Consumer Financial Protection Bureau (CFPB) has finalized a rule that will remove all medical debt from being listed on personal credit reports and prevents lenders from using medical information in their lending decisions. In 2023 the three main consumer credit reporting agencies (Experian, Equifax & TransUnion) agreed to make changes to how medical debt is reported.
New scoring models have already being reducing the importance or discarding medical debt as it’s not a reliable indicator of credit worthiness in the first place as evidenced by a 2014 report by CFPB.
Did y’all hear the CFPB has paused all activities
Does this mean I can rack up medical debt and not pay for it without consequence now? Serious question.
Depends. A hospital, like any other debtor, can still sue you to obtain a judgment to receive its debt through means like garnishment of wages or a lien on your house/other assets. However, if you have no eligible wages (e.g. SSDI) or no other assets (or they’re exempt from medical liens) then there is no consequence. This is my understanding, not legal advice.
I work in the billing dept for a large healthcare conglomerate. All of our charges are purposely overinflated sometimes by 100%. The reason they do this is because the insurance companies only pays a small % of the original cost of care. Overinflating it gets us the reimbursement we need. The problem is the insurance companies force us (contractual obligation) to collect the copays deductibles etc from the patients even though we’d be happy to write it off. They will sometimes sue us if they find out we didnt make every effort to collect the difference. Its one of many shortfalls of having an entire healthcare industry structured around profit.
Thanks for sharing. I work in health plan consulting and totally agree with your comment. Usually we paint you guys as the bad guys for the excessive cost inflation (:)) but honestly my corner of the industry isn’t far behind. Same goes for insurance, pharmaceutical, pharmacy, and lots of other players, who each wants to get rich off the patients. Was the UHC CEO evil? No worse than most others in this bloated industry…
Our country can’t keep healthcare for-profit and expect it to be a human right. It’s one or the other.
Disgustingly shameful. And we call ourselves civilized. ðŸ˜
“All of our charges are purposely overinflated sometimes by 100%. The reason they do this is because the insurance companies only pays a small % of the original cost of care. Overinflating it gets us the reimbursement we need. The problem is…”
The problem is you overinflating charges. Any sins by insurance companies does not absolve you of further sins. You’re a collaborator.
lol gotta love it – acting as if there is no correlation when someone has medical debt that they also aren’t probable to have other debt problems.
We are just living in fucking la-la-land of made up data for anyone to correlate such a joke.
It’s not always black and white, there is a lot of gray area. There is no way anyone can prepare themselves for a cancer diagnosis or the like, no matter how responsible they are. Unlike an unexpected expense like a roof or a car repair, medical bills can quickly add up depending on insurance coverage. I’ve seen high-income/debt-responsible workers get hit with an illness in the family that can wipe them out. My family got hit with huge medical bills a couple years back that pretty much wiped out all our savings. Just lucky enough to not put us underwater but I can see how easy it can happen.
Credit and loans aren’t about “gray area” they’re about facts and statistics.
And statistically……. You know what the results are.
I have my opinion, you have yours. We’re all entitled to them. I hope you never find yourself in an unforeseen and unavoidable position that alters your current situation in a bad way.
I’m not wishing any ill-will on anyone, and I don’t in the slightest hope that people come down with burdensome medical situations.
I’m simply telling you the facts: Not paying medical bills – just like any other bills – absolutely correlates with a higher probability of other financial problems and being irresponsible. This isn’t an opinion.
Hell – I say this as someone that has very costly medical items and yearly hit my max out of pocket. Believe me, I know the system.
By all means, our system is broken and we need fixes – but that’s not what this discussion is. This is more equivalent to “We are solving our obesity epidemic by making sure that no one can say you’re fat”. If anything it simply leads to more problems, not less.
That’s why there is there’s a gray area, where some fall into that, like your costly medical items and yearly hit max. And though you pay it, like I do, a bad thing could happen that could derail it and you can’t pay it. And you try to keep up, but sometimes it is just too much. Or those that pay every bill though they live paycheck to paycheck and a bad thing happens. Those are the people that fall into the gray area.
Now, there are plenty of other people that fall into the black and white who are absolutely financially illiterate. I have, optimistically maybe, belief that there are more people that will try to pay their bills than there are they try to get out of it.
And then there’s the broken system. I’m still trying to get back the $20 bill I paid for someone else that the system put on my insurance. But in order for it not to go to collections and ding my credit report, I had to pay it while the insurance company and hospital investigate. That’s f’d up.
EDIT, that should have been $20 bill.
That is a good point, that the system puts people into collections and harms their credit reports if the bill isn’t even theirs. An actually good reason to not report it.
Maybe there is a middle ground they can do like a certain amount of time before it dings the report. Who knows.
