How Medical Debt Can Impact Your Job Search and Employment

Medical debt is a huge problem in America today, and it can majorly impact your ability to find a job or advance in your career. Even if you have good qualifications, medical debt that shows up on your credit report can make employers hesitate to hire you. This article will explain how medical debt happens, how it impacts your job search, and what you can do about it.

What is Medical Debt and How Does it Happen?

Medical debt refers to money you owe to healthcare providers like doctors, hospitals, labs, etc. It happens when your health insurance doesn’t fully cover your medical bills for any reason. For example:

• You go to the emergency room and have a high deductible or copay
• You need surgery or special treatment that insurance won’t cover
• You lose your job and health insurance, but still need care
• You have a chronic illness that requires ongoing care

Medical bills add up fast, and even insured folks get stuck with thousands in medical debt. In fact, a 2020 study found 20 million Americans have medical debt in collections, totaling $45 billion!

It’s easy to fall behind on medical bills when money is tight. Unfortunately, unpaid medical debt often gets sent to collections agencies, which can seriously hurt your credit and job prospects.

How Medical Debt Impacts Your Job Search

These days, many employers check your credit as part of the hiring process. They want to see if you’re financially responsible. Medical debt can make you look bad, even if the bills weren’t your fault. Here’s how it impacts your job search:

• Lower credit score – Unpaid medical bills lower your credit score, which makes you look risky.
• Collections on your report – Medical collections really stand out to employers.
• Looks like irresponsibility – They might think you’re reckless with money.
• Questions your character – Some may see it as a red flag for honesty.

Plus, medical debt can prevent you from qualifying for apartments, car loans, utilities, and other services employers want to see. It’s a huge barrier to getting hired.

Does Medical Debt Discrimination Exist?

There’s no federal law preventing employers from discriminating against applicants with medical debt. But a few states, like Maryland and Washington, have passed laws to stop medical debt discrimination. For example, Maryland’s Equal Employment for All Act says employers can’t fire or refuse to hire someone just because of medical debt under $5,000.

These laws aim to protect people with chronic illness or disabilities who are more prone to medical debt through no fault of their own. But most states allow employers to freely discriminate based on applicants’ credit and medical debt.

How Medical Debt Affects Current Employees

Medical debt doesn’t just impact new job applicants. It also hurts current employees through:

• Lost productivity – Stress about debt hurts concentration.
• Missed work – Some miss work to deal with medical or money issues.
• Bankruptcy fears – Many constantly fear bankruptcy due to debt.
• Morale issues – Debt stress understandably takes a toll on morale.

In fact, a 2022 survey found 80% of employees with debt say it distracts them at work. That has real costs for employers!

What to Do If You Have Medical Debt

If you have unpaid medical bills that might show up in background checks, don’t panic. Here are some tips to improve the situation:

• Negotiate bills – Ask hospitals about financial assistance or discounted rates.
• Get on a payment plan – Avoid collections by setting up a monthly payment plan.
• Explain the situation – If asked, explain the circumstances in job interviews.
• Dispute errors – Fight any billing mistakes dragging your score down.

Also, a new 2023 law says credit agencies can’t put medical debt under $500 on your report! And no paid medical debt will show up either. This will help many Americans avoid credit damage.

How Employers Can Help

While employees bear the brunt of medical debt, it also hurts employers through lost productivity and retention issues. Here are some ways employers can help:

• Offer good health insurance to prevent debt from happening.
• Allow flexible scheduling for doctor appointments.
• Understand medical debt happens through no fault.
• Partner with debt counselors to help employees.
• Don’t penalize good workers over medical debt.

A little empathy and flexibility from employers can go a long way. Medical debt is a systemic issue requiring both personal and policy solutions. But together, we can reduce the burden.