INDIANAPOLIS, Ind. – If you’re racking up medical debt due to an injury or illness, your credit score may be the last thing on your mind, but experts say you should take steps to protect your finances.
Comic book store owner Bill Townsend found himself in that position in 2016. A 10-day hospital stay for a heart condition left the 59-year-old with medical bills topping $130,000.
Townsend thought his insurance would cover most of the bill, but after months of trying to navigate the $76,000 gap, between what insurance would pay and what the hospital billed him, he was turned over to a collections agency – the first step to blowing his credit.
“Something I really don`t like is uncertainty,” said Townsend. “And I was living with it 24/7. The idea that I don’t know how this was going to end – am I going to lose my business? Am I going to lose my house?”
“Medical debt can do major damage to your finances if you leave it unresolved,” said Donna Rosato, Consumer Reports money editor.
New rules are trying to help. The three big credit agencies – Equifax, Experian, and TransUnion – are now required to wait 180 days before putting an unpaid medical bill on your credit report. So, if you’re disputing a claim, let your hospital or doctor’s office know you need more time to sort things out. And if the insurance company ultimately pays a bill, it has to be taken off your credit report.
“And if the bad debt doesn’t disappear, you’re gonna have to follow up with your health care provider to get proof of payment and you might have to insist that the debt is removed from your credit report,” said Rosato.
Townsend ultimately hired a medical billing advocate to help him resolve his bill. It wasn’t cheap, but it saved his sanity.
“It’s just like a great weight had been lifted off,” said Townsend.
If you need help resolving medical billing problems, an organization called the Patient Advocate Foundation can be a good resource.
Consumer Reports also cautions against plunking down potentionally high-interest rate credit cards to pay medical bills. Many health care providers offer installment plans to help you make payments with little or no interest.