Beginning in July 2022, the three major credit reporting agencies, Equifax, Experian, and TransUnion, announced they will remove approximately 70 percent of medical collection debt from their credit reports.
Specifically, paid medical collection debt will be the debt no longer included on consumer’s credit reports. The hope behind these efforts is to allow consumers more time to address their medical debt with their healthcare providers and insurance companies prior to the debt being reported.
Several states have recently enacted laws to help alleviate the burden of medical debt for individuals who are low-income and who are struggling to pay these bills. At least 10 states, including Maine, Maryland, New Mexico, and Connecticut have passed with provisions in them that heavily affect healthcare providers and third-party debt collection agencies. These provisions include requirements for hospitals to give financial assistance to patients with lower incomes and to limit the aggressive collection practices used to collect on these debts.
According to a recent study of credit reports from Transunion, medical debt is the largest source of consumer debt currently in collections. In fact, when compared to all other types of debt, medical bills surpass both credit card and utilities in terms of other debt being collected.
Medical debt is the single largest cause of bankruptcy in America, according to the National Consumer Law Center (NCLC). Even if a person has medical insurance, most consumers have high deductible plans which require them to pay thousands of dollars upfront before their insurance will cover their medical expenses.
This fact could be why approximately 18 percent of all American consumers have some type of medical debt that is currently in collections, according to a recent study by the Journal of the American Medical Association. Between the years 2009 and 2020, unpaid medical bills were the largest source of debt being serviced by third-party debt collection agencies.
One of the biggest reasons for these debts being in collection involves a practice known as surprise billing. Surprise billing occurs when the customer receives a medical bill showing that a medical expense is significantly more than anticipated. The last thing a consumer wants to experience is an unpleasant surprise in the mail in the form of a bill showing that a hospital that he or she thought was in-network was, in fact, not in the person’s insurance network. The U.S. Department of Health and Human Services reports that millions of American consumers have experienced surprise medical billing.
Often, even if a consumer believes that he or she is being seen at an in-network hospital, many times the doctors at that hospital are not in-network. They may be working at the hospital on a contract basis, being employed by a staffing firm and not the hospital itself. Once the individual is healthy and out of the hospital, he or she may soon discover that the expenses incurred during that stay were not covered by his or her insurance. This practice has become more common as private equity firms invest in the healthcare industry and look for methods to increase billing charges.
Consumers will find themselves protected from this billing practice in the near future, as of January 1, 2022, under the new “No Surprise Act.”
The No Surprises Act protects people covered under group and individual health plans from receiving surprise medical bills when they receive most emergency services, non-emergency services from out-of-network providers at in-network facilities, and services from out-of-network air ambulance service providers. It also establishes an independent dispute resolution process for payment disputes between plans and providers, and provides new dispute resolution opportunities for uninsured and self-pay individuals when they receive a medical bill that is substantially greater than the good faith estimate they get from the provider.
TIt is expected that the No Surprise Act will reduce overall healthcare costs, ensuring that consumers are paying a reasonable market rate for any medical services received.
Please click here to read more.
Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken, P.A. website at www.miamibankruptcy.com.
After suffering a serious injury or illness, it can be hard to pay the bills that inevitably follow. Considering how many Americans are now facing medical debt in light of the coronavirus (COVID-19) pandemic, many wonder the effects this will have on their credit score and how long the debt will remain on their credit report.
After medical debt has been reported to the credit bureaus, it can remain on a consumer’s credit report for up to seven years. However, a person’s medical debt is not immediately reported to that individual’s credit as soon as it is incurred. It will not be reported to a person’s credit so long as that debt remains with the original service provider. Once a person defaults on the debt and it goes to collection, only then will the medical debt begin to show up on a person’s credit report.
The coronavirus (COVID-19) crisis has hit the American economy hard, which is evident in the number of unemployment claims being filed. It has been reported that approximately 17 million American workers have filed for unemployment over the course of three weeks after many businesses have shuttered.
Research from three different Federal Reserve banks have shown that bankruptcies related to the economic downturn from the COVID-19 crisis could increase by 200,000 to reach a record 1 million filings. However, this increase is possible only if government stimulus programs do not offset this increase.
With the cost of medical care increasing every year, many Americans are struggling to pay their medical bills. According to a recent study from NerdWallet, medical costs have increased 33 percent since 2009, while the national median household income has only increased 30 percent. To keep up with these costs, many consumers are forced to pay for their medical bills with credit cards. The problem is credit card interest rates can range anywhere from 10%-30% and come with additional fees and costs if timely payment is not made. Medical bills are expensive and paying them with your credit card will only add unnecessary interest fees to your bills.
Here are some tips that can help you avoid having to put medical bills on a credit card.
Bankruptcy offers filers a fresh financial start, but for many bankruptcy petitioners, that start comes later in life. In the past three decades, the number of people over the age of 55 who have filed for bankruptcy has gone up significantly. This increase has many financial experts wondering why so many individuals nearing retirement are filing for bankruptcy.
