Protecting Your Credit from Medical Bills After an Accident

Medical debt accounts for a substantial number of adverse entries on many Americans’ credit reports. The negative report often involves medical debt that occurs when health insurance pays only a portion of a medical bill. The consumer either forgets or cannot pay the balance. 

What are the changes to medical debt collection beginning on July 1, 2022?

Regardless of the source of the problem, the three nationwide credit reporting agencies, Equifax, Experian, and TransUnion, have agreed to several changes in how medical debt is reported. Some of those changes were implemented on July 1, 2022.

First, medical debts that are paid in full will not be included on a consumer’s credit report. Additionally, unpaid medical collection debt will not be reported until 365 days after the bill becomes delinquent.  This provides consumers with time to resolve the debt before it is reported.  

Another change will go into effect in 2023. Medical debt collection accounts totaling less than $5000.00 will not appear on credit reports. 

How can a consumer verify what bills have not been paid?

Regardless of these changes, consumers may continue to feel burdened by receiving multiple confusing bills from many visits to their medical providers. To preserve their credit rating, consumers should compare every bill received with the Explanation of Benefits, or EOB, provided by their health insurance provider.  

When there is any question as to whether the debt was incurred or has been paid, the consumer has the right under the federal Fair Debt Collection Practice Act to demand verification of a debt from the medical provider. Once the consumer makes the request in writing, the provider must provide an itemized bill confirming the debt within thirty days. 

            Consumers should also regularly review their credit reports to confirm that no debts are being inaccurately reported. Through the end of 2022, credit reports from all three agencies are free at annualcreditreport.com. Thereafter, consumers may request one free copy of their credit report from each of the three agencies annually.

Can consumers prevent problems with medical debts appearing on credit reports?

Some problems associated with medical debt can be prevented. 

Often, before major medical procedures, consumers can work with their health provider to determine costs and submit the bill to determine what health insurance will pay. 

When health insurance doesn’t cover some or all costs, health providers often will work with consumers to reduce the cost or create a payment schedule to prevent the bill from going into collections.  

All consumers should retain current copies of their health insurance policies and understand the coverage they have purchased. When the health insurance company fails to pay a bill, most health insurance companies have internal processes to review a decision. In some situations, the health insurance company may have violated laws by refusing to pay a bill.  In Virginia, consumers can file a complaint to have the matter reviewed with the Virginia State Corporation Commission by calling 804-371-9691.

Consumers should also be aware that other insurance may be available to pay some medical bills. For example, many automobile insurance policies include medical payments coverage.  This will provide payment for any medical bills incurred due to a car accident. Even when the accident is the fault of a third party, medical payments coverage may help pay bills. In contrast, the accident issues are being sorted out.  When a medical bill is related to an injury at work, workers’ compensation will be responsible for payment of the bill.

How do consumers dispute a medical debt?

When the medical provider erroneously reports a debt and refused to correct it, the consumer may file a dispute with each of the three collection agencies. A dispute will then appear alongside the entry. 

Why is the method of medical billing so complicated?

The small step that the credit reporting agencies have taken this month provides a good start to reducing the impact of medical debt on everyone’s quality of life.  The complicated scheme of medical billing in the United States is often difficult to follow, wrecking havoc on patients’ lives.  Until a more efficient payment system is developed, the responsibility rests on the consumer to reduce the adverse impact of this system and maintain both their physical health and the health of their credit score.