Medical debts are very common and can severely damage your and your family’s financial status and credit score. Medical bills can pile up to huge amounts and particularly in this COVID-19 era in which treating this virus incurs huge costs. Let alone the treatment of COVID-19, the test itself will be quite heavy on your pocket. Many people declare personal bankruptcy because of the medical debt they are under.
If you have medical insurance then some of your cost will be covered by the insurance but still you will have to pay the remaining amount which is usually still high. The CARES and FFCRA programs have helped people to get free vaccination and test for COVID but that is only for people who ae insured. And sadly, millions of people out there are not insured and this value keeps on increasing every year.
If by chance you are the unlucky one who has caught this virus, then the bill piled up with the hospitalization, treatment and medications will be huge and most insurances do not cover this. This will wind up to you paying off the entire bill. Having thousands of dollars at dispense is not possible for everybody; which ultimately puts you under medical debt. Once you have fought the COVID battle, you have to prepare yourself for the bad credit war.
How will the credit score be harmed?
Your credit score is your financial credibility. A good credit score will be your support and strength at times when you are looking for a loan and likewise a bad credit score will leave you stranded in the financial world and you won’t be able to qualify for any type of loan.
The credit score depends on different factors and among the factors your payment history makes 35% of the credit score. This means any default payment (even if all other factors are perfect) can have an adverse effect on your credit score. This is an ideal scenario because in most cases one or more elements are not even near to perfect. In a real life situation, with a bad credit history, an additional unpaid amount can sink your score to a severe low value.
This method of measure is however, changing at a snail’s pace and new models are being designed to account for different elements differently. But this change will take time to be implemented everywhere. As of now, most creditors are still using the old models or their own models to gauge the factors.
Will the medical debt immediately effect the credit score?
Gladly, the medical debts do not have an impact immediately on the credit score. Hospitals or healthcare providers do not report to the credit bureaus directly and that is why your credit score will not be impacted instantly. Once the hospitals send your outstanding bill to the collection agency that is when your countdown for bad credit starts.
Even when your debt ends up in the collection agency you can have as less as 60 and as many as 180 days before the bureaus write it on your credit score. This leaves some room for the debtors to find ways to pay off the money. Within this time frame you can negotiate with insurance company to pay off the bill. If the insurance company pays off the debt after the bureau have added the unpaid debt to your credit score, you can ask the bureau to remove the account and restore your credit score.
How can you deal with COVID-19 debt?
Your first approach should be to tackle your debt when it is still with the hospital. Tell the hospital or the doctor about your financial situation and negotiate with them to reduce the bill as much as possible. Ask the hospital about everything they have charged and what amounts can be waived off. You can also apply for any charity program that the hospital offers if you are eligible for it; if you are qualified eligible for the program there are high chances that your bill will be waived off completely or a handsome portion of it be cut off leaving only a small amount to be paid.
Next ask your insurance company to cover as many things as possible and talk with them to cover the major costs of your medical bills. You can also plan out a payment plan with the hospital and pay off the bill in easy instalments. Lastly, if the bill is still unpaid make sure you get best medical loan to pay off the bill.
Conclusion:
Medical debts particularly in the COVID-19 era can become huge and be troublesome for your financial health and your credit score. Make sure to plan out medical emergencies beforehand to avoid any unpleasant circumstances. Is stuck in such a situation, talk with your insurance company and health care provide and try to work out a solution with them instead of letting them to send it to a collection agency.