Medical Debt Gets New Focus in Congress

There has been a lot of focus from lawmakers in recent months on the ways in which medical debts can severely impact consumers’ finances for years. Now, more are moving to do something to help these Americans who typically had no way of planning for these massive balances.

A new bipartisan bill, known as the Accuracy in Reporting Medical Debt Act, was introduced into the U.S. House of Representatives as a joint venture between Rep. Gary Miller (R-Calif.) and Rep. Carolyn McCarthy (D-N.Y.). Specifically, the bill states that unpaid medical debt sent to debt collections agencies cannot be reported by those companies in the event that a consumer responsible for it can prove that they are working to resolve the issue in some way.

This includes whether they are continuing to work with an insurance company to get appropriate payments covered, did not know that the debt existed, or has applied for financial assistance to help cover the balances, the report said. Miller noted that even a minor billing error, for a debt of just $100, can lead to consumers’ scores dropping by as much as 100 points in some cases.

“Every year, families in my district, and across the country, are hit with confusing and costly medical bills,” Miller said. “The personal and financial toll of dealing with a medical emergency or serious illness is difficult enough. Unfortunately, for many patients and their families, our nation’s complex and broken healthcare system inflicts additional pain by damaging their ability to access credit. Given the negative impact of the premature reporting of medical debt, we introduced this bipartisan legislation to help make certain that only real unpaid debt, not medical billing errors or bills pending with insurance companies or being disputed, are reported to credit bureaus.”

Under the law, if the necessary proof is provided by consumers to debt collectors, the latter must wait 120 days before reporting the defaulted balances to credit bureaus. During that approximately four-month period, consumers will potentially be able to get a handle on their finances going forward and be in a better position to address their debts.

However, billing errors are not the domain of medical debts alone, and that’s why consumers should closely examine their credit reports with regularity to make sure no mistaken entries are showing up in their names and possibly diminishing their standings.

Image: Hemera