When it comes to collections accounts, one of the major categories that most people will encounter on their credit report is medical collections. These can occur for all types of reasons, but generally happen when either a patient received treatment at a hospital without medical insurance or when medical insurance rejects a claim for payment or only pays a portion, leaving a balance due by the patient.
Several issues surrounding treatment and payment issues can result in a balance due, and we are in the process of putting together a series of posts at the 760 Blog covering medical collections, so be sure to check us out to learn more in the near future, and keep an eye out, as we will be adding more topics related to this very important subject that happens to be a huge source of many negative credit items. In particular, our posts on HIPAA as well as our post on understanding your medical explanation of benefits are of particular use to those in need of credit repair.
Because there are so many various reasons why medical debt can end up on your credit report, it only makes sense that there are special circumstances that involve different methods for handling these accounts versus regular installment credit accounts.
Different Types of Medical Collections
Uninsured patient receiving hospital services: These types of accounts arise when someone without insurance needs treatment at a hospital and has no way to pay. These are a major portion of the entire medical collections industry and are a major reason why prices for services continue to rise, as the loss incurred by the hospital must be subsidized by the rest of the hospital’s patient base. Many times, people who have insurance end up with erroneous charges on their credit report that appear to stem from uninsured medical charges. This happens when hospital or emergency room staff failed to verify your insurance at the time of service or failed to follow up with you for any changes that have occurred since your last visit. Because of this, the medical claim is sent to the wrong insurer and is rejected as though you have no coverage. Then, instead of following up with you, the billing staff simply sends it to collections, leaving a negative item on your credit.
The good thing is, when this occurs, you can easily get this item removed from your credit by writing a simple letter disputing the validity of the debt. This letter should differ a little from your standard dispute, as you are going to acknowledge having the service, but will be disputing responsibility. You would want to make a copy of your insurance card and include it with your letter, with a section in your letter stating that hospital staff failed to verify your insurance and a demand to resubmit it to them for payment. In the event that too much time has passed to submit the claim, the amount is still not your responsibility; thus, the negative account will be removed from your credit either way. If you are in this position, these are some of the easiest accounts to have removed from your credit file, so don’t become overwhelmed.
Conversely, you could end up with this type of negative account on your credit if you actually are uninsured and needed to receive services at a hospital. Both state and federal laws mandate that a hospital must treat a patient, regardless of their ability to pay. The hospital must render nondiscriminatory treatment to the uninsured patient to the level of providing care to stabilize the patient. If you have negative items on your credit file due to this, there may be something you can do to take care of this without any expenditures on your end. Many times, the hospital itself will have a partnership with a local charity that buys this type of debt on behalf of the patient and simply forgives it. Give the hospital’s billing department a call and ask about a “charity write off.” They will probably send you some forms in the mail, and you will have to verify your income (or unemployed status). This can be a very helpful procedure for removing potentially thousands of dollars of debt from your credit report.
Veterans: If you are a veteran and find yourself in this position, there are specialty charities that do this exact same service to veterans and their families who have had to receive treatment outside of the VA system and ended up with debt because of it. If you have negative medical collection on your credit report because you are a veteran and were forced to receive services outside of the system, there are TONS of organizations ready to help you resolve this debt. Check into one of the services through the link above – you will be glad that you did.
A Quick Note: If you are still in need of medical treatment but are uninsured, there are tons of agencies willing to help you receive services without incurring bad debt on your credit report. This list will get you started, but you may also want to check with local charities as well.
Leftover “Patient Responsibility” Debt: Many insurance companies only pay a portion of certain services, somewhere between 70-90%, with the average being 80%. This leaves you, as the patient, responsible for the remaining 20% of the balance. If you have received services and have not paid this amount, it is likely that you will have a negative collections account on your credit because of this. The good news is that many times, these balances will be very small, so it could just make more sense for you to simply pay them and get it over with. However, if you have a large number of these small balances, resorting to using your HIPAA protections in conjunction with the standard validity dispute process, as outlined here may help you to force the credit bureau to delete them from your credit report. Either way, these small balances can be easily resolved, and as such, you should never let them hold you back from living your best life!
Other Medical Debt: Finally, other medical debt can be the result of your insurance refusing to pay for services. This is where it is a good idea to understand your explanation of benefits, which is sent to you by your insurance company after each visit. Some collection agencies will attempt to bill you for services that are not your responsibility, such as those amounts not paid for “exceeds allowable amount” or “service not covered” without you being informed of the potential of it not being covered. When it comes to these types of medical debts, only those rejected for “no coverage at the time of service” present a difficulty in settling.
In the end, medical collections accounts and the balances associated with them can be the result of reasons as unique as the treatments from which they came. The good news is that, when it comes to your credit report, there are a plethora of methods to use to easily and permanently remove these debts so they are not a negative impact on your ability to obtain credit. From veteran medical debt relief agencies to charities like United Way, you can choose to go the route of having these debts satisfied and deleted. Even if these are not an option, reviewing your past EOBs for accuracy and utilizing debt validity disputes usually results in deletions of these balances from your credit report. Keep in mind – having items removed from your credit does not mean that you do not owe the debt. Rather, it just means that these debts will not affect your credit score and will not appear on your report. The most important thing to remember when it comes to medical debt is that, although they can seem complicated at first glance, they are some of the easiest negative items to have deleted from your credit file, and these deletions tend to happen at a rather rapid pace as well. As with any attempt at removing debt from your credit report, if you are considering hiring a professional credit repair organization, make sure that you hire a professional that understands how to work with the debt that appears on your report. Alternatively, if you are planning to take on these items on your own, make sure that you educate yourself as much as possible before jumping in the deep end. Again, the 760Credit Blog is an excellent source of information, but you can take it a step further by taking credit repair-related courses on free or low-cost education sites such as ALISON, Udemy, or EdX.
- Education Sites – (EdX) https://www.edx.org/; Udemy (https://www.udemy.com/); ALISON (https://alison.com/).
- The 760Credit Blog (760Blog) – https://760credit.biz/760-credit-blog/
- United Way Charities. Homesite: https://www.unitedway.org/
- Qlink Wireless (2018). 35 Medical Assistance Programs that will Help Pay your Medical Bills. Retrieved from https://qlinkwireless.com/blog/35-medical-assistance-programs-that-will-help-you-pay-your-medical-bills/
- Fiscal Tiger (2018). Resources that will Help Veterans with Medical Debt. Retrieved from https://www.fiscaltiger.com/resources-help-veterans-medical-bills-debt/.