Update 5/15/23: Medical debt under $500 has now been removed from reports as of April 11, 2023. Hat tip to Point A Card
The three main consumer credit reporting agencies (Experian, Equifax & TransUnion) have agreed to make changes to how medical debt is reported on consumers credit reports according to WSJ. The changes are as follows and will go into effect in July:
- Medical debt that was paid after it was sent to collections will be removed from reports
- Unpaid medical debts won’t get added to credit reports for a full year after being sent to collections
- Removal of unpaid medical debt of less than $500 (won’t go into effect until first half of next year and could be increased from $500)
The changes come in response to the CFPB announcing it planned to hold credit reporting firms accountable for inaccurate reporting when it comes to medical debt. This isn’t the first time the CFPB has looked into this issue with a 2014 report showing that medical debt and non medical debt aren’t equivalent when it comes to determining a consumers credit worthiness. In 2015 changes were made that meant medical debt wasn’t added for 180 days.
It’s expected that these changes announced by the consumer reporting agencies will remove approximately 70% of medical debt currently reported on consumers reports. Most new scoring models discard or reduce the importance of medical debt as it’s not a great indicator of credit worthiness, so these changes shouldn’t come as a surprise.
I think this will just cause all medical offices to collect anything below $500 in advance and not change anything…
Paid off $4000 in credit card debt with tax refund and Equifax score jumped to 799 from 740 and Experian score jumped to 771 from 750. A month later and Equifax dropped to 750 and Experian dropped to 755 for no reason other than my credit utilization being at zero now. So tired of these credit companies and how they dictate credit worthiness. We need a new system.
I noticed something similar as well. First, if you are looking at your vantage scores, they overemphasize credit utilization. I’ve found my fico 8 scores aren’t so sensitive to credit utilization.
Second, you know how they say under 30% utilization is good, well that’s a bit of rubbish. I’ve found anything over 10% utilization really hurts your score with 15-25% losing a whopping 70+ points. I also noticed I seem to get penalized if my utilization is 0%-3%’ish.
The models seem to favor 3%-7% utilization for the most optimum tweak. It’s really all quite bullshit if you think about it.
Not so significant. It’s only $500. The crushing medical debt is in the tens of thousands. The medical and insurance lobby has our lawmakers in their pocket. This is just lip service.
You are correct. This will help people like me though. For some odd reason, every few years, I’ll get these sub $100 nonsense medical collections. Many times I ultimately am able to get them removed but its still very annoying. Some times though the collection agency is persistent in keeping it on. If they were legit I’d pay them.
Doctors’ offices and hospitals are not banks… in my experience, they are poor at handling billing and posting payments. Two of many examples that come to mind:
We had a bill that we paid *twice* (double-paid) end up in collections. How you ask? The dr’s billing office was so bad at recording the payments. No amount of calls or in-person discussion got it sorted out. They were always very polite and apologetic, but ultimately completely incompetent.
Another time we had a medical device that was evaluated and returned get billed twice. The second billing came in place of the refund when it was returned. Insurance paid twice and we got hit with two high $XXX co-pays that they’re trying to collect on. It’s been nearly a year and we’re still going around and around with the provider and billing office to get it straight.
I imagine others (especially those who aren’t willing to follow up repeatedly) would just say “this is wrong, I’m not paying” and wind up with collections that are actually invalid, especially if they’re on the smaller side.
The way it should work is that the doctors office does not need to handle billing with the consumer at all, only with the insurers. The insurance company should be required to reimburse the doctors office the pre-negotiated contracted amount. The insurance company then sends a bill to the customer for any copay/coinsurance.
The insurance is sometimes not much better in my experience. They just do not care and have no accountability, too big to fail or whatever.
Sounds like bills under $500 need not be paid.
😀
Is it cumulative? Because there are always separate charges for each service.
$400: balance due
$101: new fee
$501 reported to the trinity of bureaus.
This won’t solve anything.
Yeah because when I think of crushing medical debt I think of $500 or less..what a joke.
What about debt people stright up refuse to pay?
<$500 yes
Any one knows if this is for cumulative debt under $500 being removed? Or is it for each individual debt item under $500 being removed?
Pretty sure it is individual debts. So if you had 30 separate collections of of $1-$499 they would all be removed.
Correct
Thanks – so the best strategy is to stop paying anything under $500 from now on? 😀
That’s what it seems like!
Wonder if hospitals are gonna start combining and aggregating receipts before sending them over to collections to ensure less <$500 totals
They’ve been doing that already. With this, it’s going to be worse.
Don’t just expect the hospitals to suddenly start forgiving debt under $500.
