How Unpaid Medical Bills Affect Credit
Grace Period Before Credit Reporting
- Medical providers don’t report unpaid bills directly to credit bureaus. Instead, they may turn the debt over to a collection agency if it's unpaid for a certain period (usually 90–180 days). At this point, the collection agency might report the debt to credit bureaus.
Impact on Credit Score
- Once the debt is reported, it can significantly lower a credit score, especially if the person has a good or fair score to begin with. Medical debt collections remain on a credit report for up to 7 years, though their impact on the score decreases over time.
Exceptions Under FCRA
- As of July 2022, medical debt under $500 will no longer appear on credit reports, and credit bureaus have introduced a 12-month grace period before unpaid medical debt collections can be reported.
Steps to Address the Medical Bill
If your family member is disputing the bill, it's important to act quickly to prevent collections:
1. Contact the Doctor’s Office
- Help her contact the doctor’s office or billing department. You can offer to be on the call for support.
- Ask for:
- An itemized bill to verify charges.
- Clarification of any discrepancies or issues she wants to dispute.
- Request additional time to pay while the dispute is resolved.
2. File a Formal Dispute
- If the issue is valid, the bill can be formally disputed in writing. Include:
- Copies of the bill.
- A detailed explanation of why the charge is incorrect.
- Send the dispute via certified mail to both the medical provider and, if applicable, the insurance company.
3. Negotiate or Arrange a Payment Plan
- If the dispute isn’t resolved in her favor, many providers will accept payment plans or negotiate a reduced amount.
- You could pay the amount directly if it’s agreed upon after the dispute, ensuring it’s resolved promptly.
4. Request Financial Assistance
- If her financial situation is tight, she can inquire about financial assistance programs offered by the provider. Many hospitals and doctors offer discounts for uninsured or underinsured patients.
Important Notes
- Don’t Ignore the Bill: Letting the bill go unpaid risks collections, which is more stressful to resolve.
- Keep Records: Document all communications with the doctor’s office, including dates, times, and names of people spoken to.
What You Can Do to Help
- Offer to assist in contacting the doctor’s office and disputing the charge.
- Suggest scheduling a specific time for the call so it doesn’t fall through the cracks.
- If she agrees, pay the bill directly after the dispute is resolved or set up a payment plan.
By taking action soon, you can prevent the bill from escalating to collections and avoid any long-term impact on her credit score.