Could Medical Debt be Removed from Your Credit Report?

If you are a victim of personal injury requiring medical treatment, you might find yourself joining the large group of Americans carrying medical debt. The financial burden of high medical bills is one of the many reasons why we always recommend you speak with an attorney after you have been hurt by an act of negligence.

But there is some good news. The first part comes in the form of the “No Surprises Act,” which was signed into law in January 2022. Under the new bill, patients are now protected from carrying medical debt from “surprise” medical bills that exceed their insurance coverage, such as when consumers receive emergency health care from out-of-network providers.

It also creates an independent dispute resolution process for payment disputes that happen between providers and plans. Some of the protections that policyholders have through this act include the protection against receiving bills for emergency services and the protection against receiving bills for out-of-network cost sharing concerning emergency and some non-emergency services.

The second part of the good news starts July 1, 2022: Experian, Equifax, and TransUnion – the three largest credit reporting agencies in the country – will no longer include paid medical debt collection on consumer credit reports. Furthermore:

The time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file. In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.

The agencies cited the Kaiser Family Foundation, which said that “two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need” – the type that was most prominent during the pandemic. But these changes will benefit people who have suffered catastrophic injuries, too. Between these changes by the credit reporting agencies, and the protections offered by the No Surprises Act, patients are finally catching a break when it comes to the financial strains of medical care.

How much of a problem is medical debt, really?

The numbers are staggering. In 2019, the Journal of General Internal Medicine reported that about 137 million adults faced some kind of financial hardship related to medical debt. At a recent event announcing coordinated efforts by federal agencies to address medical debt, Shalanda Young, Director of the Office of Management and Budget (OMB), explained medical debt is now the “biggest source of debt and collections in our country, bigger than credit cards, utilities, auto loans, and other sources combined,” and saddles one in three American adults. Health and Human Services Secretary Xavier Becerra also commented that more “than two-thirds of debtors cite medical issues as contributing to their bankruptcy.”

To address the issue, the White House directed OMB to partner with several federal agencies to determine steps that can help reduce the negative consequences that medical debt causes families. Some of the actions these agencies discussed include the following:

• Health and Human Services will examine the impact of health-provider billing practices on care and medical debt, and report violations.
• The Consumer Financial Protection Bureau will investigate credit-reporting companies and debt collectors for violations of patients’ and families’ rights and hold them accountable.
• The Department of Veterans Affairs cancelled and/or refunded $1 billion in veteran medical co-payments. The VA also streamlined medical debt relief with an online application and stopped reporting medical debt to consumer reporting agencies, “ensur[ing] that debt reported better reflects creditworthiness, while saving veterans from further financial struggles simply because they had to take on medical debt.”
• The Department of Agriculture will no longer include any recurring medical debts in its borrower repayment calculations.

How medical bills and debt create financial hardships for Mississippi personal injury victims

Medical bills from catastrophic injuries can cost individuals in various ways. Whether a person suffers injuries from a work-related accident or a car accident, it is guaranteed that personal injury victims will be responsible for paying expensive medical bills. Some victims may have serious or permanent injuries and require ongoing medical services, leading to even more expensive medical bills in the future.

A loss of skills and opportunities

One of the main reasons why medical bills create a financial hardship for many individuals is because of the lack of employment opportunities Loss of employment, regular wages, overtime, and other forms of financial support all play a role in the financial burden families face. In some cases, more than one family member may lose out on financial opportunities, as they sacrifice their jobs to care for their loved ones. Even worse, injury victims are not guaranteed that their jobs will be waiting for them once they have healed, and some victims may not be able to return work.

Issues with paying other bills

Another reason why medical bills can create serious hardships for personal injury victims is by causing a financial strain in other parts of a person’s budget. Personal injury victims who pay out of pocket for medical expenses have to struggle with paying their other bills. To add insult to injury, personal injury victims may have to come to terms with stopping vital services just to lessen the severity of the debt that they are under.

The long-term effects of poor credit

Substantial debts can and will have an effect on your credit score, which can have an effect on almost every other area of your life. Poor credit can make it harder to get a home or auto loan, and harder to rent an apartment. Some insurance carriers even charge more if you have poor credit, and some employers will use it to disqualify you as a job applicant.

Why does this matter? Because you may need a loan or a new job if your accident leads to your car being totaled, or if you need to find a new job because of your injury. If your medical bills make it impossible to pay your mortgage and you need to downsize, you may struggle to find a new place to live.

For all of these reasons, it is important that you seek guidance quickly if you are injured because of someone else’s negligence. Not only do we negotiate with the insurance companies, but we may also be able to get your total medical bills reduced, depending on the circumstances of your case. We can also make sure you get access to your MedPay, if you have that option on your policy.

We can also help you seek the compensation you deserve. Under the law, victims are entitled to economic and non-economic compensatory damages. Economic compensatory damages include current and future medical expenses arising from the injuries suffered in the accident, such as costs for doctors, hospitals, procedures, medications, and rehabilitation and therapy. You can also receive compensation for any medical devices you possess as a result of your injuries. Lost wages and loss of future earnings due to the injury are also recoverable.

Non-economic damages are different. These damages cover your pain and suffering, and other non-tangible losses. They can include compensation for mental and physical trauma, as well as loss of companionship.

In some cases, injury victims may also be entitled to punitive damages. These damages are designed to punish a wrongdoer for reckless or egregious behavior. They are rare, but your attorney can explain why you may or may not be entitled to them for your claim.

If you are struggling because of a serious injury, a lawyer from Merkel & Cocke, PA may be able to help. Our team has represented the injured throughout Mississippi for years. Call 662-627-9641, or complete our contact form for a free consultation. We represent injured clients in Jackson, Clarksdale, Greenville, and Oxford, and throughout the state.