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.
The Consumer Financial Protection Bureau (CFPB) released a bulletin regarding the recently passed No Surprise Act, specifically relating to both consumer reporting requirements and medical debt collection. This CFPB bulletin provides consumers with information on compliance requirements in a hope to clarify the new law for consumers and third-party debt collectors.
The No Surprise Act was enacted to protect consumers from being forced to pay for out-of-network through what is known as surprise billing. Surprise billing occurs when the customer receives a medical bill showing that a medical expense is much more than anticipated. Unfortunately, circumstances do exist where a consumer receives medical services from a hospital or other medical provider that he or she believes is in-network. However, the consumer soon receives an unwarranted surprise in the form of a bill showing that the doctor within that hospital is actually out-of-network.
In the bulletin, the CFPB warns debt collectors about how the Fair Debt Collection Practices Act (FDCPA) intersects with the No Surprise Act. Specifically, the CFPB expressed concerns regarding debt collection practices where the collector uses “false, deceptive or misleading representations” to get the consumer to pay on the debt. For example, a debt collector may feel compelled to make certain misrepresentations to the consumer that he or she must pay a debt that would otherwise fall under the No Surprise Act, when, in fact, the person is able to dispute the out-of-network charges made. Additionally, collecting an amount that far exceeds what is owed for medical care could also be considered a violation of the FDCPA.
The bulletin also expressed concerns regarding consumer reporting agencies (CRAs) publishing information regarding any unpaid medical debts that would otherwise fall under the provisions of the No Surprise Act. Under the Fair Credit Reporting Act (FCRA), CRAs are required to ensure that the information provided is accurate. CRAs and furnishers of consumer credit reporting information must establish and abide by reasonable procedures to ensure all information is accurate, and if there is any possibility that information published is not accurate, the CRA and furnisher must conduct a reasonable and timely investigation. Given that the No Surprise Act deals with situations where consumers may be told they owe a large amount of debt on a medical expense that would otherwise be covered, ensuring that CRAs are being diligent and careful when reporting this information is important.
Given the implications involved, it is important that both sides know what steps need to be taken to reduce the risk for liability in dealing with these debts. Additional guidance and information is anticipated as both consumers and debt collectors navigate the provisions of this new law.
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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.
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.
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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.
Medical debt is a financial stressor for many Americans, even before the COVID-19 pandemic. Now with the pandemic well into its second year, countless Americans are becoming overwhelmed with medical bills with no end in sight.
Scientists are studying the long-term effects of COVID-19 on those who contract the virus. Many of them have suffered through several hospital stays, multiple treatments, and several referrals to various specialists. Each of these events, of course, comes with its own set of medical bills.
According to Credit Karma, medical debt spiked 6.5 percent since the pandemic first hit at the start of 2020, increasing by approximately $2.8 billion. The number of individuals with past due medical debt increased by nine percent during this time, jumping from 19.6 million to 21.4 million.
Another medical debt survey conducted by Lending Tree found that 60 percent of Americans polled carried some level of medical debt. Fifty-three percent (53%) of them saying that this debt was more than $5,000. Of those surveyed, 72 percent surveyed said that their medical debt has kept them from purchasing a home or having a child in the near future.
Many consumers have felt forced to rely on credit to pay off their outstanding medical debts caused by a COVID diagnosis. However, paying these debts via credit card only delays payment of what is owed.
The COVID-19 pandemic has hit consumers and businesses hard. According to a study conducted by the Commonwealth Fund, the Employee Benefit Research Institute, and the W.E. Upton Institute, 7.7 million American workers lost their employee-sponsored health insurance benefits by June 2020, affecting not just the 7.7 million workers but also their 6.9 million dependents. Due to the loss of this insurance coverage, overall cost of medical care has skyrocketed. On top of losing that health insurance coverage, many Americans also lost their job and thus their income source, making paying these high costs nearly impossible.
Congress passed the $1.9 trillion American Rescue Plan to offset these high medical costs. The bill’s protections provide a short-term solution for those struggling with medical debt. Democratic lawmakers are pushing heavily towards expanding health care and addressing the costs of medical treatment. Some of these efforts have been to reduce the negative effects medical debt has on a person’s credit score.
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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.
The Medical Bankruptcy Fairness Act of 2021 was unveiled by Democratic Senators this week in response to the economic impact of the Covid-19 pandemic. The bill would make substantial reforms to the current bankruptcy code, making it easier for those struggling with student loan debt and medical debt to discharge the same in bankruptcy.
Currently, the bankruptcy code treats student loan debt differently from other types of consumer debt. Borrowers must show they meet the ‘undue hardship’ requirement in order to discharge their student loan debt in bankruptcy.
Most people hope to avoid having long-term medical debt on their credit report, which is why it can be tempting to want to pay off medical debt with a credit card. However, the consequences that come along with using one form of debt to pay off another can be enough to want to keep anyone from taking this route.
Medical debt is reported to be the number one cause of U.S. bankruptcy filings. It has been reported that over two-thirds of all bankruptcies between 2013 and 2016 involved medical debt. According to a 2019 study, one in every three households carried credit card debt after using credit to pay off medical bills.
Medical debt presents a major problem for so many in South Florida. The cost of receiving medical care, even with health insurance, can push a financially stable person into debt. Escaping that debt can be a struggle. The coronavirus (COVID-19) pandemic has pushed countless consumers further into debt, and with a second wave of the virus likely, the problems could be far from over.
Medical debt is the leading cause of approximately two-thirds (2/3) of all consumer bankruptcies filed. According to a recent poll from U.S. News of approximately 1,500 Americans, just under 40 percent of them reported having serious trouble with managing their medical bills with at least one of these bills being sent to collections. Within this group, seven percent have been sued for collection of their medical debt. Six percent of them said they filed bankruptcy due to medical debt.
Consumer debt encompasses several different categories. However, many people often struggle with the same few categories, mainly student loans, medical debt, and credit card debt. It helps to know how to attack the debt individually in each category if a consumer is looking to pay down their various debts.
Student Loan Debt
If you are struggling with student loan debt, you’re not alone. In fact, it has been reported that Americans carry over $1.5 trillion in student loan debt. This figure amounts to an average individual load of $32,731 per student. If the consumer proceeds towards a master’s degree or professional degree following graduation from undergraduate studies, that amount can get into six figures. Paying down that debt can be a struggle for many, especially during recent times. Currently, the federal government has issued a forbearance on all federal student loan debt during the COVID-19 crisis, which has been extended past September 30.
Medical debt affects so many Americans. After suffering a serious injury or illness, it can be hard to pay the bills that will inevitably follow. In fact, more than 137 million Americans say they are struggling to pay their medical debt. According to a study published by the Journal of Internal Medicine, this many adults have faced some type of medical financial hardship in the past year.
When someone is sick or injured, it will often cause them to miss work or they may not be able to return to work ever again. Due to the loss of income and oftentimes the loss of insurance, the person will struggle to pay their medical bills when they become due. Their financial situations can get so out of control that many of these individuals are forced to dip into their retirement savings prior to reaching retirement age to pay off some of their bills. However, pulling savings early will only help so much, which is why so many consumers end up filing for personal bankruptcy as a result. It is reported that 66.5 percent of all personal bankruptcies are related to some type of medical debt.
