Medical debt is a leading source of consumer credit complaints
In 2021, approximately 15% of collection complaints were about attempts to collect a medical debt.
Medical debt on a consumer’s credit report can result in reduced access to credit, increased risk of bankruptcy, avoidance of medical care and difficulty securing employment — even if the bill itself is inaccurate or erroneous. Not surprisingly, medical debt is one of the leading categories of complaints to the Consumer Financial Protection Bureau.
“Many Americans feel forced to pay medical bills that they have already paid or never owed to begin with,” said CFPB Director Rohit Chopra. “The credit reporting system should not be used as a weapon to coerce patients into paying medical bills they do not owe.”
Related: White House rolls out plan to ease medical debt reporting
In 2021, approximately 15% of collection complaints were about attempts to collect a medical debt. Consumers raised two primary topics in their complaints:
The debt being collected already was paid, did not belong to them or was otherwise incorrect. The most common issue in debt collection is about attempts to collect a debt that the individual says is not owed. In medical debt collection complaints, this issue makes up nearly half of complaints, and complaint volume about this topic has been increasing.
Information included in collection notices for medical bills. Individuals reported that collection notices either did not contain sufficient information to identify and verify the debt or contained too much information, such as personal medical details. In complaints about medical debt and consumer reporting issues, consumers often expressed surprise and frustration about finding out about old or small medical debts when checking their credit report, often while applying for credit.
The appearance of disputed, inaccurate and erroneous bills on credit reports raises questions about legal compliance of market participants and may undermine the usefulness and integrity of the credit reporting system to creditors and other market participants.
Help may be on the way in the form of two major changes that will affect medical billing and consumer reports. The No Surprises Act will protect patients from some unexpected medical bills, and the three largest consumer reporting companies announced joint measures that would result in the removal of nearly 70% of paid medical debt tradelines from consumers’ reports.
“Medical care is often unexpected, making it difficult to compare costs and shop,” the report said. “Medical billing and health insurance programs are complex, which can result in people being charged for bills they do not owe. Financial aid programs vary, and individuals report not being considered for these benefits.”
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