According to a paper by Robert Lawless, the percentage of older Americans, specifically between the ages of 55 and 64, increased by 66 percent between the year 1991 and 2016. The number of bankruptcies filed by individuals between 65 and 74 increased by more than 200 percent between this time period. In fact, approximately 12 percent of all bankruptcy filers are over the age of 65.
Approximately a quarter of homebuyers and renters carrying personal debt were denied approval for either a mortgage or lease, according to Zillow’s recent report on Consumer Housing Trends. It was reported that medical debt had the most impact on homebuyer’s budgets and whether they would qualify for a mortgage.
While student loan debt has been reported as being a major factor keeping many younger people from purchasing a home, it turns out medical debt is an even bigger factor.
According to Zillow, medical debts are more likely than any other type of debt to keep American consumers from either purchasing or renting a new home. They conducted a survey which showed that 38 percent of people who owe money for medical or healthcare expenses say they were turned down for renting a home or taking out a mortgage due to those debts. According to Zillow, this group represented the largest rate of rejection- more than any other kind of debt, including credit cards and student loans.
Medical debt remains the leading cause of bankruptcy in America. Thousands of patients at University of Virginia Health Systems (UVA) have seen the devastating consequences of past due medical debt.
Over the course of six years ending in June 2018, the University of Virginia Health System sued former patients over 36,000 times for a sum of over $106 million. The hospital has seized wages and bank accounts of former patients and have put liens on homes and property. This information comes from a Kaiser Health News study, which reviewed UVA Health System’s court records, hospital files, and interviewed hospital officials, as well as former patients.
Medical debt is an issue that plagues many Americans. It only takes one major medical crisis to set a person back hundreds, even thousands of dollars. According to the Kaiser Family Foundation, one in every three Americans report having difficulty paying their medical bills. As a result, a number of these individuals end up having their medical bills go into collections.
If you are one of the millions of Americans struggling with medical debt, remember you are not alone, and you do have options.
Negotiating a Settlement with Service Provider or Debt Collector.
If the debt has not been officially sent to a third-party debt collector but is being collected by the original service provider, the consumer can often work directly with that company to negotiate either a payment plan or settlement of the debt owed. The same could be said for if the debt has been sent to a third-party debt collector, although the entity contacted to negotiate on the debt will be different. This settlement can be done through three different possible methods including:
A lump sum payment is a common method used so long as the person has enough money to pay a large amount. The debt collector often would rather have some level of payment rather than nothing at all, so they will often take a lump sum payment to close the account, although the amount owed may be slightly less than what is paid. Many times, this method is preferred because the creditor or debt collector would rather receive a large lump sum of money immediately instead of keeping the negative account on the books or having the consumer file for bankruptcy where the debt would be discharged.
While very similar to a lump sum payment, some creditors will accept a specific percentage to pay off the debt, such as 25 to 30 percent, while forgiving the remainder owed. However, this type of settlement depends heavily on the balance. If someone owes a small balance, the percentage the creditor will accept may be much higher than the percentage of a large balance. Additionally, if the person is suffering from a financial hardship, the creditor may be more willing to work with that person on a percentage payment. Also, if there is a strong threat of bankruptcy, the creditor may accept a lower payment rather than get nothing through a bankruptcy discharge.
Many medical providers will work with the account holder on payment plans if they are not able to pay the bill off in full right away. However, these agreements need to be worked out timely and not after missing several payments, causing the account to go into default. Both parties must agree on an amount and the terms of the payment plan.
Get any Agreement in Writing.
Whatever settlement is worked out between the creditor/collector and consumer, it is important that this agreement be documented in writing. Without a firm commitment on the amount agreed upon, the consumer will have nothing to hold the collector to in the event they dispute the arrangement. It also gives the consumer something legally enforceable in the event the agreement falls through.
Payments Made but Still Sent to Collections.
The unfortunate fact is even if the consumer is making payments on the debt, the unpaid balance can still be sent to collections. Ultimately, it is a business decision that is made by the medical provider (i.e. – doctor’s office, hospital or dentist). How they handle the account depends on many factors, including how large the balance is, how much is being paid monthly, and how long it will take to finally pay off the amount owed. For example, if the individual owes $15,000 and is only making $10 per month payments, the provider may ultimately find that this is not going to work and could send the claim to collections, even though the $10 monthly payments are being made. This action can be much harder to accomplish if the parties have a written payment agreement, which is why it is extremely important that the payment arrangement be in writing.
Refusal of a Payment Plan.
It is always possible that a medical provider will refuse a payment plan. They are not legally obligated to work with the customer on a payment arrangement. For the most part, medical providers will work out payment arrangements out of goodwill, but if the person asking for the payment plan has failed several times before, they are not legally obligated to work out an agreement. The same goes for a collection agency. However, collectors do often work on commission, and because of this, they will often accept a payment plan that will pay off the obligation quickly, closing the account, and getting them paid.
How Medical Debt is Handled in Bankruptcy.
In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one. It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, car, IRA and social security. It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.
Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Related Resources:
https://www.inquirer.com/health/consumer/challenge-medical-bill-debt-collection-tips-20190610.html
https://www.growingfamilybenefits.com/negotiate-medical-bills-settle/
