Medical debt. It’s an unwelcome tag-along that’s managed to secure a spot in the home of nearly 1-in-5 American households. A bit of a home-wrecker, wouldn’t you say? But it’s not all bad news on the debt front.
Congress, playing the role of a financial lifeguard, has passed the “No Surprises Act” to shield consumers from the unpredictability of certain medical bills. But don’t be misled into thinking this is a free pass. It’s more like a financial safety net during these times of economic uncertainty.
Medical bills are tricky, sometimes a collection pops up before the provider even sends a bill. The CFPB is cracking down on the industry to protect consumers. Credit bureaus have stepped up, giving more time to dispute and removing medical debts under $500 from consumer credit reports. Consumers should check their credit reports for medical bills that shouldn’t be there. Removal from your credit report doesn’t necessarily remove the obligation to repay. If you receive a collections notice, ask for verification for medical bills that are outdated or may have already been paid by your insurance provider.
And now, for the pièce de résistance. The three heavyweight credit reporting companies – Equifax, Experian, and TransUnion – have made some noteworthy changes. They’ve done away with all paid medical debts and those less than a year old from consumer credit reports. And if that wasn’t enough, they’ve also scrubbed clean all medical collections under $500 from your report, starting April 11, 2023. This move is projected to wipe the slate clean for about half of those with medical debt visible on their reports.
What does this mean for you? Well, this is a good time to put on your detective hat. Check your credit reports for any outstanding medical bills and dispute any errors or collections that ought to have been removed.
Moreover, the credit reporting companies have shown a bit of leniency. They’ve stretched the time frame for you to dispute, negotiate, or pay any outstanding bills before they can be reported. They now wait a year from the time you donned that hospital gown before allowing the debt to appear on your credit report.
The CFPB is optimistic that these steps will lessen the burden many families bear after medical care. But they’re not stopping there. If you find invalid medical bills on your credit report or face issues disputing medical bill errors with the credit reporting companies, they want to hear about it. You’re encouraged to submit a complaint to the CFPB.
This is a significant shift in the way medical debts are reported and handled, but it doesn’t absolve the responsibility of repayment. If anything, it stresses the importance of maintaining financial responsibility in a more forgiving environment. As with any financial matter, approach it with prudence, understanding, and, yes, a touch of skepticism. After all, while this move offers much-needed relief, it’s also a reminder that debts, like secrets, have a way of coming back if not dealt with properly.
