5 Myths About Medical Collections
More than a million Americans are on the verge of bankruptcy as a result of inability to pay their medical bills. In addition to the rising costs of medical care, there is also plenty of confusion about the content of medical bills, what insurance will cover and how to avoid having the bill sent to collections.
Some misconceptions about how the process of medical billing works only contributes to the growing problem of people going into serious debt and eventually filing for bankruptcy because of their healthcare costs. Understanding more about medical collections can help prevent the financial devastation that can occur as a result of unpaid medical bills.
Myth 1 – Making Payments on a Bill Prevents it from Going to Collections
A lot of people can make the assumption that any progress they’ve made in paying their bill will mean they are safe from collections. In reality, your medical billing can go to collections at any time if it has not been paid in full.
If your payments are too small or you are late on one of your dates for the payment plan then there is a chance that it can be turned over to collections. In order to prevent this you have to make sure that you have met all your due dates if you are under a payment arrangement.
Myth 2 – There Will Be Notification Before a Bill Goes to Collections
If you have unpaid medical bills that you are not aware of or are late completing the bill you may not even realize that it is being sent to collections until the damage has already been done. It can be too late to avoid the effect on your credit when the unpaid medical bill has been turned over even if the bill is currently being disputed. Medical collections agencies will insist that you pay the bill even if it was sent to the wrong address or you never received it.
Myth 3 – Medical Collection Accounts are Scored Differently than Other Collections
While some people may believe that medical collections will not affect their credit score as much as other debt, the truth is that there is no real distinction between medical collections and other types of collection accounts. Medical bill costs often don’t show up on credit reports as they are not typically reported by medical providers.
If a collection agency reports the bill it does not show up as a medical collection but is treated the same way as any other debt in that collection. Having a medical collection on your report affects your score equally as much as other types and can cause your score to drop by up to 100 points.
Myth 4 – Paying Off Medical Collections Will Help Improve Credit Score
After a medical bill has gone to collections it can bring down your score significantly and paying off the bills will not necessarily help. Through some models may favor paid accounts over unpaid, any collection accounts will negatively affect your credit score and there is not much you can do to change it. It will benefit you to pay off your debt but don’t expect your score to improve much after completing your medical bills.
Myth 5 – Good Health Insurance Will Prevent Any Debt Problems
While it is definitely beneficial to have health insurance, there is no guarantee that you will be free from serious medical debt. You might have your bill turned over to collections if your insurance does not offer full coverage for the procedures you have received. Out-of-pocket costs can often be high enough to create serious debt and unpaid bills that are turned over to medical collections.