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SALT LAKE CITY — If you are in a fight with some doctor, hospital, or insurance company over an unpaid medical bill, beware. You might be out of luck when you try to finance a car, refinance your home, or even land a new job.
Nearly two out of five Americans say their credit worthiness got zinged because of unpaid medical bills. That can damage their financial health in many ways.
"Not only through loans but through insurance costs as well, opportunities for employment," said Will VanderToolen of the Utah AAA Fair Credit Foundation.
VanderToolen says the days are long gone in which lenders didn't sweat over a borrower's medical debt.
"Many underwriters in years past haven't been so concerned about that. But we live in a day now where every little item on our credit report is of great importance," he said.
The Federal Reserve says nearly half of all collections on credit reports are unpaid medical bills. One reason: They're much more complicated than other bills.
"An individual makes a visit to the hospital, yet they end up with several different bills coming from several different organizations. They don't know what bill corresponds with what service," VanderToolen said.
If it's coming down to the wire, consider paying the whole bill before it hits your credit report. You might find it easier to get reimbursement from an insurer than to get a collections off your credit report.
Add the time insurers take to figure out how much they will cover and it could be several weeks or months before you know what share of the total cost is yours.
However, you can't wait long. Your doctor or health provider will typically turn your account over to collections within 90 to 120 days. Once that happens, you could see your credit score drop by as much as 100 points.
"Those 90 days are going to come very quickly," VanderToolen said.
That's why he says it's crucial to track all those bills. Find out which bills insurance will not cover and why. And, keep in contact with health providers.
"Try to set up some sort of payment arrangement and tell them, realistically, how much you can afford to pay them each month. Start sending that in immediately and let them know you're going to prepay that amount," he suggested.
