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Chi Chi Wu, an attorney with the National Consumer Law Center, expressed concern that a conversation about medical debt take could take employees to a place they don’t want to go. “There is an argument that employers understand,” she says, “but frankly you may not want to get into that with a prospective employer.” As illustration, she gives the example of someone who had cancer. “You don’t want to have to discuss that with an employer.”

While Miller says that employees are not required to discuss their specific illness or diagnosis with a prospective employer, he also acknowledges that not all firms employ staff trained to properly screen credit reports and to ask the right questions while avoiding the wrong ones. “What you are talking about is a risk management issue,” he notes.

Of course, for the job hunter, the risk is that they may not get the job if their credit reports lists large debts or collection accounts of any kind.

[Related article: Proposed Law Could Help Millions Facing Medical Debt]

There are some limited protections that affect how medical debts appear on credit reports. The FCRA requires that medical information be limited to data about the debt, and not include information about the type of illness or treatment that was received. For example, “the fact that you owe money to a fertility center does show up,” explains Wu.

Rukavina worries that credit reports are “kind of a backdoor way for employers to get information that otherwise wouldn’t be available to them.” He also points out that a lot of medical debt shows up as credit card debt, and it’s impossible for an employer to know that a maxed-out credit card is due to hospital bills or expensive prescriptions, for example.

One way to avoid the problem completely would be to limit or ban the use of credit reports by employers. But wouldn’t that be throwing the baby out with the bath water?

“We have yet to see any data-based evidence or argument that there is any basis for using credit checks for employment outside the national security area, and we aren’t sure there are any there either,” says Ray P. McClain, director of the Employment Discrimination Project of the Lawyers Committee for Civil Rights Under Law national office.

He notes that limited research has been done on the correlation between job performance and credit history. In a 2004 study by Dr. Jerry Palmer and Dr. Laura Koppes of Eastern Kentucky University, for example, the credit reports of nearly 200 current and former employees working in the financial services areas of six companies were examined. Those with good credit were no more likely to receive positive performance evaluations and were no less likely to be terminated from their jobs.

[Resource: Get your free Credit Report Card]

Rukavina believes the “sensible solution would be to suppress medical (debt) data on a credit report used for employment screening purposes.” I agree. He’s also a fan of the Medical Debt Responsibility Act of 2011, proposed legislation that would remove medical collection accounts with an original balance of $2500 or less from consumer’s credit reports 45 days after they are paid or settled. I support that legislation as well.

But legislative and regulatory solutions take time. In the meantime, what’s a job hunter to do?

1. Review your credit reports to identify any potential medical collection accounts that may be reported. Remember, if you are unemployed and looking for a job, you are entitled to an additional free copy of your credit report each year.

2. Understand that you do not have to disclose any information about illnesses or medical conditions with prospective employers.

3. Prepare an explanation for the medical bills without discussing your medical conditions or treatments. For example, “I had a large bill that insurance didn’t cover and it went to collections, but I am working with them and expect to be able to pay it off even faster when I am employed.” Keep it short and sweet. If they press for information about medical conditions, you can file a complaint with the Equal Employment Opportunity Commission.

4. Try to avoid having accounts sent to medical collections, if at all possible. “Don’t wait to address your medical issues or your medical bills. If you can contact the billing officer at your doctor’s office they can make monthly payment arrangements that can fit into your budget,” says Neil Ellington, Executive Vice President with CESI Debt Solutions.

Speak up! Has medical debt affected your ability to get a job? Share your story in the comments section below.

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