Debt collectors propose new guidelines for collecting medical debt

The skyrocketing cost of health care is not news to anyone. As the economy still struggles to recover from 2008's recession in 2013, many people still find it difficult to meet basic needs. When they need medical care, it often results in huge bills that they cannot afford to pay, and they face harassment from debt collectors. Proposed federal laws may offer some reprieve for patients who cannot afford to pay their medical bills, and health care providers and debt collectors are considering adopting new collection practices in anticipation of increased government regulations.

Medical debt collection task force

Representatives from the Healthcare Financial Management Association, a group of hospitals and other health care providers, and ACA International, the largest organization of debt collectors formed a task force at the end of 2012 in an effort to draft guidelines about best practices for collecting medical debts. The group released their recommendations in the fall of 2013, and allowed health care professionals to comment on them.

The task force's recommendations included allowing patients 120 days to pay their bills before the creditor takes "extraordinary collection actions," such as reporting the account as delinquent to credit reporting bureaus or turning the account over to a collection agency, and ensuring that paid medical debts are reported as such to credit reporting bureaus within 45 days of payment.

Proposed regulations to protect patients

The task force was formed in response to proposed federal laws and regulations aimed at protecting patients from abusive debt collection techniques. The House of Representatives is considering the Medical Debt Responsibility Act, which would require debt collectors and health care providers to remove paid medical debts from patients' credit reports within 45 days of payment. Additionally, the IRS is planning to update its regulations for non-profit hospitals to forbid them from taking "extraordinary collection actions," before both a 120 day "notification period" during which hospitals must communicate financial assistance policies to patients and a 120 day "application period" allowing patients to apply for financial assistance have passed. Some of the collection actions that IRS regulations prohibit include reporting accounts as delinquent to credit reporting bureaus, garnishing wages, placing liens on property or bank accounts and foreclosing on real estate.

Speak with an attorney

The guidelines that the task force released are only suggestions for best practices, not mandatory for debt collectors. Those collecting medical debts are still free to engage in the same aggressive and harassing collection tactics that they have used in the past, badgering the most vulnerable in society - those who are sick and poor. Those struggling with medical debt do have options for protection, however. Filing bankruptcy may be a way to eliminate overwhelming medical bills and stop creditor harassment. If you are struggling to pay medical bills, speak with an experienced debt relief attorney who can advise you about the most appropriate way to proceed based on your circumstances.