Medical Debt Collection

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Medical debt collection is a serious problem affecting millions of Americans. Here are strategies for dealing with medical bills in collections.

A serious illness or even a relatively brief stay in a hospital is apt to leave you with a pile of medical bills that you cannot afford to pay, even if you have health insurance. If you don’t pay them or if you don’t pay them quickly enough, you end up in medical debt collections.  

Many medical providers are feeling financially pinched by our country’s broken health care system. As a result, a growing number of them have become aggressive about collecting their patients’ unpaid medical debts.

Even if you have few financial resources, if you continue to be ill, or if you are unable to work anymore, they still want to be paid. To collect, hospitals, individual doctors and the debt collectors they may hire may use one or more of the following medical debt collection tactics to get you to pay up:

  • Obtain court orders to garnish your wages, assuming wage garnishment is legal in your state.
  • Sue you for the money that they are owed.
  • Put liens on your home.
  • Threaten to ruin your credit by reporting your past due medical debt to one or more of the credit reporting agencies.

Having even a small medical debt reported as past due or in collections can seriously damage your credit history, you may be tempted to pay just to protect your credit.

Some medical providers may even try to pressure you into paying your debt owe by refusing to provide you (or one of your family members) with additional medical care until you do. Some of them may even refuse you future care while you are paying off your debt through an installment plan! Others may have a policy that as long as you owe them money, you must pay up-front for all future medical services they provide to you.

Warning: Aggressive medical providers can be a special problem for seniors living on fixed incomes when their spouses have been hospitalized or have accumulated a large outstanding bill with one or more of their doctors.

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When Can I Be Sent to Collections On a Medical Bill?

If at all possible, you want to keep a medical bill out of collections. Once it is turned over to a collection agency, it will likely appear on your credit reports as a collection account and damage your credit rating.

Your medical debt may be turned over to collections:

  • If you are making payments. Even if you are making payments, you may find your account turned over to collections with no advance warning. In addition, if you are late with a payment under a payment agreement - even by one day - you may find your account in collections. There is no federal law that stops a medical provider from turning an unpaid account over to collections just because you are making payments.
  • While you are disputing a bill. If you have not paid a bill because you are disputing it, or if you are waiting for your insurance company to pay it, beware! Your bill may be turned over to collections with no advance warning.
  • If a medical bill remains unpaid - even if you never received a billing statement! We have heard from consumers who first hear about a medical bill from a collection agency. There is no federal law that protects you from this type of situation.

How can you protect yourself from medical debt collection? Don't ignore medical bills. Talk to the medical provider. Get everything in writing, or follow up in writing yourself.

A Success Story

Want to hear how one woman was able to successfully fight back when  her medical bill turned up in collections without any warning?

Listen to or download the story here:

If You or A Loved One Needs Medical Care and You Have No Health Insurance

When you have no medical insurance and your income is limited and you own few if any assets, find out if you qualify for charity care if you or one of your family members is hospitalized. Some doctors also provide charity care to their low-income patients. However, to qualify for charity care you may have to prove that you were denied Medicaid coverage for the services you received. Medicaid is a federal-state program that helps pay the costs of medical care for people with low incomes and few assets.

Tip: Some doctors and hospitals offer discounts to uninsured patients even if the patients are not low income. 

Warning: Some medical providers refer patients who can’t afford to pay for their medical care to creditors who will charge them high interest rates to finance the cost of the services that the patients need or may already have received. These creditors include finance companies and credit card companies. Other medical providers may encourage you to come up with the money you need to pay your medical bills by refinancing your home and getting cash out or by borrowing against the equity in your home. Both options are risky because if you’re unable to keep up with your new mortgage or home equity loan, you’ll risk losing your home. 

If you are not already enrolled in Medicaid, find out if you qualify for the program. If you do, Medicaid will pay the medical debt that you’ve already incurred assuming that the debt was for care and services normally covered by Medicaid and that the debt is not more than three months old.

If You Have Insurance and Your Insurer Refuses to Pay All or a Portion of Your Medical Bills

It’s not unusual for health insurers to deny coverage for medical care. If that happens to you and you believe that the care should be covered, or if your insurer pays some but not all of your medical bill and you believe it should cover the entire bill, here’s what we recommend:

  • Review your health insurance policy for an explanation of why the insurance company made the decision it did.
  • If you don’t find a good explanation in your policy, call the company’s customer service office. If you are unhappy with its explanation, contact your insurance agent or your health plan administrator, if you receive your health insurance through your employer.
  • If your agent or the plan administrator is unable to help you with your claim, appeal the decision of your health insurance company. Your agent or plan administrator can tell you how to do that. At the same time, you may want to file a complaint against your insurance company with your state’s insurance commission or department, which may have a complaint resolution process. Sometimes, filing this kind of complaint will make an insurance company rethink its approach to a claim in order to avoid a problem with the state commission or department that is regulating it.
  • Contact a consumer law attorney with experience in medical debt collection issues for help if none of the actions you’ve taken have gotten you the results you had hoped for. Simply receiving a letter from an attorney may get your insurance company to reverse its decision. It’s also possible that you may have to file a lawsuit against the company in order to get action. However, an attorney will not take your case unless he or she thinks that you have a strong basis for a lawsuit and a good chance of winning. If the attorney does, he or she will probably take your case on a contingent fee basis, which means that you won’t have to pay the attorney an up-front fee but instead, the attorney will be paid by taking a share of whatever money he may win for you.

Your Options for Dealing With Medical Debt Collection Accounts

If you have pursued without much success all of the suggestions we’ve already outlined for dealing with your medical debts, here are some other options:   

  • Contact churches and social services organizations in your area. Explain that you have medical debt collection accounts and ask them if they can help you pay your medical bills.
  • Get in touch with your local and county governments. They may have programs that can help with medical bills or they may be aware of a non-profit program that can be of help.
  • Find out if you can do volunteer work for your medical provider in order to help reduce the size of your debt.
  • Request a payment plan so that you can pay off your debt over time. However, don’t agree to a particular monthly payment amount without reviewing your household budget first. It’s important that you have know exactly how much you can realistically afford to pay. Also, don’t sign a payment plan agreement unless you are clear about the interest rate on the plan and all of the other terms of the plan, including when will you be considered to have defaulted on the agreement and what will happen if you do. For example, if you default on your payment plan, the medical provider may refuse to provide you (and your loved ones too) with any additional care in the future until you get caught up.
  • Get an audit of your medical bills, especially if you were hospitalized. Studies have shown that most hospital bills are wrong – and often overcharge patients. There are firms that will analyze your medical bills to find overcharges. They may charge you an hourly fee, or a percentage of the money they save you.
  • Negotiate a settlement on your medical bills. You may be able to get the medical provider to accept less than the full balance due.
  • File for bankruptcy. Past due medical bills are one of the leading causes of bankruptcy. Bankruptcy may be one method for dealing with medical debt collection accounts. At a minimum, it can be helpful to talk with a bankruptcy attorney to find out whether you need to consider going this route.

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