Even if you have health insurance coverage, you could still incur significant medical expenses that you are responsible for paying yourself. According to CNBC, medical debt is a factor in approximately two-thirds of all bankruptcy filings.
However, in 2017, the three credit bureaus started treating medical debt differently than other types for purposes of calculating credit scores. If you have medical debt, credit bureaus cannot report it for 180 days, or six months, giving you time to resolve any dispute with your insurance company or medical provider. If you pay the bill in full, or if insurance is covering it, medical debt does not remain on your credit report for the customary seven years.
With these provisions in mind, AARP suggests some strategies to help you deal effectively with your medical debt.
Do not pay off medical debt with a credit card
If you use a credit card to pay off outstanding medical bills, you are essentially trading one kind of debt for another. Unlike credit card debt, medical debt typically has low interest rates and does not charge late fees. If you use credit cards to pay off your health care bills, you can no longer take advantage of the benefits that credit bureaus offer for medical debt.
Pay off other debts first
If you have outstanding debts besides medical bills, such as credit cards, car loans or mortgages, make those a priority before your medical debts. These are more likely to hurt your credit than medical debt that will not show up on your credit report for the first six months and will stay on your report longer.
It may be possible to make arrangements with either your health care provider or a collection agency to pay off your medical debt over time, for a lower price.