Failing to pay your health insurance usually results in your insurer canceling your policy. Medical bills you owe that are not covered by your insurance plan, however, can go to collections, show up on your credit report as a delinquent debt and sink your score. Before you pull the plug on your health insurance, review your insurer's cancellation policy, resolve any outstanding bills and check your credit report.
Review Cancellation Policy
Review your insurance company's cancellation policy. Inform your insurer your intention to cancel and ask when the cancellation will take effect. Some insurance companies may cancel a policy immediately while other insurers offer a brief period of continued coverage. Follow-up your cancellation request in writing. Pay any residual premiums you owe to your insurer before you cancel. Otherwise, the unpaid premium may be sent to a collection agency.
Pay Outstanding Bills
Pay any outstanding medical bills you owe before you cancel your health insurance. If you owe a medical claim that is not a covered benefit under your insurance policy, negotiate a payment plan with the provider. Health care providers generally avoid the collection process and have the right to send any delinquent medical bills to collection agencies without your permission. Unpaid medical bills reported to a credit bureau stay on your credit report for seven years.
Learn Privacy Laws
Learn the health care privacy laws regarding medical debt collection. According to the Privacy Clearinghouse Office, health care providers may only share certain information with credit reporting agencies, such as your name, address, Social Security number and payment history. Credit reports will mask out the name of the health care provider seeking collection if it reveals the medical condition in which you sought care. You have the right to dispute the debt if you believe it is inaccurate or is not your own.
Examine Credit Annually
Examine your credit report at least once a year for any medical debts owed. For any medical debts found, negotiate a payment plan with the collection agency or dispute the debt with the credit reporting bureau and provide documentation to back your case. Request the credit agency attach your explanation (100 words or less) as to why the debt is in error and request the credit agency show this information to potential creditors.
- Privacy Rights Clearinghouse: Debt Collection Practices, When Hardball Tactics Go to Far; Debt Collectors and Medical Bills
- National Association of Insurance Commissioners: Managing Your Insurance Needs During a Financial Crisis
- Congressional Research Service. "Consumer Credit Reporting, Credit Bureaus, Credit Scoring, and Related Policy Issues," Page 14. Accessed Oct. 9, 2020.
- Board of the Governors of the Federal Reserve. "Credit Reports and Credit Scores," Page 4. Accessed Oct. 9, 2020.
- Medicaid.gov. "Eligibility: Effective Date of Coverage." Accessed Oct. 9, 2020.
- Consumer Financial Protection Bureau. "What Information Does a Debt Collector Have To Give Me About the Debt?" Accessed Oct. 9, 2020.
- Federal Trade Commission. "Fair Debt Collection Practices Act." Accessed Oct. 9, 2020.
- Federal Trade Commission Consumer Information. "Disputing Errors on Credit Reports." Accessed Oct. 9, 2020.
Penny Clark has worked as a feature writer for several Northern California community newspapers since 1994 and holds a bachelor's degree in journalism from California State University, Sacramento. Since 2010, she has been teaching the public food preservation techniques in Sacramento County. She also owns a food storage consulting business that specializes in freeze-dried foods and emergency preparedness products.