How Not Having Health Insurance Can Damage Your Credit

March 17th, 2017 | Author:

[F]or many, health insurance is a cost they can’t afford. Premiums have gone up and co-pays are often higher as well as deductibles. If you have decided that you just can’t have health insurance, be aware of what it may really cost you.

Major Health Issues

As long as you are healthy, not having health insurance may not be a big deal. However, one injury or serious illness can set you back thousands of dollars. For the average person, this may mean wiping out their savings. For others, it may mean accruing a bill they can’t afford to pay.

Just a few nights in the hospital or one surgery, and you could be thousands of dollars in debt. Even though many hospitals and clinics offer payment plans, you may have a hard time coming up with a minimum payment if your injury has resulted in time off work.

Collections Accounts

If you are unable to pay your medical bill, the clinic or facility will at some point send your account to a collections agency. The agency will try to collect on the money while reporting your nonpayment to at least one of the three credit bureaus.

Once you have a collections account added to your credit history, your credit score will drop dramatically. The better the credit score, the more it will drop. This information will stay on your credit report for up to seven years even if you start making payments or pay the balance in full. If you negotiate a settlement, it will show up as paid for less than the total amount.

Even though the effects of a negative account will lessen after two years, lenders will still see the account for as long as it is listed on the report. This information may deter them from approving a credit application.

While health insurance can be expensive, so is not having a policy in place if the time comes that you need it. Remember that the decisions you make now can impact your credit rating in the future.

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