Negotiating Medical Debt (continued)
Option 7: File Chapter 7 bankruptcy
Filing Chapter 7 bankruptcy usually wipes out all of your unsecured debt, such as medical and credit card debt. The biggest problem with doing this is that, once a person files bankruptcy, he or she cannot do so again for six years. If a person files Chapter 7 bankruptcy and then acquires additional medical debt in the six-year period immediately following bankruptcy, he has nothing to protect him from wage garnishments, judgments or liens. Therefore, don't choose this option unless your medical debt is staggering and your medical treatment is completed since any debt not included in the bankruptcy petition must be paid to the creditor. If you owe a relatively small amount, try to work out a repayment plan with the hospital or other health care provider to pay the debt.
Medical Debt: Proposed State and Federal Legislation
As stated above, many hospitals routinely charge the uninsured up to four times more for services and medical care than they do the insured. For example, an insured person who spends a few hours in the emergency room might receive a bill for $2,000 while an uninsured person receiving the exact same service in the ER will receive a bill for $8,000. Is this legal? Yes, it currently is, although the Director of Health and Human Services and the American Hospital Association have issued guidelines to the health industry urging this practice be discontinued. There is also proposed federal legislation (and some state legislation) that would ban the practice of charging more to the uninsured and will set forth guidelines restricting aggressive debt collection. It is unknown at this time what affect the Affordable Care Act will have on future legislation or if additional legislation will be required.
Typically, proposed federal and state legislation would require hospitals and the medical industry to do the following when dealing with the uninsured and those who cannot pay their medical bills:
(1) Require that uninsured patients be informed about their consumer rights and financial options, including payment plans, public insurance programs and hospital "charity care" policies. Hospitals might be required to work with debtors more cooperatively so that debt can be paid back in a reasonable manner.
(2) Prohibit hospital bills from being sent to collection agencies for 150 days after treatment, giving debtors more time to pay the debt. Currently, many medical debts are turned over to collectors in just two months.
(3) Prohibit hospitals and collectors from placing liens on a patient's home and using other aggressive collection practices.
(4) Families with income under 400 percent of the federal poverty level (about $62,000 for a family of three) could not be charged more than Medicare or workers' compensation rates. This would eliminate the current practice of charging the uninsured up to four times more for medical care than what is charged to the insured.
(5) Hospitals also would be required to fully disclose programs available to those with no insurance or who cannot repay their medical debt. This would eliminate the current trend of hiding such programs for indigent patients in order to collect 400% more from them.
If you suspect you have been overcharged because you're uninsured, do some Internet research to find out if your state has already passed or is in the process of passing state legislation banning this practice. You should also find out what the hospital charges for each service and demand that you be charged the standard fee.
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