The New Rules About Medical Bills and Your Credit

By Lynnette Khalfani-Cox, The Money Coach®

If you’ve ever had big medical bills that you couldn’t immediately pay, you know how troubling and stressful that situation can be. Even worse: for many years, past due healthcare bills could wind up on your credit report if a doctor’s office, clinic or other medical facility reported your bill to a collection agency.

Thankfully, there is good news now regarding how medical bills are being treated in the world of credit reporting. Effective March 2018, all three of the nation’s three largest credit bureaus —Equifax, Experian and TransUnion — are no longer reporting medical debts that are less than six months past due on credit reports. Additionally, medical bills that were past due but later paid by insurance are now being deleted from credit reports altogether.

The credit bureaus first officially began this policy in September 2017, but they had until March 2018 to fully implement the initiative, under a new program known as the National Consumer Assistance Plan. The goal of the new rules concerning medical bills and credit reports is to give consumers with medical bills the necessary time to process insurance claims, work out payment plans, or otherwise handle logistics with their healthcare providers and insurers — before a medical bill impacts one’s credit. The credit bureaus also recognized that having medical debt is often not a choice, and is therefore vastly different than when people have, for example, outstanding credit card bills or overdue car notes. So part of the new effort is also focused on enhancing credit reporting accuracy.

All of this is a welcome reprieve for the estimated 43 million Americans who owe medical debt. After all, according to a Kaiser Family Foundation survey, 20% of Americans with health insurance reported struggling to pay off their medical bills; among the uninsured, the figure totaled 53%. Overall, 45% of Americans said they’d have a difficult time paying an unexpected $500 medical bill, a 2017 Kaiser Health Tracking Poll revealed.

There are some finer details to know about new credit rules, most of which are friendly for consumers. For starters: credit reporting agencies will no longer include any medical collections on your credit report, unless your medical debt is at least 180 days past due. Another point: even if your medical bill does go into collections, the latest credit scoring formulas from FICO and VantageScore don’t penalize you as much for having past-due healthcare bills.

In fact, even though negative information such as late payments usually stay on your credit reports for seven years, under the newer credit scoring models, a paid medical collection account may not count against your credit score at all. Obviously, you should always try to work with a healthcare provider to avoid having medical bills go into collection. But at least you can breathe a sigh of relief knowing that medical-related debts won’t ding your credit scores in the same way they did in the past.


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