How removing unpaid medical bills from credit reports could help consumers

What’s more, lenders will be barred from using information about medical devices, such as prosthetic limbs, to make them serve as collateral for a loan and subject to repossession, according to the CFPB’s announcement.

How are advocates responding?

Nonprofits in the healthcare space are pleased.

“This decision is great news for everyday Americans,” said Carrie Joy Grimes, founder of personal finance organization WorkMoney. “Medical debt is not a reflection of being bad with money — any one of us can experience illness or injury. With this new rule, Americans will now be able to focus less on the strain of medical debt and more on getting back on their feet.”

Patricia Kelmar, health care campaigns director for the U.S. Public Interest Resource Group, said the rule would help “many financially responsible families who have accumulated medical debt from unpredictable health issues, high out-of-pocket costs, insurance claim denials and billing errors.”

What should you do after receiving an unexpectedly high medical bill?

While high medical bills are common in the US, including for individuals and households with insurance, there are ways to get relief.

First, determine whether you qualify for charity care. Federal law requires nonprofit hospitals to lower or write off bills for individuals depending on household income. To determine if you qualify, do an internet search for the hospital or health care provider along with the phrase “charity care” or “financial assistance policy.” The nonprofit organization Dollar For also provides a simplified online tool for patients.

Next, appeal under the provisions of the No Surprises Act, a federal law that says insurance companies must reasonably cover any out-of-network services related to emergency and some non-emergency medical care. If you’re being charged more than you’re used to or expect when you receive in-network services, that bill may be illegal.

Also: Always ask for an itemized bill. Medical billing is notoriously complicated and rife with errors. An itemized bill includes the billing codes of all care received. If something is off between these codes and the care provided, contesting your bill can yield changes.

Another approach — comparing the bill with insurance companies’ estimates of fair charges for services can also help. If the price you were charged is more than average, you may have your costs lowered. You could even take the provider to small claims court over the discrepancy – or let them know you have a case.

Finally, always compare your insurance company’s “explanation of benefits” to the bill. The hospital’s bill must match the explanation of costs that are covered and not covered. If it does not, you have another reason not to pay and to ask the provider to work with your insurance company further first.

Even after taking these steps, you can always appeal health claims with your insurance company if you believe there is any reason the bills should be covered entirely or more than the company initially decided. You may also contact your state insurance commissioner for support.

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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.