We would like to think we will never have a need for a hospital visit; however, there can be unpredictable circumstances arise when we are faced with this trip. Regardless of the reason, a bill will be generated. A service was rendered and now payment will be expected. The hospital will submit a request for reimbursement to your insurance, but the amount your insurance company will pay is dependent upon your coverage. Often there may be a remaining patient responsibility balance.
But what if something unforeseen happens? What if your not paying your hospital bills? How does that impact your credit score?
Your visit to the hospital will consist of various bills because each service provided will submit a request for reimbursement from your insurance company through their billing office. The doctor(s) who performed the service, the radiologist who was requested to take internal images for evaluation, the anesthesiologist, the lab, and the hospital itself will all generate a bill. What you do with the bill can have an impact on any future purchase that may refer to your credit report. Creditors have access to a few different types of credit scores. While a hospital bill may not directly impact some decisions, it could impact that huge creditor you are relying on.
You will continue to receive a bill from the hospital until the bill has been paid or until the hospital refers the bill to a collection agency. So, what’s the penalty for not paying your hospital bills? And at what point does the hospital or medical facility submit the delinquency to your credit report?
State laws vary in credit bureau reporting requirements. However, hospitals will generally transfer your unpaid bills to a collection agency and allow the collection agency to follow through with credit bureau reporting. If you decide to not paying your hospital bills, it can make a significant dent in your credit score. Your credit score can drop by 50 points or more.
There are several ways to stay on top of maintaining your credit score with medical expenses reflected on your credit report.
1. Request a copy of your credit report on an annual basis and review it for any errors or questions. You should be able to find the appropriate person to contact with any questions you may have in regards to your credit report, as to what you are looking at, or how you go about fixing an error.
2. Review your credit report for actual bills as opposed to scams. When reviewing your credit report, verify that the collection agency representing the hospital has submitted one bill as you would have received it in the mail as opposed to submitting numerous billable items spread out. If a bill is broken up and submitted, your credit report will reflect more delinquent accounts which will also impact your credit score.
3. Contact the hospital’s billing office and request an itemized summary of your bill. Discuss any questions or concerns with their office that may not appear on the bill, but are clearly viewable on your credit report.
4. If you have any unpaid balances that are not in dispute, see if the billing office will offer a payment arrangement to help you settle the debt. Talk to this office about its credit bureau reporting process.
5. Insurance companies provide an EOB (Explanation of Benefits) after your visit. Review this for any discrepancies. Compare it to the itemized summary you may have requested from the hospital’s billing office. Contact your insurance company with any questions of discrepancy.
6. Pay attention to medical bills received in the mail and compare them to your credit report. It may take up to six months for a medical bill to show up on your credit report to have any effect on your credit score.
7. Be familiar with your rights under the Fair Credit Reporting Act.
Three major credit bureaus are responsible for your credit report: Experian, TransUnion and Equifax. Your credit score can vary between all three credit bureaus, depending on whether a company you work with reports to one, two or all. Your credit report will reflect who you are in a snapshot.
1. Personal demographic information – This can include any name you have obtained credit under; phone numbers you have used; previous addresses you have claimed as residence; your birth date and social security number.
2. History of Creditors – This will be a list of closed accounts as well as open accounts you have obtained credit with. The closed accounts may show unpaid balances or that they were paid in full. You might be able to contact the creditor and request they remove this account from your credit report as it has been paid in full. The history of creditors will also list how well you have paid your payments.
3. Public Record Information – If you have ever filed bankruptcy or a lien placed on property owned, it will show on your credit report.
4. Potential Creditors – If you apply for a loan, etc…your credit report will show the name of the company that inquired about your credit. Allowing a credit inquiry can cause your credit score to be lowered as well. You can lose up to four points per inquiry.
A good credit score is a treasure. A good credit score can help you:
1. Obtain a mortgage loan when you plan to purchase your first home;
2. Obtain a credit card with a low interest rate and a higher credit limit;
3. Obtain an automobile loan and/or personal loan (which may come in handy when your child is old enough and needs assistance in his or her first purchase);
4. Receive a lower, better insurance rate for any insurance need;
5. Obtain a lease or rental agreement for an apartment, condominium or house;
6. Obtain utilities without a security deposit.
Once a delinquency is reported to a credit bureau, it will typically remain on your credit report for seven years. In reviewing your credit report, look at the debts that may be close to expiration date. You may not need to do anything with those if they are ready to be dropped from your credit report automatically. However, collection agencies can sell your debt to other collection agencies and continue to report the delinquency another seven years and so forth. Staying on top of your credit report can help eliminate situations that can arise that would be out of your control. A severely delinquent debt can lead to a lawsuit which can then lead to your wages being garnished. Hospital bills are just as important as any other bill you receive in the mail for services rendered.
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