What Qualifies as Medical Debt?

When it comes to medical debt, it's important to understand what it is and how it can affect you. Medical debt is a unique type of debt that is incurred due to health care costs and related expenses. It can be caused by the complexity of medical billing, the third-party repayment process, and the unpredictable nature of health care costs. If a medical debt is not paid, the health care provider can assign it to a debt collection agency.

In the worst case scenario, you could be sued for unpaid medical bills. If you lose your case, a creditor or debt collector could take steps to garnish your bank account or garnish your wages as payment. Most health insurance offers financial protection against catastrophic medical expenses, but an insured person may still receive bills that they do not expect or cannot pay. These bills may reflect cost-sharing requirements such as deductibles, copayments, and coinsurance, non-covered services, or out-of-network providers.

Medical debt can lead to bankruptcy and cause significant stress due to collection calls. It can also mean that households have less money to spend on other essentials such as food and housing. People with medical debts may even give up the medical care or treatment they need. If the medical bill is yours and it is accurate, debt collectors can contact you to try to collect it.

They must comply with laws that apply to debt collection such as avoiding harassment or abusive calls, and comply with requirements when reporting debt to consumer reporting companies. They cannot call you 24 hours a day, and you have the right to tell them to stop contacting you. In order to prevent the problem from affecting your credit score, take care of the medical debt as soon as you receive the bill. A medical credit card is a good idea if you can earn deferred interest and make payments within the allotted time.

You can also apply for an FHA-backed mortgage without fear that medical debt will prevent you from buying a home. If you have outstanding medical bills that are past due, your creditors may be willing to agree to a debt repayment agreement. Medical bill advocates or patients are people who understand the health care delivery system, explain it to you, and negotiate it for you. According to a report by the Comptroller of the Treasury, at least 20% of households had medical debts regardless of age group where the head of household was under 65 years of age.

There was no difference in the proportion of households above and below the poverty line that reported having medical debt (19% in both groups). Regionally, 22.1% of households in the south reported having medical debts compared to 15.2% of households in the west and 15.6% in the northeast. Addressing concerns about medical billing and collections is a particular focus for us as the country emerges from the COVID-19 pandemic. Future reports will focus on how medical debt varies across Tennessee's 95 counties and options for legislators who want to address it.

It's important to understand what qualifies as medical debt so that you can take steps to protect yourself from its effects. Medical debt is different from other forms of debt because it is usually incurred accidentally or flawlessly. The government has taken steps to protect Americans with medical debts by prohibiting consideration of medical debt when evaluating applications for federal loan programs.

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