$500 late payment fee
People in the US think that you can get first-world medical innovation and treatments at third-world prices. A lot of countries with socialized medical systems have tax rates 50-100% higher than US tax rates and also have a two-tier medical system. There is the socialized medical system for the peasants with limited treatments and long waits, and then the privatized medical system for the upper class. People in the US are just brainwashed with political propaganda so that they give politicians more money and power while they themselves just end up with more debt and inflation and taxes. The US currently has considerable subsidization for healthcare for lower-income individuals, and programs such as Medicaid and Medicare.
We have a great healthcare system for the very poor, and very rich. What about the middle class? Who have to face high deductibles, high copayments, out of network providers. Socialized healthcare or not, the cost of service is simply way too high, higher than any other countries in the world
30% of 1,000 is much different than 30% of 20,000 for surgery
Find better options/employers then. I’m neither, and I don’t have problems with it. Maybe if the population would stop consuming so much soda, added sugar, added processing and preservatives, and exercised more, it wouldn’t be so riddled with health problems and hence wouldn’t require all the medical expenses.
Yes, because getting hit by a car or getting cancer is preventable by drinking less soda.
But did I say it would zero out all medical problems? Clearly not. And also cancer risk is half environmental.
Its an insurance pool of funds. So if American’s took better care of themselves to not drain the system with long term medical issues, then the pool would have funds to cover accidental emergencies so the patient wouldn’t come out of pocket.
The irony with your proposition is that it would have an opposite negative effect. Even if people lived healthier lifestyles thus resulting in getting healthier, then there would be less sick people, aka paying customers to all medical facilities which means that the costs that the sick people would have to pay has to go up in order to maintain revenue and profit. Even a nonprofit hospital has to rely on x% of external revenues from customers to avoid going defunct. It’s quite interesting isn’t it, when one solution ends up causing another problem.
The cost is so high precisely because the government forced the creation of health insurance in the first place. Unlike every single thing from food to a house to a car, there is no accurate open pricing for procedures, tests, and treatments. The hospital bills $30,000 because they will get reimbursed $6000 by the insurance company with the insured paying the co-pay off of the ridiculous $30,000 amount. Since most people have insurance from work or Medicaid/Medicare, the true cost of everything is out of whack. If we wanted the lowest costs, banning medical insurance would actually help the most.
Amen
Not that I agree or disagree with you, what kind of insurance do you have that charges the copay on the billed number? I don’t think they can do that. If I have a procedure that bills me 10k, the insurance reduces to 5k, my copay is based off the 5k.
The middle class are the ones that are supposed to band together and hold politicians accountable. They don’t though.
Hey Steve, you sound like a guy that really knows what’s going on. Why do you think it is that 66.5% of personal bankruptcies in 2019 were medical, compared to 8% in 1981 and near zero in the dozens of countries with measurably better health outcomes?
Tell us the differences in bankruptcy laws between those countries. That would answer your question.
Because our system punishes the working poor?
Near zero in countries with a median household income of €30000 (France/Germany) vs $62,000 U.S. because tax and economic constraints keep households economically suppressed. Health outcomes certainly will be better in countries that don’t have the demographics that plague big cities in the U.S. who don’t watch their diabetes and etc.
The real answer to why bankruptcies for medical debt have gone up is because costs have gone up astronomically. Surgeons are earning $500,000-$800,000. More ridiculous lawsuits with astronomically high awards force higher hospital charges.
Get outta here, Steve. You’re on the wrong forum, try the AITA on reddit instead.
Could you delete these political stuff on DoC? This has nothing to do with churning/MSing. I DON’T CARE! Now go fk yourself.
Where is that great medical care you are talking about? Virtually any doctor doesn’t accept new patients, yet charge $100 for a 10 minute visit just for writing a new prescription.
So true. Even rich people in Canada have problems finding a doctor in certain provinces and territories because of the ridiculous system up there. 6 month waits. Same with Greece. If you need a non emergent Angioplasty or bypass, 6-9 months unless you slip the doctor €15,000. Then an appointment opens up in two days.
The U.S. system is awful but all the complaints are invalid if those people cite Britain, Europe, and Canada as an example. Countries like Brazil have the public health care and a lot of people have private health insurance. However, when the costs of living are 25% of the U.S. or Europe, we can’t compare it to here because surgeons are making $500,000-$800,000 in the U.S.
You’re right, Steve. I married a girl from Italy. Her family is well off and they absolutely avoid the socialized medical system over there, despite it being “free”. When the wife hears folks stateside praising Italy’s amazing socialized medical system, she can’t keep her mouth shut and has to say something because it’s hardly the dream that it’s sold to be over here. And yes, over there you’re paying 38% income tax from the moment you earn over 28k Euro. And it goes up from there.
We’ve got our own set of issues over here with the insurance companies and large providers colluding to get a pill of aspirin to run like $500 if given in a hospital. But we need to address the root of those problems. The answer is not socialized healthcare.