Americans were struggling with medical debt long before the COVID-19 pandemic hit. For the last year, many people have struggled to handle bills in the midst of job loss and financial hardship exacerbated by the public health crisis.
Side Effects reporter Carter Barrett spoke with John Brengle, attorney with Indiana Legal Services; Jenifer Bosco, attorney with the National Consumer Law Center; and Dan Weissmann, host of An Arm and a Leg podcast, about the scope of the medical debt problem and what resources people can tap if they find themselves struggling with medical bills.
How big a problem is medical debt in the U.S.? How do we understand, or quantify, the problem?
There aren’t a lot of straightforward answers, Bosco said.
“We don't have national statistics on, you know, what is our total amount of medical debt, or how many people are sued,” she said. “Or, you know, how many wage garnishments are there every year, not on a national level.”
However, thanks to research from individual states, we do know some important facts about medical debt. About 24% of non-elderly Americans report having past-due medical bills; and that percentage increases to 31% for non-elderly Black households. Medical debt is the top reason that people file for bankruptcy, and represents more than half of the items on credit reports.
“I could go on and on with numbers and statistics, but you know, it's a significant problem and unfortunately continues to be a problem over the past year, that consumers are still facing medical debt collection, lawsuits and wage garnishments and legal actions over medical debt,” Bosco said.
What do we know about the way COVID has changed the issue of medical debt — or has it?
In some ways, it’s hard to tell. It can take months for a consumer to receive a bill after a hospital visit or medical procedure. And testing and treatment for COVID-19 is supposed to be covered by your insurance company, though there are cases where people have received bills for services that should have been covered, Bosco pointed out. If there are debts associated with COVID-19 treatment, it won’t start showing up on credit reports for months.
In general, the medical debts people have struggled with during the pandemic were likely incurred before the pandemic began.
But managing it has gotten more complicated, thanks to social distancing necessities after courts reopened. Some hospitals and collections agencies are still taking people to court for unpaid debts, sometimes requiring people to show up in person to courtrooms despite the ongoing COVID threat.
How do you go into medical debt? What are the consequences, particularly if you don’t pay a bill? What happens when that debt moves to collections?
If a medical provider doesn’t receive adequate payment in the time they require, they may enlist a collections agency to help recoup the debt or bring in a third-party debt collector.
From there, the debt collector could choose to take the individual in question to court — either civil court or small claims. An individual being sued is supposed to receive notice that it’s happening, and when to appear in court. If they don’t show up, they are considered in default and can suffer a number of consequences.
One is wage garnishment — that is, money taken out of paychecks — “which can be up to 25% of their take-home income, or they can have their bank accounts attached and money taken directly from their bank account,” Brengle said. “Or they can have their tax refunds seized.” They could also have a lien put on their property.
Indiana is one of three states that allows lawsuits to be left at the door of the plaintiff’s last known address--regardless of whether anyone comes to the door to receive it. That’s a problem, Brengle said, because the people who suffer with medical debt are often poor, and poor people tend to move frequently.
“And we get a lot of people come in for medical [debts] and other debts who were sued, and didn't know it until their wages start to be garnished,” Brengle said.
What can people do if they can’t pay a bill?
First things first: When you get a bill, make sure you actually owe what they say you owe. Request an itemized bill and review all the charges. Sometimes you’ll catch errors in the billing, and can talk to the hospital to get the erroneous charges removed.
Additionally, if you find a charge that you believe should be covered by your insurance but hasn’t been, you have the right to appeal the decision with your insurance company or, if that doesn’t work, with an external third party like the federal Department of Health and Human Services.
Weissmann also recommended looking up the average cost of services in your area, using sites like fairhealth.org or the HealthCare BlueBook. If a hospital charges more than the listing price, you may be able to negotiate a smaller bill.
Second, check to see whether you qualify for any financial aid. Nonprofit hospitals in the U.S. have charity care policies, meaning they will forgive some or all medical costs if a patient meets certain income requirements. Often hospitals won’t disclose those policies upfront, but consumers can find them by searching online.
And if those efforts don’t work, Weissmann said, call up the hospital and talk to them.
“Like, ‘Look, I don’t want to stiff you. But I can't really pay this much. Can we make a deal?’ And you just never know,” he said. It’s not a guarantee, he added, “But if you don’t ask, you never know.”
What if your bill goes to collections? What can you do?
It might be time to look for legal counsel.
“I would suggest, if you can, to see an attorney. Go through your legal services agency, or if there's a local legal agency in your town,” Brengle said.
Indiana Legal Services is one option for people who fall into a low income bracket. There are also pro bono networks of lawyers in many states who may be able to help.
Surviving Debt, a resource from the National Consumer Law Center, has a section about finding legal representation as well as other information about handling debt. The book is available for free on the NCLC website throughout the pandemic.
People have certain rights in cases of debt collection under the federal Fair Debt Collection Practices Act. For one, there are limits to how a debt collector communicates with someone from whom they’re trying to collect, such as calling at unusually early or late hours or by contacting their workplace. Collectors cannot make false statements about the debt owed, such as the amount. And they are not allowed to threaten consequences that cannot legally be enforced.
Collectors also cannot pursue debt indefinitely; states have statutes of limitations, after which debt collectors can no longer sue a person who owes money. (That does not mean the debt is gone. You still owe the money; you just can’t be taken to court over it.)
In Indiana, the statute of limitations for medical debt is six years since the debt went into default. If a debt collector calls about an old debt, check to make sure the debt is still within the statute of limitations. In some states, once you make a payment the statute of limitations begins again -- essentially restarting the clock. That’s also something you can talk to a lawyer about.