It seems that you are an idealist, which is admirable. Unfortunately, I’m afraid that there are many people like the person that made this comment: #1980756 .
I think you have to be to an extent to survive this world, sometimes. Like pretty much anything, some bad actors do something that taints the rest of the group.
https://files.consumerfinance.gov/f/201412_cfpb_reports_consumer-credit-medical-and-non-medical-collections.pdf
If you don’t want to read the whole report feel free to skip to the “Implications and conclusions.”
I’m not saying you’re wrong, just saying that it is not cut and dry.
Statistics are fun!
Pretty sure there are more things that correlate to bad debt. Type of car one drives, the number of flights one books to Las Vegas, etc. It’s a completely different question whether it makes sense to use any of them to ding someone’s ability to borrow money in the future.
I always enjoy seeing the comment sections on posts like this lol
You’re welcome
why are people against this ?
Why do people not see that lame duck admin actions are disingenuous? Anything that happens post election is for pure partisan purposes. Why didnt they do it 3+ years ago if they were so righteous? And no, the the CFPB is not nonpartisan, don’t be naive.
Wouldn’t it be the opposite? If the “lame duck” has nothing to lose, wouldn’t this be the time to really push things that they really want?
The CFPB started the rulemaking process for this in 2023. Hardly can be connected to a lame duck admin.
Because empathy is for weaklings
Because they’ve been brainwashed or can’t critically think or are willfully ignorant or a combination of those three things.
Because they’re temporarily embarrassed billionaires who lack empathy
Probably because it doesn’t really help them, so they don’t really care.
then you would be indifferent… not antagonistic of it
If someone else is gaining and you arent, then youre losing position. It’s crabs in a bucket mentality
Because some people think that someone else is being given a break or getting a handout that they’re not getting.
I have recommended for people who can’t pay to make small payments to the hospital every month even if it takes years, they usually won’t come after you. Save receipts.
It depends on the hospital. Some hospitals will work with you, other hospitals (usually for-profit publicly traded hospitals, but even nonprofits do this too) will demand that you make a specific monthly payment and pay the balance within a certain amount of months or they automatically send it to collections.
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Just dont pay your debt and they will settle for 50%+ less. Medical debt is a joke in this country and if you can play the system, do it. Especially now with safer reporting when it comes to medical debt.
I don’t recommend that bc that will make it harder for ppl who truly need payment plans. I imagine that if too many ppl stop paying their bills, the hospitals/doctors will be less accommodating. One thing that I found great about the payment plans is that there were no interest or fees. Don’t ruin it for others…Also, I think that they can still actually sue you (at least in some states).
I think the hospitals are more likely to go complain to Congress and ask for bailouts or higher medicare/medicaid payouts.
A sane country would probably look into a single payer option but we’ll hold on to a for profit healthcare system until it completely collapses.
I went to the ER a few yrs ago and was shocked that they had a really good payment plan and they were easy to work with. I always picture them as bad debt collectors, but that wasn’t the case. My highest bill was only around $2k and I think I could have had about 12 months to pay it. Not saying that everyone will have it this easy. Just at least ask what your options are and don’t avoid it.
What sucked is that there were so many diff parties involved that it was difficult to keep track of who was owed what. I can see someone getting behind on a bill just bc of that. They need to make that easier to track.
They will suggest a minimum but from personal experience, I’ve paid even less than that. As long as you send in something…
One time it took me like 5 years to pay it off. I didn’t care.
curious what that 2014 report would look like today
A scenario comes to my mind. A person with medical debt got approved for a mortgage and a few months later the hospital sue him and get his wage garnished. Now he won’t be able to pay both and lead to force closure
It’s ‘foreclosure’ but sure, ‘force’d closure is basically the result
A scenario comes to mind. You get approved for a mortgage and a few months later you lose your job. Now you won’t be able to pay your mortgage leading to force closure. So let’s just not let anyone buy a house unless they’re rich and can put down 100% up front.
Amazing how a community of otherwise financially studious individuals are simps for big Gov and complete speds on public policy.
Financially studious? Girl I’m just here for canned chili rebates.
Property insurers just got recked if they haven’t already pulled out and screwed your grandma over, but I’m sure a Penn State dropout as financially studious as yourself with demonstrated expertise in public policy and the economics of catastrophic insurance coverage has all the answers.
Who said I dropped out of Penn State?
Sorry, kicked out. I tried to be nice. Feel better now?
Who said I was kicked out?
In case you haven’t figured it out yet, I was never “kicked out” or “dropped out.”
I graduated with my Bachelor’s degree and 0 disciplinary record!
Apologies are always welcome 🙂
John @ 
John