Medical debt is a different animal than other kinds of consumer debt. Like illnesses, it has a way of developing complications. Between confusing insurance coverage, high deductibles, copays and all too frequent billing errors, medical bills can easily migrate into debt collection status. And this affects over 40 million Americans every year.
Credit bureaus have taken due note
After months of research into the prevalence of medical debt on consumer credit reports, the credit bureaus – Equifax, Experian and Transunion – announced mitigating processes to slow down the financial bleed.
The changes include:
- As of July 1, 2022, medical collection debt that has been paid will no longer show up on consumer credit reports.
- The interval before an unpaid medical collection item makes its way onto a credit report is now 12 months rather than 6 months.
- As of 2023, credit reports will no longer reflect medical debts under $500.
These adjustments certainly help, although a debt in collection is still a large project to confront. At this point, it’s helpful to proceed systematically. Careful inquiry might even turn up curious results – like not owing the debt at all!
What to do
First, gather every data byte of information related to the bill in question, and check for errors. Then ask the debt collector to send you a verification letter of the debt. It’s in response to this letter that you will dispute the debt in writing.
If the creditor then reports the debt to the credit bureaus, ensure that it shows up as medical debt. You can add notations within your report regarding the debt to explain the situation. In Equifax, that’d be done in the Personal Consumer Statement. With Experian and Transunion, that would be in the Disputes sections.
Perhaps you don’t owe
The situation may ultimately develop in unexpected ways. For instance:
- If you don’t receive a debt verification letter or any additional information after filing a dispute, you don’t pay.
- If you receive the requested materials and there are errors, you don’t pay (until these are sorted and agreed).
- Your insurer may never have received the claim from the provider. This could be the insurer’s claim and not yours.
- The insurer may have denied coverage. That can be appealed. Often denials are based on nothing more than administrative errors.
- If the statute of limitations has run out – in Indiana, for medical debt, that would be six years – you don’t pay.
In the final analysis, the debt may have to be paid. It’d be wonderful if it were otherwise, and if these financial headaches didn’t plague us. But until there’s another medical care system in place, knowing your rights and having sound processes to follow can help.
Medical debt is a different animal than other kinds of consumer debt. Like illnesses, it has a way of developing complications. Between confusing insurance coverage, high deductibles, copays and all too frequent billing errors, medical bills can easily migrate into debt collection status. And this affects over 40 million Americans every year.
Credit bureaus have taken due note
After months of research into the prevalence of medical debt on consumer credit reports, the credit bureaus – Equifax, Experian and Transunion – announced mitigating processes to slow down the financial bleed.
The changes include:
- As of July 1, 2022, medical collection debt that has been paid will no longer show up on consumer credit reports.
- The interval before an unpaid medical collection item makes its way onto a credit report is now 12 months rather than 6 months.
- As of 2023, credit reports will no longer reflect medical debts under $500.
These adjustments certainly help, although a debt in collection is still a large project to confront. At this point, it’s helpful to proceed systematically. Careful inquiry might even turn up curious results – like not owing the debt at all!
What to do
First, gather every data byte of information related to the bill in question, and check for errors. Then ask the debt collector to send you a verification letter of the debt. It’s in response to this letter that you will dispute the debt in writing.
If the creditor then reports the debt to the credit bureaus, ensure that it shows up as medical debt. You can add notations within your report regarding the debt to explain the situation. In Equifax, that’d be done in the Personal Consumer Statement. With Experian and Transunion, that would be in the Disputes sections.
Perhaps you don’t owe
The situation may ultimately develop in unexpected ways. For instance:
- If you don’t receive a debt verification letter or any additional information after filing a dispute, you don’t pay.
- If you receive the requested materials and there are errors, you don’t pay (until these are sorted and agreed).
- Your insurer may never have received the claim from the provider. This could be the insurer’s claim and not yours.
- The insurer may have denied coverage. That can be appealed. Often denials are based on nothing more than administrative errors.
- If the statute of limitations has run out – in Indiana, for medical debt, that would be six years – you don’t pay.
In the final analysis, the debt may have to be paid. It’d be wonderful if it were otherwise, and if these financial headaches didn’t plague us. But until there’s another medical care system in place, knowing your rights and having sound processes to follow can help.
