If medical bills leave you confused, you're not alone. One study found nearly 40 percent of Americans don't understand their medical bills or explanation of benefits statements well enough to know what services they are paying for, why they owe that amount, and if the amount is correct!
But in the case of medical bills, what you don't know can hurt you. Unpaid medical bills are often turned over to collection agencies and can hurt your credit scores for many years. Here are three common medical bill myths along with tips for avoiding problems:I have good health insurance so I don't have to worry. While good insurance is a big plus, it's no guarantee you won't have to deal with billing errors or claims denials. An American Medical Association study found nearly 20 percent of electronically processed claims contain errors, for example.
What To Do: Keep a file for medical bills and correspondence you receive from your insurance company. If you don't understand a bill or an explanation of benefits, ask for clarification. If you don't receive a bill or explanation of benefits statement from a provider, find out why.
A medical bill can't be turned over to collections as long as I make payments. In most cases, the medical provider does not have to give you advance notice or the opportunity to pay a past due bill before it is sent to collections. A collection account may remain on your credit reports for seven years and six months from the date you first fell behind. Paying off a collection account doesn't remove it from your credit reports or help your credit scores.
What To Do: Get payment agreements in writing, or send written confirmation yourself. Then be sure to make payments on time. This doesn't stop a provider from placing a past-due account with a collection agency, but can help reduce the chance they will.
Medical collections don't hurt credit scores as much as other types of collections. All collection accounts are considered very negative, regardless of the original source of the debt. The most recent FICO® Score ignores collection accounts with a balance of $100 or less, but that doesn't always apply.
What To Do: Make every effort to keep a bill out of collections. Stay in touch with your medical provider until the bill has been paid or resolved. Consider paying it yourself, if necessary. Then you can seek reimbursement from your insurance company.
Union Plus Medical Negotiating Service: Health Advocates will help union members or retirees negotiate a medical or dental service bill that totals $400 or more, for free.
Union Plus Health Savings: A discount prescription card can help you or a family member save on prescriptions. There are also discount plans for eye care, dental care and visits to the doctor or hospital.
Hospital Grants: You may be eligible for a hospital grant of up to $1,000 if you have unreimbursable hospital bills that exceed 10 percent or more of your household income. Union members or retirees who have participated in the Union Plus credit card, insurance or mortgage programs for at least a year may be eligible.