Medicare, Social Security, and Insurance

7/6/2022 | By Lisa Gerstner, Kiplinger’s Personal Finance

Changes that took place on July 1, 2022, provide relief from medical debts on credit reports, including removal of paid-off debts and extension of periods before unpaid debts appear. Lisa Gerstner of Kiplinger’s Personal Finance explains and offers suggestions on cleaning reports.

Many consumers who have past medical debts weighing on their credit reports will get relief this summer. As of July 1, the major credit reporting companies – Equifax, Experian, and TransUnion – are no longer including paid-off medical-debt collection accounts on credit reports.

The reporting companies will also extend the period before unpaid medical collections appear on credit reports from six months to one year, allowing additional time for patients to resolve issues with insurers or care providers. And in the first half of 2023, the companies will stop including medical collection debts of less than $500 on credit files.

Nearly 70% of medical debt collections will vanish from credit reports because of these measures, according to the companies. In announcing the changes, the companies cited a Kaiser Family Foundation study that found two-thirds of medical debts result from a one-time or short-term medical expense arising from an acute medical need. They’re also the most common debts turned over to debt collectors.

If a medical collection account is removed from your credit report because of the new policies, some versions of your credit score may get a lift. The newest models of the FICO score – FICO 9 and FICO 10 – disregard all paid-off collection accounts that appear in your credit file, and unpaid medical collection accounts affect those scores less negatively than other unpaid collections.

Man at laptop on phone, concerned. Photo by Elnur, Dreamstime. Changes on July 1, 2022, provide relief from medical debts on credit reports, including faster removal of paid-off debts and higher minimum.

With older FICO models that do not differentiate between paid and unpaid collection accounts, the removal of paid-off medical collections may increase scores. “We expect most impacted consumers to experience a score increase of less than 25 points,” says Tommy Lee, senior director of analytics science at FICO.

Someone who has no other negative information on his or her credit report is more likely to see a larger score increase once the paid medical collection is removed.

If you have an unpaid medical collection account on your credit report, consider negotiating a payment plan with the care provider or collection agency reporting it, says Bruce McClary, a senior vice president at the National Foundation for Credit Counseling. That may allow you to whittle down the balance enough for it to be removed from your credit file.

If you recently received a medical bill that you can’t afford, negotiating a lower balance or payment plan with the provider can prevent the debt from going to collection and landing on your credit report in the first place. And make sure that your health insurer pays all the expenses it’s responsible for covering.

As a pandemic-related measure, through the end of 2022 the three major credit reporting companies are allowing consumers to check their credit reports for free on a weekly basis, rather than only once every 12 months. If a paid-off or low-balance medical collection account erroneously shows on your credit report after the companies’ new policies take effect, dispute the mistake with each company that shows it.

© 2022 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

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Lisa Gerstner, Kiplinger’s Personal Finance

Lisa Gerstner is a contributing editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit