Unpaid Medical Bills: New Rules Provide Some Relief
Far too many people across the United States are suffering endlessly under a mountain of unpaid medical bills. This is a terrible situation for a lot of reasons. Not only has someone fallen ill or suffered serious injuries to the point where he or she needed extensive medical care, but now that same person and/or that person’s family is being saddled with enormous debt as a result. Unpaid medical bills are rarely a patient’s fault, as they stem from unexpected events.
Regardless of how unfair it all seems, it is the system in which we live and despite what some may think, the reality is that unpaid medical bills need to be dealt with so they don’t inflict a totally different type of harm on a person or that person’s family.
Fortunately, there are new rules coming into effect that deal directly with unpaid medical bills. These laws bolster the rights of patients and their families such that the amount of financial damage that can be done is somewhat limited. However, people who face unpaid medical bills need to be aware of these rules and enforce them properly. Below you’ll find some examples in hopes that they will help you get out from under existing and unpaid medical debt.
Who Came Up With These New Unpaid Medical Bills Rules?
The Consumer Financial Protection Bureau, or the CFPB, is the federal agency that formulated the new rules regarding unpaid medical bills. There are several potential benefits included in them, and what the CFPB did was deal directly with the three credit reporting agencies instead of trying to track down all of these collection agencies that seem to pop up and disappear with stunning speed.
Basically, the new rules are geared towards keeping certain types of unpaid medical bills off of a person’s credit history, at least for a period of time until they can be dealt with in some form or fashion. While that won’t necessarily stop collection efforts, these rules can provide people with the opportunity to prevent unpaid medical bills from following them around in a financial sense for years.
Unpaid Medical Bills That Have Been Settled
The first type of unpaid medical bills that the CFPB focused on were those that had actually been paid, at least technically. However, as we mentioned above, even if someone has paid off their medical bills that went to collections, the fact that they were at one point sent to a collection agency appears on their credit report for a period of seven years. That leads not only to a lower credit score, but also to higher interest rates when borrowing and a lower chance for approval when someone applies for credit.
That’s no longer going to be the case thanks to these new CFPB rules. As of July 1, 2022, unpaid medical bills that went to collections but that were ultimately settled are no longer going to appear on people’s credit history. This is a massive shift, and one that could lead to more than half of all unpaid medical bills that did appear on credit reports being removed.
The New Floor For Unpaid Medical Bills
Until now, pretty much any of the unpaid medical bills that people faced could wind up on their credit reports. For some of the smaller ones, collectors may not have thought it worthwhile to make those entries given the paperwork involved, but it was always a threat that they could use when trying to collect payments from people.
That’s not going to be how it works anymore beginning at some point in 2023. When it happens, the new unpaid medical bills rule will not allow any medical debt below $500 to be entered on someone’s credit report. That will also have a huge effect on people’s overall creditworthiness.
The Longer Grace Period For Unpaid Medical Bills
Even now, most people – some potential lenders included – understand that in essence, unpaid medical bills is not necessarily a reflection of someone’s creditworthiness. Medical costs arise unexpectedly, they can be exorbitant and even people who have health insurance can face costs that are totally untenable if they get very sick or suffer serious injuries.
Regardless, a credit score is a credit score, and many lenders don’t dig any deeper than the number that they see when they run a credit check. They might not even see that someone has a lower score than needed because they were injured in a car accident and had to stay in the hospital for weeks. Thanks to the new CFPB rules, unpaid medical bills sent to a collection agency can not appear on a credit report for one full year. That began in July of 2022, and until now the grace period was six months.
Check Your Own Credit History
Ultimately, it’s up to you to figure out whether you have unpaid medical bills appearing wrongfully on your credit report. That all starts with taking a look at your history and finding out if anything like that appears. If so, then make sure you look at the relevant dates and amounts, as it could be that you have the right to have certain problematic entries removed.
Even if the unpaid medical bills are there properly, you should still do what you can to get those entries removed. You can try to settle with the debt collectors, as many will take a lower payment amount than demanded. Debt collectors are generally paid on a percentage of what they collect, and something is better than nothing.
You can also sign up for news and insights from Wade Torkelson, as he can help you understand how to deal with creditors and how to assert your legal rights that they may not know you’re aware of. Sign up today to arm yourself with knowledge that could protect your financial future.
