This past year, one in four American households had difficulty paying a medical bill. These unexpected expenses aren’t cheap: 31% of people with problematic health care bills owe $5,000 or more. Unless you get help with medical bills, they can cause big problems like persistent collections calls and damage to your credit.
If you’re struggling with medical debt, know that you’re not alone. Here are a few FAQs about how medical bills impact your credit, and six ways to help with medical bills before they hurt you.
Can medical bills be sent to collections?
Yes. If your bills are unpaid, the hospital or medical provider typically hires a third-party agency to collect the amount due. As the Consumer Financial Protection Bureau explains, collections practices vary widely: “Assignment of unpaid medical bills to third-party debt collectors can even occur when the bills are only 60 or even just 30 days past due.”
It’s important to note that unpaid bills are often sent to collections automatically. For example, if you’ve negotiated a six-month payment plan with the hospital, your bill could still be sent to collections after 90 days—even if you haven’t missed a single payment. The creditor has discretion to send any and all unpaid balances to collections.
Can medical bills affect your credit score?
Yes. Either the original medical provider or the collections agency can report a “trade line” to the major credit bureaus. A trade line describes your account’s status, and would designate the account as being in collections.
“Failure to pay a bill affects the biggest portion of your credit scores: payment history. Consequently, having a medical bill in collections will probably result in serious damage to your credit scores,” writes Lindsay Konsko for NerdWallet.
How can you get help with medical bills?
Whether your credit score has already taken a hit, or you’re working to keep a bill from falling into collections, these options can help you take control of your medical debt:
- Negotiate: Hospitals and insurance companies would rather you pay them something rather than nothing at all, so it’s worth asking if you can negotiate a lower bill or payment plan. Increase your chances of success by following best practices recommended by Susan Johnston Taylor at U.S. News & World Report, including keeping precise records and thoroughly understanding your insurance policy.
- Government assistance: Learn about the various government programs available at Benefits.gov or by contacting a social worker. Individual states run programs through their Department of Human Services, Department of Social Services or Health Services. CalWORKs, for example, provides money each month for qualifying families to spend on housing, food or medical care.
- Nonprofit and private groups: Dozens of charities, foundations and religious organizations offer financial aid and grants to help families facing steep medical costs. If you are impacted by a specific condition, it can help to research charities focused on that ailment—the American Kidney Fund, for example.
- Financial aid: Many hospitals are not-for-profit organizations, meaning they legally must provide care to all people regardless of financial condition. Hospital financial aid programs typically offer discounts based on income, according to federal poverty levels. Be sure to ask the hospital’s billing department about available financial aid and the application process.
- Crowdfunding: Websites like GoFundMe and YouCaring offer platforms for fundraising campaigns, allowing you to reach out to friends, family and community for help with medical bills and other emergency expenses.
- Medical bill loans: With an installment loan, you’ll pay back the borrowed amount plus interest by making regular payments (or installments) over a fixed period of time. A side benefit is that making on-time payments can boost your credit score. Installment loans are available from banks, credit unions and online. Online loans typically have a fast application process, and you can usually get the money within a day or two.
RISE is an example of an online installment loan that can help with unexpected medical bills. With a RISE online loan, you can borrow up to $5,000 and usually get the cash within 1-2 days.* And RISE can help rebuild or improve your credit with free credit monitoring and financial tools designed to get you on track. Apply today and find out if you qualify within minutes.
* Applications processed and approved before 6pm ET are typically funded the next business day. RISE is offered only to residents in states where permitted by law. To obtain credit, you must apply online and have a valid checking account and email address. Approval for credit and the amount for which you may be approved are subject to minimum income requirements and vary by state.
In some cases, we may not be able to verify your application information and may ask you to provide certain documents. Refer to Rates & Terms for additional details. Complete disclosures of APR, fees and payment terms are provided within your Agreement.