As of 2019, 137 million Americans were living with medical debt. Unfortunately, misinformation and confusion around the billing system can make these bills challenging to pay off. There are a number a common myths about hospital billing and medical debt that could stump some patients and their families.
Myths tend to spread quickly, so we’ve put together the most common medical debt myths around and try to debunk them.
Here are seven common medical debt myths and the reality behind them.
MYTH 1: Once I make payments on a medical bill, the hospital or doctor’s office won’t sent my account to collections.
The reality is that paying your medical bills to the hospital won’t necessarily keep them away from the collections. Regular payments need to reach a certain amount before they can exclude you from a turnover.
Late payment of medical bills can make you eligible for the collection list.
Having an unpaid balance can also take your bills to collections. One way to avoid this is to make payment plan arrangements with the doctor’s office or the hospital that billed you.
MYTH 2: Medical bills are always correct.
It’s comfortable to assume that medical organizations’ billing departments will be 100% transparent in computing bills. While medical facilities may not deliberately take our money unnecessarily, it’s not far-fetched for them to make a mistake during computations.
Human beings run these systems, and they may not always be right. For example, these errors can occur when the insurance company rejects a code on a claim, and they ‘forget’ to resubmit. Also, you may get different statements depending on the number of procedures you have. Having to process these can get a little confusing.
Checking your medical bill with your insurance company’s Explanation of Benefits to understand how your bills are paid can help fix such issues.
MYTH 3: I will receive a notice before my medical bill goes to collections.
If your medical bills go to collections, you should receive a notice. However, as mentioned above, there can be errors, notices sent to the wrong address, or any other thing that may happen. It’s possible you only hear about an unpaid medical bill for the first time when you get a call from the collection agency.
Make efforts to regularly verify your billings and make inquiries from your hospital to clear any misconceptions.
MYTH 4: My medical debt won’t affect my credit.
This is partly true. Medical facilities don’t report medical debt to creditors. However, collections agencies do. So, your credit will likely take a hit if your medical bills go to collections. Other actions, like filing for bankruptcy, will harm your credit. Keep in mind that your credit score will gradually improve over time as you pay down your debt.
MYTH 5: Paying off my medical debt will drastically improve my credit.
One of the most common medical debt myths around is that paying off a collection will automatically improve your available credit.
Like we stated earlier, collections sure affect your credit score. Even when you pay off your debt, they still reflect negative information on your listing and may not leave your credit history for a couple of years.
Don’t expect your credit score to usurp drastically right away. Unless your collection agency agrees not to report your medical account if you pay up immediately, it’s going to reflect in your credit report for a while.
MYTH 6: My health insurance will cover all of my medical costs as soon as I pay my full deductible.
While your health insurance kicks in after your deductible, your insurance company might not cover all of your medical services.
Health insurance typically covers about 80% of medical charges after a deductible. This means that you’ll have to pay the remaining 20% as a patient until you meet your maximum out of pocket range.
To be on the safe side, you should make plans to pay for whatever your insurance doesn’t cover.
While medical debt can be a burden on your personal finances, you do have options for relief. Here are some of our resources for paying off and managing your medical debt.