2 Maternity Medical Bills Dropped My Credit Score 150 Points—Here's How I Recovered

Health insurance companies deny payment for nearly one quarter of the bills they receive, forcing patients to foot the bill themselves. It happened to me—because of my pregnancy.

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Photo: Emilija Manevska/Getty Images.

Medical bill denials in the United States are up 11 percent since the start of the COVID-19 pandemic, according to a recent study by Change Healthcare. Overall, health insurance companies deny payment for nearly one quarter of the bills they receive—and it's the patients, not the healthcare providers, who often pay the price. I should know. It happened to me—because of my pregnancy.

A couple of denied medical bills can inflict serious and expensive damage on your financial life; a 150-point credit score drop can do that to a person. But if you know what to expect—and what collection agencies are and are not allowed to do—you can mitigate the problem. In the world of credit and finances, knowing your rights can make a world of difference.

Medical bills add up—especially during pregnancy.

In early 2020 while the coronavirus was first sweeping the globe, our family had another surprise in store: At 39 years old, I discovered that I was pregnant.

I battle a somewhat rare neurological condition called pseudotumor cerebri (PTC). With PTC, your spinal fluid pressure can increase, causing brain swelling, optic nerve swelling, headaches, and vision problems. In other words, it's a lot of pain and not much fun. So, the pregnancy itself was challenging, and doctors classified me as high-risk.

Our baby boy wasn't due to be born until the end of the year, but complications from PTC turned what was supposed to be a routine maternity checkup into an emergency c-section. Baby Jayden made his debut into the world around six weeks early, and after a quick kiss from Mom and Dad, he was rushed off to the NICU.

Our family was fortunate. Despite my high-risk pregnancy, my son's premature delivery, and the NICU stay, everyone came through the storm and is in good health for the most part.

But the experience—as well as a kidney surgery for my daughter that happened around the same time—left my family with over $200,000 in medical bills. We did have medical coverage in place, but our plan features a $3,000 deductible that resets every year.

By the end of 2020, my family was responsible for $6,000 in medical deductibles. Plus, most weeks, we had hundreds of dollars in co-pays due. Of course, many people's experiences with health care bills are far worse—but even those bills did serious damage to our family budget.

And even if you're lucky enough to have healthcare coverage, like I had, billing errors can happen. And they happened to me—over and over again. Payments slipped through the cracks; in my case, the provider's billing department never sent them to my medical coverage provider. Coding errors happened. Claims were denied.

According to the LBL Group, 80% or more of medical bills contain errors. And when billing problems happen, surprise (expensive) medical bills often follow. So, on top of those copays and the $6,000 in deductibles we owed, even more bills were flooding my mailbox. And my phone was blowing up with calls.

80% or more of medical bills contain errors. And when billing problems happen, surprise (expensive) medical bills often follow.

The Importance of Follow-Up

I was a mother of three holding down a full-time job and breastfeeding a premature infant. I couldn't find enough time in my schedule to take a shower most days; the idea of sorting out billing errors was a non-starter.

Once the baby was a couple of months old, though, I finally found some time to reach out to billing departments and my medical coverage provider—in hopes of making them work together. Of course, because of the pandemic, getting someone on the phone to try to fix billing issues was more difficult than ever; I often sat on hold for over an hour.

After hours on the phone and dozens of emails, I thought I had everything resolved. I hadn't.

Dealing With Debt Collectors

For the first time in my life, a collection account appeared on my credit reports. Actually, there were two of them. And to add insult to injury, those accounts dropped my credit score 142 points. Because I subscribe to several free credit monitoring services, I found out about the problem the same day it happened. Right away, I called the collection agency.

The debt collector had a small list of several outstanding bills from the same hospital. Note that a hospital doesn't typically bill you for all services at once; in my case, there were many smaller bills for services such as anesthesia, medications from the hospital pharmacy, surgeon's fees, pediatrician's fees, and more.

Again, all of these bills were supposed to be covered by my medical share plan. But numerous billing mistakes had left them unpaid.

