How Much Do Unpaid Medical Bills Affect Your Credit Score


How to Deal with Medical Debt

Without or without health insurance, medical debt can be a huge burden. Hospital and doctor’s bills can be extremely high and sometimes impossible to pay without a plan.

medical professional

Even if you have an insurance plan, you can quickly get overloaded with co-pays, deductibles, and prescriptions.

Unpaid Medical Bills

Unpaid medical expenses are easily one of the largest debts that people can face in their lives, and knowing where to turn for help can be a challenge. That’s added on top of your other bills and expenses you have to pay each month.

What’s more, sometimes health care bills are hard to decipher and can even be inaccurate, so it’s important to be cautious whenever dealing with them. It’s also useful to know what options are available to you to make it easier to manage your medical debt. We’ve got all the information you need below.

Make Sure the Charges are Accurate

When you’re dealing with medical debt, it can be hard to determine what you are being charged for. Depending on your health insurance (assuming you have insurance) it isn’t always clear in the first place just how much you might owe.

Services might sometimes overlap or be described in technical language, and there can be billing for any variety of tests, medicine, use of equipment, or time spent with doctors or specialists.

Hospital bills can be particularly hard to break down. Sometimes insurance companies won’t pay what they said they would. Doctors or hospitals will also sometimes bill you for unexpected items you thought were supposed to be covered by your healthcare plan.

Duplicate Billing

There can also be issues of duplicate billing and other mistakes that are hard to track down. Plus, your bills might be staggered so that you don’t actually know the total cost of what you owe.

For all these reasons, it’s crucial to be very careful and thorough when dealing with your medical bills to ensure that you aren’t paying more than you should be. Unfortunately, this can mean a lot of time on the phone clarifying every potential issue as it arises.

Otherwise, these issues can be buried in paperwork. It’s also essential to keep thorough and accurate records so you have a reference point whenever a new question arises.

Understanding Your Health Care Benefits

One of the best things to do is familiarize yourself with your health insurance plan’s explanation of benefits (EOB). This isn’t always clear, but you can get a better understanding of the types of procedures you’re covered for.

You can also find out what percentage you’re responsible for, and what medical providers are considered in-network versus out-of-network, or Tier 1 versus Tier 2. If you’re confused, call your healthcare company for clarity.

Do medical bills affect your credit?

In the past, it was treated just like any other type of debt on your credit report. Any relevant late payments, charge offs, or collections surrounding medical bills were weighed the same as credit card or any other type of debt.

Now, however, both laws and credit scoring models have changed to better benefit consumers who are dealing with medical bills. One of the best recent changes happened in 2015.

The three major credit bureaus decided not to report any medical debt until 180 days, compared to just 30 days for other types of debt. This gives you more time to receive your bills, make sure they’re accurate, and work out a payment plan.

FICO Score 9

Credit scoring models are also putting less emphasis on medical debt when it comes time to calculate your credit score. FICO 9, the newest model, gives medical collections less weight than other collections or debts owed.

This provides some relief when you’ve had medical and consequently, financial, situations that are out of your control. The downside is that many lenders still use older FICO models where medical bills are treated equally with other debt.

But as lenders start to upgrade and the popularity of FICO 9 continues to grow, you can expect to see some improvement in your credit score.

How to Handle Your Medical Debt

Even with the proper planning and familiarizing yourself with your benefits, it’s easy to find yourself saddled with overwhelming debt. Whether you’ve had a major operation or your child broke his leg, receiving medical care is expensive.

Luckily, there are a few different ways to handle it, many that are more amenable than other types of consumer debt. The best thing is to address the debt as soon as you start receiving bills. Otherwise, you can set yourself up for expensive late fees and negative items on your credit report.

Interest-Free Payment Plan

The cost of medical debt can be well outside of anyone’s reasonable budget, so one of the first things you should do is to arrange for a good payment plan. Most medical bills should be interest-free. The healthcare industry is usually willing to work with you as long as you’re willing to pay something.

