When is a Medical Bill Sent to a Collection Agency?
A recent article in the Chicago Tribune’s March 4, 2012, issue “Small, Paid-off Medical Debt Can Mar Credit, Upend Financing for Unknowing Americans” highlighted how quickly a pristine credit can plummet when unexpected medical bill balances show up on credit reports including previously paid off medical debt. According to the Commonwealth Fund, 30 million Americans were contacted by collection agencies in 2010, an increase of over 25 percent from 2005. And, the Access Project, a research group funded by health care foundations and advocates of tougher laws on medical debt collectors, estimate that over 3 million Americans who have paid off their debt in full still have their balances appearing on their credit reports. Most of the collection actions are attributed to medical bills with the majority of outstanding balances under $250.00.
Medical bills are sent to collection agencies quicker than you think. In fact, it is common to receive a bill within a few days or so of your procedure or hospital stay and the clock starts ticking. So, what can you do to minimize your account from being turned over to a collection agency?
- First and foremost, do NOT ignore your bill! If you haven’t already done so, immediately communicate with your medical provider informing them of your financial situation. Most providers will collaborate with you on options when they know you are actively working to resolve the balance.
- Be persistent and polite.
- Get everything in writing even agreeements; follow up in writing yourself. Did you know a provider may choose to turn your account over to a collection agency if you miss an agreed upon payment or they feel you aren’t paying the balance down fast enough? Thorough and organized recordkeeping is a must including names, dates, what was said, etc.
- Submit written communication when disputing your bill or requesting a bill audit for errors. You may want to make good faith payments until the dispute is resolved. Again, get this in writing.
- Regularly check your credit reports for incorrect listings such as disputed bills that were reported as unpaid accounts. Submit a letter of complaint to the credit bureaus explaining the dispute. The bureaus must review your complaint and correct their reports.
Medical debt can appear on your credit report for seven years, even if it was paid off or settled.
In June 2011, bill H.R. 2086: Medical Debt Responsibility Act of 2011 was introduced. Should this pass, it will provide relief for Americans by excluding “from consumer credit reports medical debt that has been in collection and has been fully paid or settled, and for other purposes”. To support this bill, contact your Congress member.