Health insurance policies and active coverage documents should be kept for as long as they are active. Once a policy period ends, it is recommended to keep records for at least three to seven years to handle potential insurance disputes, audit inquiries, or tax-related medical expense deductions.
Once you have a new policy in hand, the old one can usually be tossed — unless there is an open claim that still needs to be resolved. In this case, it is a good idea to keep all documents, including car repair and medical care receipts, until the claim has been closed and all payments have been received.
For Insurance Claims
Keeping your medical bills and Explanation of Benefits (EOB) statements for at least one year is a good practice. If a reimbursement dispute comes up, these documents serve as proof of what you paid and what your insurer covered.
Keep health insurance policies for as long as the insurance is active. Records relating to your health—conditions, treatments, prescriptions, lab tests, family history—should be kept forever. It's a good practice to have a separate file for records from the past year for quick reference in an emergency.
Old insurance documents and paperwork contain sensitive data that can make it easy for identity thieves to violate your privacy, so avoid placing whole documents in your recycling or trash. Instead, shred documents using a cross-cut shredder (one that shreds in two directions, producing small, confetti-like pieces).
Other records
After paying credit card or utility bills, shred them immediately. Also, shred sales receipts, unless related to warranties, taxes, or insurance. After one year, shred bank statements, pay stubs, and medical bills (unless you have an unresolved insurance dispute).
You may choose not to use insurance if the service you need isn't covered, or it's less expensive if you pay out of pocket. In most cases, providers and facilities must give you an estimate when you schedule care at least 3 business days in advance, or if you ask for one.
As a rule of thumb, it's advisable to keep medical documents for at least 1-3 years after payment or the resolution of any insurance disputes. This time frame ensures that you have ample documentation to support any late-coming claims or inquiries from insurance companies.
Keep Forever
Unpaid medical bills don't just disappear; they can stay on your credit report for up to seven years and potentially lead to lawsuits, but recent changes mean paid collections under $500 are removed, and new rules aim to ban medical debt from credit reports entirely, though they face legal challenges. While debt collectors can't sue indefinitely (due to state statutes of limitations, usually 3-6 years), the debt itself often remains, and you can negotiate with providers or agencies for payment plans or settlements.
The golden rule in medical billing is "If it wasn't documented, it wasn't done," meaning every service, diagnosis, and treatment must be thoroughly recorded in the patient's chart to justify billing, ensure compliance, prevent denials, and prove medical necessity, acting as the ultimate proof for payers. This core principle ensures accuracy, completeness, and timeliness in claims, protecting providers from audits and delays by linking services directly to documentation.
What to Keep
One year is the standard, in case of billing errors or disputes. I'd probably go ahead and make it a little longer. Keep them for one year. Really, I think you should just get the electronic statements where available.
The "life insurance 7 year rule," or 7-Pay Test, is an IRS test for permanent life insurance (like Whole or Universal Life) to prevent overfunding; if you pay more than the maximum premium needed to fully fund the policy in seven years, it becomes a Modified Endowment Contract (MEC). MECs lose some tax benefits, making withdrawals and loans taxable as income (earnings first) and potentially subject to penalties, though they still provide a tax-free death benefit. The test resets if you make significant changes (like increasing the death benefit) to the policy, starting a new seven-year period.
You generally don't need to keep 20-year-old tax returns; the standard IRS recommendation is to keep most tax records for 3 years, but 6 years if you significantly underreported income (25% or more), or even indefinitely if you never filed or filed fraudulently. For most people, keeping records for 3-7 years covers standard audits, but if those returns are from a time you bought/sold property or have complex investments (like worthless securities), you might need them longer, so consider shredding or securely disposing of anything older than 7 years unless it's for property records.
No, the IRS will not penalize you at the federal level for not having health insurance for tax years 2019 and beyond, as the federal penalty was eliminated by the 2017 Tax Cuts and Jobs Act. However, several states (like CA, MA, NJ, RI, and DC) have their own individual mandates and may impose a state-level penalty, so it depends on where you live.