Medical procedures can be unexpected and unavoidable. The medical bills can be just as unexpected, especially when you are contacted by a debt collection company.
The White House says the biggest source of debt sent to collections is medical debt, totaling more than a credit card, auto loans, and utilities combined. A recent report by the Consumer Financial Protection Bureau highlighted several common errors in collection notices.
"Oftentimes that debt is not even owed by the patient," said Flavio Cumpiano, a senior advisor for the CFPB. "It's owed by a third party, so the patient doesn't know what to do."
Because the debt has been separated from the original medical bill, it can be confusing at first to know if it is a legitimate medical bill. Cumpiano also says medical billing is unnecessarily complicated, and it isn't clear who should pay it.
"The medical debt might be owed by the patient, but really should be paid by the patient's insurance company," said Cumpiano. "That itself is confusing, but the debt collector doesn't want to deal with insurance companies, so they send it directly to the patient."
The CFPB's report says in 2021, the amount of debt that was not owed, but that a company was trying to collect, increased by 31 percent compared to 2018.
It also found that debt collection companies might try to leverage credit reports and scores to make people pay up quickly.
"It's unfair because most people can't predict they're going to have an emergency," said Cumpiano.
In one complaint, someone told the CFPB they found their credit score was dropping because of a four-year-old medical bill totaling $10. However, the medical office they visited said they had no records of unpaid debt and did not send anything to collections. The debt collector said it would keep affecting their report until the debt was paid.
It's a good reminder to check your credit report at least once a year to see if there are any unexpected debts that show up.
If you get a medical bill from a debt collector, first do some research. If you think the amount is wrong or there are other errors, file a complaint with the agency. The CFPB has templates you can use to write a letter.
If you think the debt was or should be, covered by your insurance, reach out to your insurer to get details from them.
If it turns out the bill is legitimate and you do owe them money, try to put together a payment plan. Sometimes debt collectors will let you negotiate a way to pay down the debt.
In the meantime, CFPB says it will keep working with other federal agencies to reduce the impact of medical debt because it is not the same as a loan or credit card.
"It's not predictive of consumers' ability or probability that they will repay the loan," said Cumpiano "After all, that's what credit reports and credit scores are there for."