If you can’t meet the payments they request, be honest about it and inquire about special hardship plans. You can only afford to pay so much and they’re going to have to accept that. Be aggressive about it and let them know that you intend to pay everything back, but you can only do it at a reasonable rate.

Avoid Missing Payments

When you’ve established what that is, avoid missing any payments if you want to remain in good standing and not have your debt sold to collections. If you discover that your bills were sent to collections, you should call the collections agency right away and tell them that a mistake was made.

Of course, if a medical bill is already in collections, you’ll have to deal with that in a different way. In either case, it always helps to talk to a free non-profit credit counseling service or debt consultant.

Debt Management

If your medical debts are just one debt among many, you’re not alone. It’s not uncommon for people to accrue other consumer debt as well, very often because of the circumstances surrounding their illness. If you or someone in your family has had an illness or hospital stay, it’s commonplace for other debts to build.

You or a loved one might be out of work, or dealing with other expenses. When debts become out of control, debt counselors can help. They can create debt management plans specifically tailored to your own unique situation.

Negotiate a Lower Payment

Depending on the circumstances, you might be able to negotiate a lower payment on your own or with help from a debt relief company. Sometimes hospitals are willing to work with you. Other times they’re more likely to negotiate with a professional who knows more about the system and has leveraging power.

You might even have luck asking your insurance company for help. Negotiations and even settlements can take place as part of a complete debt relief package, or one specifically centered on medical debt. Talk to a debt counselor to find out more.


Personal Finance Interview with Tawra Kellam on Saving at the Grocery Store

Personal Finance Interview with Tawra Kellam on Saving at the Grocery Store

If you’re looking for easy ways to save money at the grocery store it seems personal finance bloggers and frugal living experts have a mantra about what not to buy:

“Soda, junk food, snacks and eating out,” says blogger Tawra Kellam of Living on a Dime. “I know I keep saying this and all the money-saving gurus say this but that’s because people just blow it off and don’t really realize how much they spend buying snacks and going out to eat.”

Tawra knows a thing or two about leaving a grocery store with only the necessities. She feeds her family of four on just $450 a month without using coupons.

We recently checked in her to get practical advice on everything from grocery shopping to talking to kids about money. Here’s what she had to say:

Hi, Tawra! Can you tell us about Living on a Dime? When and why did you start your site?

I started our site in 1999 after I wrote our cookbook “Not Just Beans” (now “Dining On A Dime”). I was on a couple of frugal living boards when I was on bed rest with my first pregnancy. I kept answering questions on how to save money on your grocery bill and giving out recipes on how to make pretty much anything homemade.

I decided to go ahead and write and self-publish a cookbook on how to save money on your grocery bill without using coupons or living on beans. That’s what the first name of the book was supposed to mean, but of course it was a bad name and no one got it so we later changed it.

We started the website to promote the book and then it later turned into helping people save money and get organized in all areas of their life.

Who should be reading it?

It’s mostly geared toward families. We have mostly moms in the 30- to 45-age range, but of course we have women of all ages but that’s our target group.

We’re in awe of the fact that you can feed your family of six spending just $450 a month on groceries without using coupons … have you always been such a savvy shopper?

I grew up with a single mom who had paid off all our debt ($35K including the house) on just $1,000 a month in five years. Then we became ill will Chronic Fatigue Syndrome and she raised two teens on $500 a month income. To me living frugally was just a way of life.

What’s the one thing everyone can do to trim his or her bill?

The one thing most people can do to trim their grocery bill is to cut the junk. I know you hear it all the time but the juice boxes, fruit snacks, chips, sodas really do add up to the tune of thousands of dollars a year. The problem is people say “this box of fruit snacks is “only” $2″ but that $2 plus all the other $2’s add up over a year. You can see here how just cutting out a few things (not all) could add up to saving almost $10,000 in one year! Yes, $10,000!

So many personal finance sites tout the use of coupons … so why don’t you use them?

