full before agreeing to a settlement, or it will not be good for your credit report.
On the other hand, you can check the statute of limitations on debt in your state; this refers to the length of time a debt can be collected; it varies by state but does not influence the credit report as a bill can appear for seven years from the acquisition of the debt.
Once you pay the bill, you should ensure that the collection agency updates the information to the credit reporting companies; the agency should report that you have paid in full. To verify your credit information, you can request a free copy of your report from each credit reporting company.
Finally, to improve your credit report score, you can follow some simple and effective recommendations:
- Pay past due debts: in addition to your medical bill, you should pay any other debts as soon as possible.
- Future payments: in the future, you should make all your payments on time, and if you cannot pay, you should contact the service provider and make a payment arrangement before your bill goes to collections again.
- Credit cards: Credit cards are the second most important factor in a credit report score, so paying off outstanding balances on your credit cards will help improve your score.