Helping people to manage medical expenses and debt

In May, Consumer Action teamed up with the Financial Empowerment Center (FEC) at Prince George's Community College in Largo, Maryland, to discuss medical debt—how it starts, strategies to manage medical expenses, and programs that help pay medical bills. The FEC hosts weekly virtual empowerment hours to increase financial capability among students and community members. It also offers financial counseling, free access to credit reports, tax preparation and small business coaching.

Attendees from Maryland and Washington, D.C., heard Consumer Action’s director of strategic partnerships, Audrey Perrott, give an overview of medical debt and available resources to help cover healthcare expenses and debt. The interactive presentation included videos and learning checkpoints to ensure attendees understood the resources discussed and increased their knowledge during the presentation.

Perrott discussed six public resources (the Health Insurance Marketplace, the Maryland Health Benefit Exchange, the Maryland Children’s Health Program, Medicaid, Social Security Disability Insurance and Supplemental Security Income) as well as a wide range of private and nonprofit programs to help consumers with healthcare and medical debt. Perrott noted that under the Affordable Care Act (ACA), nonprofit hospitals must offer charity care to maintain their nonprofit status with the Internal Revenue Service, and some states have passed their own laws requiring healthcare providers to offer charity care. In addition, some for-profit hospitals offer need-based programs that provide a similar type of assistance.

There also are more than 375 prescription assistance programs (PAPs) to help consumers afford needed medications, with each drug company establishing its own rules and eligibility guidelines. (View the online PAP directory.) Perrott also discussed programs through religious and other nonprofit organizations that pay for medical care, expenses or delinquent debt. One of these nonprofits, RIP Medical Debt, uses donor funds to pay off the delinquent debt of those at or near the poverty level. The organization recognizes that many, if not most, consumers drowning in medical debt are in that situation not because of poor decision-making, but because of a broken healthcare system.

Perrott moved on to the impact of medical debt on credit. Medical debt is not typically reported unless it is in collections, and there is a 180-day waiting period before a collection account is added to a consumer’s credit report, giving the consumer time to resolve or dispute the bill. She explained that newer scoring models, such as FICO 9 and VantageScore 3.0 and 4.0, give less weight to unpaid medical collections than other collection accounts.

Webinar attendees received some assessment questions to consider when faced with medical debt, so that they do not simply avoid the debt and allow it to ruin their credit.

“Medical debt is a huge problem that plagues low- and moderate-income and underserved communities, with individuals and families forced to make difficult decisions daily regarding health care that may negatively impact their health or their credit for many years,” said Perrott. “It is my sincere hope that attendees will use the resources to manage their health expenses and debt or help others to do so.”