Frankly, I find them annoying and to me it’s not worth the stress of trying make sure I remember them, have the right item with the coupon and figuring out a shopping trip based on the coupons that are going to be expiring or going when the things are on sale. Also, most of the times I would try to use them, the store would be out of the items from other couponers cleaning them out.

What’s your typical pre-grocery store trip routine? How do you prepare for your shopping trip?

We cook from the pantry. Meaning I keep certain items on hand all the time and just cook from what I have on hand. For us the pre-grocery shopping includes just writing down on the list what we need when we run out. I do keep track of meat on sale and stock up when it’s at its lowest. If I see roast for $3 a pound then I will buy five to six and put them in the freezer. Chicken at $1.99 a pound, I will buy 20 packages and freeze them. The just can just pull it out of the freezer when I need it. I don’t spend a lot of time planning meals. We have 10 meals for summer and 10 meals for winter that we eat most of the time and just add something new and now and then. Most people do eat the same things over and over so why make it more complicated then you need to.

What do you think are the most common misconceptions people have about saving money at the grocery store?

That it’s a lot of work to save money and you have to make everything from scratch to save. For me the biggest way we save is by not buying things on a regular basis that most families buy like soda, juice and snacks for the kids. I also keep it very simple. We eat mostly chicken, roast and hamburger. I make my 10 meals out of those on a regular basis and then add other things in now and then to mix it up a bit.

What do people do in the name of saving money that might not actually be saving them money?

Clipping coupons and buying things just because it’s on sale. Just because it’s a good deal, if you aren’t going to use it or eat it then you are just throwing money away. They also justify buying things like fruit snacks and juice boxes so they can “save money” by not eating out. Really it takes me about five minutes to make a sandwich, put some water and ice in a reusable bottle, throw some applesauce in a reusable container and a cookie and put it in a lunch box. You don’t need prepackaged (and expensive) fruit and snacks to make an inexpensive lunch. By the way, usually my lunches cost less than $1 for the entire thing.

You were able to pay off $20,000 in debt on a tight budget … why did you prioritize paying off your debt? What did you do to reach your goal?

For me we would never be financially stable until we were debt free. We still owe half on our house, but my other than that we are debt free. It is so freeing not arguing with your husband all the time about money and not worrying how you are going to pay your bills because you are paying for things that you used up or did a long a time ago. I’m not saying that we are perfect and don’t ever worry about bills but when we do have issues it’s with unexpected things like medical bills and not an everyday stress.

How do you enlist your whole family in managing your family finances?

For us it’s a lifestyle. The kids know that we try to save every way we can. All of them now are really good about saving and even help us save. A good example is our son had to pay for his own cell phone. He researched to find the best deal. When our cell phone died then he told us where to go to get the best deal on a no-contract phone and we saved at least half of what most people spend on their cell phones.

What advice do you have on talking to your kids about money?

I have three pieces of advice actually.

First, you have to set an example. If your kids see you out spending but you’re in debt and always talking about how you never have money they are not going to be any different.

Second, talk to you kids about money. Don’t hide your finances from them. Sit them down and show them when you pay the bills how much it costs for everything. If you are having money issues, tell them why and what you are doing to fix it.

And lastly, tell your kids “no.” My kids pay for their own cell phones, gas for the car for work and fun (we pay for it for school since they go to school 30 miles from home) and we don’t buy them a toy every time we go to the store. We also don’t pay for college or buy the newest name-brand clothes, shoes or gadgets for them. If they want things like their own computer, tablet, cell phone, expensive clothes or college then they pay for it themselves.

This teaches them that you can’t always have everything you want and how to manage money before they get out on their own. As for college they will work a lot harder for scholarships and getting better grades if they know it’s their dime on the line.

Jill Cooper and Tawra Kellam are frugal living experts and the authors of the “Dining On A Dime Cookbook”. “Dining On A Dime” will help you save money on groceries and get out of debt by cooking quick and simple homemade meals. For free tips & recipes visit

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