Most forms of health insurance don’t guarantee that, following a hospital stay or medical procedure, you won’t be left paying a substantial medical bill. If you’re uninsured, your likelihood of being unable to afford medical expenses is significant, given the high cost of medical care and the unforeseen nature of many medical emergencies. Not paying your medical debts, however, can carry severe consequences.
Medical Debt Reduction
If you cannot pay your medical bills, you can attempt to negotiate them to a more affordable level. Insurance companies commonly negotiate with health care providers before reaching an acceptable price for services. Hospitals and doctor's offices may not present you with that option, but that doesn’t mean it isn’t there. CBS Moneywatch suggests calling the billing department and offering to pay a percentage of the bill in exchange for the provider’s agreement to write off the rest. Some providers will agree to this in an effort to avoid a lengthy, and sometimes expensive, collection process.
Unpaid Medical Bills
Just like unpaid credit cards or personal loans, hospitals and doctor’s offices direct unpaid medical debts to collection agencies. Collection agencies will telephone you and mail you letters imploring you to immediately submit a payment. Unfortunately, these companies often add their own fees to the bill, making the amount you owe even more substantial. Third party debt collectors must defer to the Fair Debt Collection Practices Act when contacting you about your debt. Thus, you may sue any debt collector who threatens you, swears at you or informs anyone else about your medical debt.
Effects on Credit
The medical provider may report your unpaid medical debt to the credit bureaus. If the provider sells the debt to a collection agency, that company may also report your unpaid bill on your credit report. Unpaid debts and collection accounts impair your credit score and weaken your overall credit rating. This can leave you struggling to get new credit or loans, and lenders that approve your applications will often charge you a higher interest rate. After seven years, however, The Fair Credit Reporting Act requires credit reporting agencies to remove the damaging entries from your files.
Lawsuit Warning
A medical provider or collection agency may sue you for your unpaid medical bills. According to Santa Clara University, if you lose the lawsuit or simply don’t respond to notification of the case and don’t appear in court, your creditor may request a court order to garnish your wages and bank accounts. In some cases, it may even place liens against personal property such as your vehicle or home. The higher your medical bills are and the more recently they were incurred, the higher your risk of a lawsuit.
Considerations
Even if your health care provider or its collection agency successfully obtains a court judgment against you for past medical debts, you may be able to avoid the consequences of the judgment indefinitely. Although judgments allow creditors to garnish income and bank accounts, forms of income such as Social Security, government assistance and retirement funds are exempt. These funds remain exempt once you deposit them into your bank account. Thus, depending on the type of income you receive, a court judgment may not have any impact on you financially.
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