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How medical debt can ruin your credit score unfairly : Shots


Penelope Wingard of Charlotte, NC, survived breast cancer, a brain aneurysm, and surgery in both eyes. For the past eight years, she’s also been struggling with tens of thousands of dollars in medical debt.

Aneri Pattani / KHN


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Aneri Pattani / KHN


Penelope Wingard of Charlotte, NC, survived breast cancer, a brain aneurysm, and surgery in both eyes. For the past eight years, she’s also been struggling with tens of thousands of dollars in medical debt.

Aneri Pattani / KHN

After a year of chemotherapy and radiation, doctors told Penelope Wingard in 2014 that her breast cancer was in remission. She prayed for this good news. But it also means she’s no longer eligible for a program in North Carolina that provides temporary Medicaid coverage to patients undergoing active breast cancer treatment.

Wingard became uninsured. She has survived medical expenses, but the financial costs are still ongoing.

Bills for follow-up appointments, blood tests, and scans quickly piled up. Soon after, her oncologist said he wouldn’t see her until she paid off her debt.

“My hair didn’t even grow back after chemotherapy, and I couldn’t see my oncologist,” says Wingard.

Medical debt has brought her credit score so low that she has struggled to qualify for loans, and applying for jobs and buying apartments has become a frustrating experience.

“It’s like you’re being punished for being sick,” says Wingard.

Earlier this year, when the three national credit bureaus Announce new policies In response to medical debt, consumer advocates celebrated, thinking it would bring relief to patients like Wingard. But it turned out the changes weren’t enough to help her or many other low-income and Black patients, who are often the hardest hit by medical debt.

“They’re just getting rid of the little things”

Under the new policies, Equifax, Experian, and TransUnion will remove from credit reports any outstanding debt or personal bills that are less than $500 and that have been moved to the collection, even if unpaid. This doesn’t wipe out what people owe, but the idea is to remove the stains of collections from their credit so they can easily hit milestones like qualifying for a car loan or buying a home. .

The changes, which go into full effect in 2023, are expected to benefit about 16 million Americans. But one federal report Released this summer shows people who may not be the ones who need it most.

“Although the credit reporting companies have claimed this is a big change, the reality is that they only remove the little things,” Ryan Sandler, co-author of the report and senior economist for the Consumer Financial Protection Bureau. “They may not be doing as well a thing as their press release wants you to believe.”

Medicaid debt highest in Southern states that didn’t expand Medicaid

Those most burdened with medical debt tend to be black or Hispanic, low-income, and Southern. One nationwide KFF poll 56% of black adults and 50% of Hispanics say they have current debt due to medical or dental bills, compared with 37% of non-Hispanic white adults. And a Research published in 2021 found that medical debt is highest in low-income communities and in Southern states that have not yet expanded Medicaid.

However, Sandler said, “populations that will be stripped of all their collections are more likely to live in white-majority neighborhoods and high-income neighborhoods.”

Receipts under $500 are usually due to unpaid copayment or Insurance moneySandler said, and those with insurance are often wealthier and white.

Someone like Wingard – a black woman living in North Carolina – is less likely to benefit from the credit companies’ new policies.

After Wingard’s oncologist cut her throat, it took nearly six months to find another doctor who would see her while the bills were unpaid.

North Carolina did not expand Medicaid, so despite her low income, Wingard, 58 and no young children, is not eligible for the public insurance program in her state.

She estimates her total medical debt now to be more than $50,000. It wasn’t just for cancer care, but the bills for unrelated health problems had grown in the years that followed.

She has worked as a teacher and after-school tutor, a COVID-19 contact tracker and a ride-hailing driver, but none of those jobs come with insurance benefits. medical insurance. Wingard says she tried to buy private insurance on the market a few years ago, but her monthly premium would be over $200, which she couldn’t afford.

That leaves her stuck with bill after bill. Her credit report shows five pages of notices from collection agencies representing doctors’ offices, hospitals, and labs.

Nearly 20% have medical debt fearing they’ll never pay it off

Wingard is resourceful. She hunted down clinics that worked with sliding fees, pharmacy programs that reduced copays, and nonprofits that helped cover healthcare costs. But it still wasn’t enough to get her out of debt.

In February, Wingard needed a specialized mammogram to check for a recurrence of the cancer. Before the appointment, she contacted a local nonprofit to agree to cover the costs. But a few weeks after the procedure, Wingard received a bill for nearly $1,900. Wingard says there has been some miscommunication between the nonprofit and the hospital. While she was trying to solve the problem, the bill went to the collection. It’s more than $500, so it won’t be removed even if the credit agency’s new policies go into full effect next year.

“You fight so hard and you’ve been through a lot,” Wingard said. “However, sometimes you don’t see any kind of relief.”

Nearly 20% of Americans with medical debt don’t think they’ll pay it off, according to a KFF poll. Wingard was doomed to live with ramifications.

“It makes you feel worthless, like you can’t do anything”

Her refrigerator and stove have both been out for over a year. She can’t qualify for a loan to replace them, so instead of making grilled chicken from her favorite family recipe, she often buys a can of soup or snack chicken wings instead.

For emergencies – such as when she needs to fix a broken tooth this fall – Wingard will borrow from her family. But it’s not easy to ask for money, she said. “It makes you feel useless, like you can’t do anything about it.”

One recently published research found that medical debt leaves many people unable to pay for basic utilities, increases their food and housing insecurity, and can “contribute to a downward spiral of poverty.” poor health and financial insecurity.”

How bad credit reports affect job prospects

For Wingard, it affected her ability to get a job. She said that two employers told her that poor credit appeared as a red flag in background checks and led to her being denied for the positions.

Employers sometimes use credit reports as a “character representation,” explains Mark Rukavina, program director of the nonprofit health advocacy group Community Catalyst. If two candidates are equally qualified but one has a low credit rating or some outstanding debt, the employer may consider the person less responsible, he said – although from research Medical debt is not an accurate predictor of someone’s ability to pay their bills.

While new policies from credit unions are unlikely to improve Wingard’s situation, consumer advocates say there are signs that society is starting to think differently about medical debt. .

The Biden administration has warned federal lenders no longer consider medical debt when evaluating loan applications and has asked the Consumer Financial Protection Bureau to investigate whether medical debt should appear on credit reports.

Federal law Ban certain types of unexpected medical bills went into effect this year, and some states already strengthen protections against medical debt by expanding Medicaid or organizing responsible nonprofit hospitals provide financial assistance to low-income patients.

In August, VantageScore, a credit score calculator, said it would stop using medical collections in its formula.

Wingard is ready for a faster and more powerful change. And she has an idea for how to get there: a march to Washington to demand reductions in medical debt and universal coverage to reduce future bills.

“For a million people to gather there and say we need better healthcare, I think that would be history,” she said. “Maybe then they’ll realize we need help.”

KHN (Kaiser Health News) is a national, editorially independent program of KFF (Kaiser Family Foundation).

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