Is Medical Debt Causing You Anxiety? Here's Some Good News

I won’t beat around the bush: I’m in a lot of debt. Like most chronically ill folks, I have my fair share of ever-increasing medical bills that lurk in my file folder, filling me with shame and dread. In addition to the routine costs of having a rare disease and several co-morbid conditions, I have tens of thousands in student loan debt – both private and federal.

The U.S. health care system (and other lending schemes, let’s be honest) is based on predatory billing and collections practices, so until that changes, the best we can do is work with what we have.

It’s not all doom and gloom for us, however.

How Medical Debt Is Changing

Some exciting changes were made on July 1, 2022! The three major credit bureaus joined forces to remove approximately 70% of medical debt that’s already gone to collections from consumers’ credit reports. Medical collection debt that had been paid was removed from credit reports and, in the first half of 2023, the three bureaus also stopped including medical debt that was in collections and under $500 on reports.

In addition to all of this, the No Surprises Act – which helps protect patients from unexpected costs associated with seeing an out-of-network provider they did not choose, such as during an emergency or for surgery – began to be more aggressively enforced. The VA also stopped reporting approximately 90% of the debt they had been and streamlined their debt forgiveness process.

So, how does this actually affect me?

These changes help remove surprise credit score and report changes because health care facilities and insurance companies don’t typically report unpaid bills to credit bureaus. Instead, these bills get sent to collections agencies, and, after a year thanks to these changes, the debt then gets reported to bureaus.

Well, what’s the worst-case scenario?

If you do wind up having to deal with a collections agency, it is not the end of the world! The thought of going to collections can be scary, but you can equip yourself with knowledge and face the situation on your own terms.

Collections companies will harass you to try to make you pay your medical debt. If you have a large amount of debt that you don’t pay for a long period of time, the provider or collections agency might file a lawsuit. There are rules these collections agencies must (OK, are supposed to) follow, however, including a statute of limitations for the length of time the collector has to sue you, which varies by state.

The National Consumer Law Center has a digital book called “Surviving Debt,” which is free to access during the COVID-19 pandemic. This book includes tips for dealing with collections, including how to write a no-contact letter.

What happens if my medical bill is sent to collections?

Here are some simple steps:

1. You will want to see how your credit report has been impacted. Due to the pandemic, you can get free weekly credit reports from all three credit bureaus from annualcreditreport.com until the end of 2022.
2. Does your credit report have any errors? If so, dispute the claim on your report with the bureaus themselves. Gather evidence and file a different letter for each bureau that has the inaccurate debt listed on your report. TikTok is actually a decent source for tips on writing these letters!
3. If your credit report is accurate, then pay off your debt to the best of your ability. Your account will show that the debt has been paid – late payment looks a lot better than no payment – and that will help you when seeking approval from lenders and creditors in the future. Unfortunately, this might not improve your actual score right away, but it will get better.

I hope this information brings you some relief as you navigate our complicated U.S. health care system. These are major developments that could help a lot of people, including you and me!