I reached out to my medical coverage provider and got them to call the hospital with me on the line. Together, we were able to go through the list of accounts the billing department had turned over to collections. The hospital agreed to recall all except two of the bills—and submit them to insurance with the proper billing code (you know, like they should have done in the first place).

In all honesty, I didn't feel like I owed the two bills that the hospital refused to recall. But since they were just a few hundred dollars and I, fortunately, could pay them, I decided to make a settlement offer to the collection agency.

When the collection agency informed me they were recording our call, I disclosed that I was recording on my end too. The collection agent agreed to what's called a pay-for-delete settlement. As long as I paid the two accounts (minus a 20% discount I negotiated), they would ask the credit bureaus to erase the account from my credit report. For good measure, I asked for a copy of the settlement agreement in writing.

Protect Yourself

In 2020 the Consumer Financial Protection Bureau received nearly 83,000 complaints about unfair debt collection practices. That figure represents an 11% increase from the agency's 2019 numbers.

I don't believe that every collection agency is evil. But debt collectors have a bad reputation for a reason; there's a lot of manipulation and downright dishonesty that takes place in the debt collection industry.

In my case, the agency had promised to request the deletion of the account from my credit report after they received their payment—but, they lied. Surprise! Instead of asking the credit bureau to erase the account, the collection agency updated the balance. My $200(ish) collections that I'd settled for $160 now showed a new balance of $40—the 20% reduction I had negotiated.

Those two updates to the balances on my credit report lowered my credit score another eight points. At that point, the two collection accounts had cost me 150 points off my credit score.

Thankfully, I had recorded the conversation with the collection agency. So, I gave the company a call and politely asked for a supervisor. At first, the supervisor argued with me. That's when I let her know that I knew my rights: The Fair Debt Collection Practices Act (FDCPA) makes it illegal to lie to someone in an attempt to collect a debt. Promising to delete an account in exchange for payment and then not following through was illegal.

When the supervisor pushed back, I encouraged her to go back and listen to the recording. I also let her know that if she didn't fix the mistake, I was going to reach out to a consumer protection attorney with my copy of the recording and the settlement offer letter I had saved.

Eventually, the supervisor confirmed she had listened to the recording. She agreed to send deletion requests to all three major credit bureaus—Equifax, TransUnion, and Experian.

The next day, I received notifications from my credit monitoring services. My credit score had rebounded 150 points, all the way back to 812.

Your Credit Matters

I'm so glad that I protected myself in writing and by recording my settlement call with the collection agency. Having proof that the collection agency promised to delete those accounts was the magic bullet I needed to fix a frustrating situation.

If you're wondering how much a 150-point credit score drop really matters, here's an example: My husband and I applied for a new mortgage the month after the medical collection incident happened. The FICO Loan Savings Calculator provides estimates of the APR you might qualify for on a mortgage, based on your credit score:

  • 3.263% is the APR you might be eligible for with a FICO® Score of 760-850.
  • 3.876% is the APR you might qualify for with a FICO® Score of 660-679.

That difference might not look like a lot, but consider this: The median sales price on a home in November of 2021 was $358,000, according to the National Association of Realtors. On a 30-year fixed mortgage for that amount, here's how much home loans with those two different APRs would cost you:

  • A 3.263% APR would make your monthly mortgage payment $1,561. You'd pay $203,814 in total interest (if you never moved or refinanced).
  • A 3.876% APR would equal a monthly mortgage payment of $1,684. The total interest on the mortgage would be $248,115.

The loan with the higher interest rate would cost you $123 extra dollars every month. Over the life of the loan, you'd pay $44,301 in additional interest fees.

A lower credit score can cost you in many other ways too. You might pay more money every time you apply for financing. And if the credit damage is severe enough, you could have trouble qualifying for certain loans and credit cards at all.

Bottom line

Dealing with a pile of medical bills (or any other debts) isn't fun. I can attest to this. But if you ignore the problem, it's ultimately you who will pay the price.

So know your rights, and if you ever find yourself in a situation like mine, be as proactive as possible. Take notes, record calls (and disclose that you're doing so), and get everything in writing when you talk to creditors or debt collectors. Then, if the situation goes sideways, you'll be in a better position to seek legal help if you need it.

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