Jan 13, 2015 Philip Burgess
With the new year comes evolving debt collection laws, and the IRS ended 2014 by issuing reformed medical debt rules. The law affects hospitals' ability to engage in "extraordinary debt collection practices."
According to the Green Bay Press Gazette, medical debt is very common, as 43 million Americans have it on their credit reports. This law applies to the billing practices of non-profit medical centers when they look for ways to provide financial assistance for patients, according to insideARM. Overdue medical bills are generally different from any other kind - such as the ones accrued because of unpaid phone bills - since they are often unexpected and very costly. However, that doesn't mean that those in debt shouldn't be held responsible for it.
What the law means
The "extraordinary debt collection practices" named above are defined as reporting debt to a credit bureau, filing for wage garnishment or selling or contracting with a third party debt collection agency, according to insideARM. This law only applies to non-profit hospitals, which is not the majority of the clients debt collectors have. Instead, non-profit medical centers must take the time to determine whether or not a patient is eligible for financial assistance.
According to a report by the Consumer Financial Protection Bureau, medical debt averages $579. Debt collectors face all sorts of criticism, but when numbers like this are put in perspective, the judgment should be lessened, as this is not a large amount of money. The idea that debt collectors are badgering clients for the sake of doing so should be wiped away as a belief altogether - they should be seen as the encouragement to get that $579 paid off.
How debt collectors are blamed
The main issues that preceded this law were laid out by the CFPB's report. The medical billing process can be confusing for those who must face it. The source blamed the system for being haphazard, as there are multiple bills from various providers and no one way to report overdue medical debt. Most patients have no idea of the many ways debt can end up on their consumer credit reports.
However, this doesn't mean that debt collectors should be the ones facing criticism for pressuring clients to pay off their debt, as they are just doing their jobs. A confusing medical system isn't the fault of a debt collector, it is a factor outside of their control that needs to be solved by the medical industry.
New laws won't fix the debts that occur due to medical emergencies, and debt collectors should be recognized as a resource for getting that debt paid off.