Make Ends Meet: Medical debt on your consumer credit report

LOUISVILLE, Ky. (WAVE) - There is not a lot of good news when it comes to family’s bank accounts today.

Millions of Americans are struggling with medical bills but there is a little bit of help now when it comes to trying to make ends meet.

According to Census Bureau data, as many as 45% of Americans may benefit from a change to medical debt reporting. Most Americans cannot pay for medical care up front and the burden is even greater when that medical bill is unexpected.

The way medical debt is reported has changed, and we want to make sure you are aware.

“How medical debt gets reported on your credit report is going to change,” shared Nick VinZant, a Senior Research Analyst, and Insurance Expert at QuoteWizard. “That can be huge for people.”

The three nationwide credit reporting agencies Equifax, Experian and TransUnion announced major changes to how your delinquent medical debt is handled. Overdue payments of any kind have always lingered on credit reports for up to seven years. Even after the overdue bill has been paid.

“In the past even if you paid off a medical bill or really any kind of bill that would stay on your credit report,” proclaimed VinZant.

Now, paid medical debt that was in collections will no longer stay on your consumer credit report.

“As soon as you pay it, it comes off your credit report,” exclaimed VinZant.

You will also have more time before unpaid medical debt is reported. More time will give you a chance to get your finances in order so you can pay on the debt or clear the debt in total.

“It used to be after 6 months then any medical debt would be reported on your credit report, and it would affect your credit score,” shared VinZant. “Now that is going to be a year.”

Medical debt under $500 will not show up on your account at all.

“So far what they have said is that it’s not going to appear on your credit report if it’s under $500,” explained VinZant. “That is expected to start in 2023.”

Delinquent payments on your credit report can affect almost everything you do and everything you want.

”Your credit score dictates so much of how you pay for things,” exclaimed VinZant. “Car insurance, cell phones, mortgage applications, rental applications.”

One in 10 Americans who owe medical debt always make sure the calculated amount is correct.

”Make sure that your medical bills are accurate,” stressed VinZant. “It’s been estimated that as many as 80% of medical bills have a flaw in them and have charges in them that they should not have. Look at your insurance plan and really understand what the benefits are compared to other plans that are available to you. A health savings account is one of the biggest things you can do because that is tax free money that you’ve contributed.”

This does not mean you can ignore your medical debt. Pay it as soon as you can.

Check your credit report to make sure any delinquent medical debt that you have paid is immediately taken off your report.

Even though the rule has changed, and medical debt is to be immediately removed, mistakes still happen.

You should be checking your credit report for mistakes from time to time anyway.

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