Medical debt is increasingly becoming a burden on Americans, says CFPB

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In a new study on consumer finances, the Consumer Financial Protection Bureau (CFPB) found that medical debt hurts consumers’ credit scores and adds significant amounts to their personal debt.

The agency suggests that some 43 million Americans have medical debt on their credit reports, and that debt amounts to about $88 billion nationwide.

Medical debt is not something the average person expects, as it often arises as a result of unforeseen and urgent events. But when it does, it can hit hard and put Americans in a catastrophic loop between their medical provider and their insurance company.

The CFPB says consumers often have to deal with aggressive debt collection and coercive credit reports that force them to pay medical bills they may not even owe. Once medical debt shows up on a credit report, the impact can be far-reaching and felt across all races and ethnicities, but especially in minority and low-income communities.

“These practices can impose significant costs on people’s financial, physical and emotional health. Having a medical debt collection business line on someone’s credit report can make it harder to get credit, rent or buy a home, or find a job,” declared the CFPB in its report.

“Some people are pushed into bankruptcy by medical bills they can’t pay. Some avoid seeking health care for fear of medical debt. And some find the stress of having medical debt – and being contacted by medical debt collectors – worsens their mental health, contributing to conditions such as anxiety, depression and even suicide.

What the CFPB is doing about the situation

Armed with the data from the new study and states’ efforts to protect patients from staggering medical bills, the CFPB decided it needed to step up its efforts to ensure that consumer credit reports are not misused. excessive to force patients and their families to pay questionable medical costs. bills. More specifically, the agency intends to address the following factors:

Reasonable Practices: The agency wants to ensure that credit reporting companies have reasonable procedures in place to maintain the accuracy of medical debt information. It plans to take action against suppliers who report inaccurate information.

No surprises: The CFPB says it will support the work of the U.S. Department of Health and Human Services to ensure patients aren’t forced to pay bills that exceed amounts owed. This is especially true in situations where the amount billed violates the law without surprise. This law protects consumers covered by group and individual health plans from receiving surprise medical bills from most emergency services and non-emergency services from out-of-network providers at in-network facilities.

Tell consumers what financial help is available: Regulators will consider how best to make it easier for patients to access financial assistance programs offered by medical providers, including at the point of collection and credit reporting.

Continue to investigate the situation: The CFPB says its latest study is just the start and it will conduct further research into medical bill collection practices and their impact on patients and families.

Look for ways to end the current problem: Finally, the agency said it will determine whether policies need to be implemented to completely eliminate unpaid medical billing data on credit reports.

Additional expert advice

ConsumerAffairs contacted Stephanie Genkin, an expert in medical debt, to obtain her opinion on the CFPB report. It assures consumers that medical debt carries less weight in credit reports than other types of delinquency. However, she said there are three things people can do when faced with medical cost issues:

  • Do not argue with the debt collector. Ask for written confirmation of the debt so that you can dispute it if it is inaccurate.

  • Negotiate a reduced payment. Debt collection agencies buy medical debt for pennies on the dollar, so consumers can often try to work with debt collectors to reduce their debt burden.

  • Try a “pay to delete” strategy. Genkin says consumers can get written confirmation that a debt collector will notify the three credit reporting agencies to remove the statement of their debt once it’s paid off.

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