It’s perhaps one of the cruelest situations in which to find oneself: recovering from an illness or injury, or coping with a disability that involves expensive medical treatments; trying to get back to work, but unable to do so because of your medical bills. That scenario is perhaps not as far-fetched as it may sound.
Consider that Federal Reserve researchers found in a 2003 study that more than half of collection agency accounts and nearly one-fifth of lawsuits listed on credit reports are for medical debts. While not all employers check credit, plenty do. Some 13% of organizations polled by the Society for Human Resource Management (SHRM) conduct credit checks on all job candidates, while another 47% consider the credit history of candidates for select jobs. (Four out of ten do not conduct credit checks.)
“There’s a perception that medical debt is somehow treated differently than other debt,” says Mark Rukavina, executive director of the healthcare research and advocacy organization The Access Project. “But I don’t think (employers) peel back the onion far enough to see where the debt came from. The problem is that virtually all of the medical data on credit reports is there because it’s been reported by a collection agency makes it very difficult for an employer to distinguish (it from other debt).”
[Related Reader Question: How Can I Remove a Medical Collection Account From My Credit Reports?]
The perception described by Rukavina seems common. The internet is rife with articles and opinions stating that medical debt doesn’t affect credit the same way as other debt. (I may have even said that at some point.) Citing the results of a survey about the use of employer background screening tools, SHRM stated that “Medical debt is not considered during the hiring process.”
But if that information appears on credit reports, how can we be certain it’s not considered?
I decided to try to confirm whether medical debts are somehow excluded from credit reports employers receive. Yet, when I tried to find any evidence of that, I came up empty-handed. I checked with the Consumer Data Industry Association (CDIA), which referred me to the individual consumer reporting agencies. I also checked with the National Association of Professional Background Screeners to see if they had additional information, but they referred me back to CDIA.
TransUnion and Equifax did not reply to my repeated requests for information. Experian responded promptly to my query, however, and spokesperson Rod Griffin told me:
Medical collection accounts will appear on Experian credit reports for employment and insurance purposes. However, the financial obligation will show only as “medical collection.” There will be no information that would indicate the kind of treatment received, the type illness that was treated or other information that would divulge private medical information.
He also added that:
Credit scores are never used in employment decisions, and the report employers receive has a number of differences, such as account numbers being truncated or omitted, birth date removed, and so on to ensure consumer privacy and compliance with EEOA regulations.
This brings us back to my question, “Can medical debt keep you from getting a job?” The answer appears to be “yes.” And that’s where it gets tricky.
Robert Miller, a human resources director who serves on SHRM’s Special Expertise Panel for Employee Health Safety and Security, told me that medical debt can affect someone’s ability to get a job. “But that doesn’t necessarily mean it will,” he cautioned.
He explained, “It may be a protected class issue with regard to Americans with Disabilities Act or Family and Medical Leave Act.” Miller, who helps write questions for certification exams for human resources professionals, says that employers can ask prospective hires about medical collections on their credit reports, but must comply with those laws. They can say, “What happened here?” But “they cannot ask about the illness or the diagnosis,” he states.
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Image: Brandi Jordan, via Flickr.com