Managing Debt

How to Stop Your Medical Bill From Going to Collections

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Health care is on the front burner yet again, and the Obama administration is in the hot seat. Talking heads are blasting the botched launch of the health insurance marketplace website. President Obama recently held a press conference to publicly reverse his position on skinny insurance coverage. And millions of Americans are waiting for the promise of affordable healthcare to be fulfilled.

As they wait, out-of-pocket costs continue to climb. Last year, for privately insured patients, these costs grew faster than the rate of overall healthcare spending. Unanticipated healthcare expenses can send a family teetering on the edge of economic disaster.

One recent study on financial capability in the U.S. found that 26% of American adults have unpaid medical bills that are past due. Those with unpaid medical bills are twice as likely than those without to report spending more than their income, and three times more likely to report that it is “very difficult” to cover their expenses and bills each month. The study found that having an unpaid medical bill is the strongest predictor of someone feeling that he or she has “too much debt.”

Typically, having too much debt creates problems. In 2012, 32 million American adults with medical bills were contacted by a collection agency for these unpaid bills. Such a blemish on a credit report can do serious damage, lowering one’s credit score by more than 100 points, especially for someone with a good credit history.  This connection between medical debt and credit has not been lost on the Consumer Financial Protection Bureau, which publishes its database of consumer complaints against collection agencies, including ones involving medical debt. The medical debt collection complaints varied from attempts to collect a debt that had been paid, incorrect amounts, or trying to collect from people not responsible for the debt.

How to Deal With Your Medical Bills

Given the cost trends, the challenges of the Affordable Care Act, and the serious consequences of having medical debt turned over to a collection agency, what can you do if you have medical debt? To start, do everything to avoid having a bill sent to collection. Never ignore a medical bill.

Communicate with your healthcare provider. Too few people know that many providers offer assistance in resolving bills.  They’ll work to help find coverage for uninsured patients and many offer financial assistance and extended payment plans to help those with outstanding bills.

If you owe money to a nonprofit hospital, there are existing protections. New federal requirements dictate that hospitals have written financial assistance, billing and collection policies. The policies should be posted on hospitals’ websites. The policies are to explain how to apply for the hospital’s assistance and how to work with them to avoid having bills sent to collection.

Better Support Systems in the Works

Proposed regulations issued by the IRS prohibit hospitals granted federal tax exemptions from using “extraordinary collection actions” until they’ve made reasonable efforts to determine whether the patient qualifies for financial assistance. (This assistance is available to low-income patients of nonprofit hospitals).

The healthcare and collection industries are also concerned that American consumers get a fair shake when it comes to medical bills. Earlier this year, the Healthcare Financial Management Association (HFMA) and the Association of Credit and Collection Professionals (ACA, International) convened a medical debt task force.  The task force was charged with establishing guidelines outlining the step-by-step actions needed to resolve patient payments after care was provided to them. The guidelines recommend that providers make reasonable efforts to ensure accurate and complete patient bills, work to enroll self-pay patients in any applicable public or other insurance programs, screen for financial assistance, offer payment plans and ensure that all processes adhere to HFMA’s Patient Friendly Billing Principles.

So even while ObamaCare is experiencing technical difficulties, there is much that can be done to avoid having a medical bill sent to collection. Know your rights. Research the financial assistance and billing/collection policies of your provider. Utilize industry guidelines to negotiate payment terms based on your financial resources. Finally, if you are able to stay current with your payments and communicate with your provider, it is likely that your medical bill will not be turned over to collection and your credit will be spared.

Image: iStock

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  • Ben

    How about when you don’t get sent a bill, but it gets sent to the collection agency, even before the insurance has gotten back to you on if the bill will be paid? Or how about you send your payment the day you get the first bill from the medical facility (in less then 30 days) , but get the collection notice from the collection agency in the mail the next day in the mail?

  • Hope

    I was/am a divorced single stay at home mom, who was waiting to hear from SSI disability & an X who wasn’t paying mutually agreed upon ‘maintenance’. And I was at the hospital every 30 days for treatment for server chronic pain in my lower back, hips and legs due to a degenerative spine deformity that I was born with, spinal cord &.nerve damage and a failed spinal fusion.
    Now I had been a patient there since I was 23 and now I’m 46. It’s not just the hospital that was treating me, but also my pain docs and they bill separately. And the same goes for trips to the ER. The hospital has a program to cover people who don’t have insurance, but any doc that comes with in 5 feet of you or a tech w/a needle or test that the doc orders is AGAIN NOT covered by the hospital. And I have been treated horribly by Doctor’s staff after explaining to them that I was a chronic pain patient and unemployed and had no support.
    Once I took my daughter to a specialist because she was complaining of lower back and tailbone pain…and not knowing if the condition I was born with was hereditary or not…I took her to an orthopedic that specialized in children’s spinal issues. They billed the Insurance company for her visit and it was denied. They said that it was a “pre-existing condition” which was NOT true, then the Docs office billed me, instead of her father who was responsible for her insurance and medical expenses. But because I brought her in and had full custody, they billed me and it’s on my credit report. Even though I copied the section for my MSA that showed that her father was legally responsible for all medical costs that were incurred! I did not find any of them to be at all understanding or helpful.
    As for the Insurance company, they would not speak to me because I was not on the policy. So I have not found most of the medical community to be very helpful or understanding when it comes to special circumstances.
    But even when I had BC/BS, and I had my daughter 17 years ago … my OBGYN kept me in the hospital for a week due to the fact I spiked a high fever after delivery. But they fought paying the bill tor my daughter needing to staying in the hospital also. Just out of curiosity, who was she going to go home to??.My husband at the time ran his own business and there was no one to stop their lives to take care of a new born!! That was “my job” and I was stuck in the bloody hospital!
    7 months after giving birth, my spinal started to collapse and I had to have spinal fusion surgery w/hardware and would be in bed for 3 months. The Doc’s, hospital, etc. charged BC/BS over $100,000 for my surgury. BC/BS raised my monthly premium to over a $1000.00 a month. But not only did they raise mine, but they raised everyone that worked for my husbands company, even if they were healthy and had never used their insurance.
    The whole medical & Insurance industry is a total blood sucking scam. And now that I am on disability, the limited amount of doctors who all have taken an oath to care for their patience …the few that take any type of Medicaid, you can’t find out if they are board certified, their education or if they have been sued for mal-practice. And if you are over the age of 18, and need to see a specialist or have a procedure done, It’s not covered under the new “Obama care plan” … at least not for those on disability. Who I would guess, if they were approved for disability, which is not easy in my experience, need to see doctors and specialists more so then the average person, especially the average person under the age of 18. .

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