What you can do about medical debt

You successfully battled a serious medical condition; you have had surgery or spent time in the hospital. You hope to move on with your life now that you have regained your health. But there’s the small problem of the bill that weighs heavily, crushing your ability to pay. Or even worse, maybe you’re still sick and unable to pay your medical bills.

According to a report from the Consumer Financial Protection Bureau, you are not alone. Americans owe billions to medical providers. The bureau estimates that between about 18% and 35% of Americans have medical debt, with blacks and Hispanics, young adults and low-income people of all races and ethnicities being more likely to bear this burden.

If you’re struggling to pay your medical debt, what can you do? Fortunately, several options are available to you, depending on your situation and especially if the debt comes from a hospital. We’ll spell them out for you.

The most common medical debts in collection

US credit reports show $88 billion in medical debt as of June, according to a recent federal government report.

Medical debt is the most common type of debt pursued by collection agencies, accounting for 58% of all third-party debt collections in 2021, according to the Consumer Financial Protection Bureau report. This dwarfs the second most common form of debt sought by collection agencies, telecommunications debt, which is 15%.

The report says two-thirds of medical debt results from one-time or short-term medical care resulting from acute need, when people don’t have the time – or the ability – to shop around for cheaper options. If you are uninsured or the provider is not part of your insurance network, you may be hit with higher prices. And even in the network, prices can be very different in different facilities or even different departments of the same facility.

“Medical debt can also lead people to avoid medical care, develop physical and mental health problems, and face adverse financial consequences such as lawsuits, garnishment of wages and bank accounts, liens property and bankruptcy,” the CFPB report said. “Given the widespread impact of COVID-19, resolving medical debt is an urgent priority.”

What you should do about your medical debt depends on a number of factors, including whether a collection agency has already become involved.

What to do about medical debt before a collection agency harasses you

If you have a medical debt that hasn’t been collected, Jennifer Bosco, an attorney at the National Consumer Law Center, suggests getting an itemized bill and checking it for errors. If the invoice contains incorrect information, you can appeal. And if you think your insurer should have paid the bill or more of the bill, call the insurer.

Once you are sure the bill is correct, you should seek other sources of financing to help pay the debt, including assistance programs.
For example, different states offer programs for catastrophic health needs of children, some states have brain injury programs, and there are other state programs, such as the Massachusetts Health Safety Net. Research your state’s programs and be sure to check if there are programs specific to your condition.
You can also apply for charity care or financial assistance regardless of your state through Dollar For, a non-profit organization that does not charge to help people apply hospital charity care policies. These policies are necessary for hospitals to maintain their nonprofit status.

Dollar For notes that the law says hospitals must post their financial aid policies online and accept applications for debt forgiveness. Hospitals generally provide charitable care to uninsured or underinsured low- and middle-income patients.

If you are insured, ensure there is no balance billing – a practice in which you are charged a high price for a service provided by someone outside your network, even if the facility and your main supplier are networked. Balance billing was made illegal this year by the No Surprises Act.

If you have questions about whether your bill is covered by law or what to do if you believe the law has been violated in your case, you can go to the Federal Department of Health and Human Services website for get answers or file a complaint. If the surprise billing involves Medicaid or Medicare, Bosco said you should contact the state or federal agency that administers the insurance program or, if you’re eligible, consult with a legal aid attorney.

If your only income is Social Security or if you are financially insolvent, let the health care provider know, as you are likely considered proof of judgment. That means if the provider sue you and wins, the provider won’t be able to collect any money, Bosco said. If the supplier knows this, they are more likely to work with you to reduce or even cancel the debt.

Medical debt is different, so preserve your protections

Bosco said not to put medical bills ahead of other debts. “It’s a relatively low-priority debt compared to rent, utilities, court judgment, criminal justice, car loans or leases, child support, etc.,” she said. declared. “Immediate needs like food, shelter, utilities and transportation are higher priorities because they are just basic human needs. A court-ordered payment, such as a criminal justice debt or child support, must be paid to avoid the legal consequences that could follow if a person does not pay.

“Medical debt is certainly large, but compared to these other debts, it is not as urgent,” she added.

And don’t worry about not being able to get additional medical care due to unpaid bills. Bosco noted that federal law requires hospitals to provide necessary emergency or labor and delivery services to patients regardless of their ability to pay.

In addition, medical debt will not appear on credit reports until six months after the bill is due. And while medical debt is included in a credit report, new credit reporting systems don’t weigh medical debt as much as other types of debt because it’s not considered predictive of creditworthiness. “However,” Bosco warned, “not all institutions that manage credit ratings use the new rating system.”

This is one of the main reasons, Bosco explained, for not covering medical debt by incurring additional conventional debt, whether by borrowing from existing credit cards or a line of credit, or by a “card medical credit” that you might have seen marketed. These often come with high interest rates while depriving the consumer of legal protections against medical debt that are not available for credit card debt. Additionally, it may be more difficult to apply for financial assistance or charitable care when a bill has already been paid.

How to deal with a medical debt collector

If you have ever been contacted by a debt collector, first check the debt collector’s license to verify their legitimacy. The Consumer Financial Protection Board also has information on debt collectors.

You can limit contact from a debt collector by writing a “stop contact” or “stop” letter. If you do, the debt collector can only acknowledge receipt of the letter and then inform you of the legal action they are taking. This only applies to collection agencies, but creditors collecting their own debts can honor these requests. A sample letter is available on the NCLC website.

You can also specify the types of contacts you want to stop, such as emails or calls; you can limit the times and places where and when you can be contacted. For example, you can tell the tax collector not to call you at work or not to call before noon or not to text you.

If a collection agency is trying to collect your medical debt, Bosco advised getting an itemized bill to verify the debt is accurate.

If you think the debt information is wrong, you can write a dispute letter. Collectors are legally required to give you valid information about the alleged debt and your right to dispute it.

And if you don’t know exactly what it is, you shouldn’t pay anything until you get more information.

If some of your income is exempt from collection, such as federal or state government benefits, you can let the collector know and they can decide to stop contacting you.

Bosco said you can negotiate with the bill collector to get a payment plan and debt amount reduction. The debt collector cannot give your medical debt information to the three major credit bureaus for 180 days, Bosco said.

If you are notified that the debt collector has sued you, don’t ignore the notice, Bosco said. Seek legal advice.

If all else fails, you may have to declare bankruptcy. Bosco said you should consult a lawyer before taking this serious step.

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