In recent years and months, the state of the U.S. health care system has been the center of much public and political debate. While many New Jersey residents likely have their own opinions related to health care access and costs, few understand the reality of the situation until faced with a serious illness or medical emergency.
Even people who are vigilant about paying bills on time are often unable to do so when it comes to hospital bills. When the initial shock related to the amount of a hospital bill subsides, individuals are often left feeling confused and frustrated. Many hospital bills simply state the amount a patient owes with little to no explanation of how that number was determined. In cases where an itemized bill is provided and payment negotiations attempted, it’s likely that months have passed from when an actual appointment or procedure occurred. During this time, frustration mounts and an individual’s account may have been turned over to a collection agency.
The medical billing process is confusing and largely unregulated. As such, hospitals and clinics are allowed to determine their own billing cycles as well as when a patient’s bill is deemed delinquent and turned over to collections. It turns out that the later is happening more frequently and without warning. While federal bills have been proposed aimed to prevent an individual’s credit score from being affected by medical debt, to date no such bills have successfully passed. As a result, even a relatively small medical bill can harm a person’s credit rating which in turn can lead to a host of other and more serious financial problems.
Adding to the financial woes of many Americans struggling with medical debt is the lack of consistency or transparency with regard to medical costs. Not only are medical costs continually rising, but they vary greatly from hospital to hospital. Additionally, it’s often difficult to determine what costs and how much of those cost will be covered by health insurance providers.
In an attempt to improve one’s financial health, many are sacrificing their physical health. Costs associated with health care are often ambiguous and difficult to both discern and negotiate. As a result, medical debts increase while credit scores decrease. Individuals struggling with medical debt may find relief through the bankruptcy process. Both Chapter 7 and Chapter 13 bankruptcy can successfully free an individual from medical debt.
Source: The New York Times, “When Health Costs Harm Your Credit,” Elisabeth Rosenthal, March, 8, 2014