Biden administration announces plan to help those with medical debt

On Monday, the Biden administration announced a four-step plan aimed at increasing consumer protections for Americans with medical debt.

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Vice President Kamala Harris said 1 in 3 American adults “struggles with unpaid medical bills.” Medical debt is now the largest source of debt in collections, surpassing credit cards, utilities and auto loans combined.

“Anyone who has needed that level of medical care over that period of time, should be allowed the dignity of being able to focus on their recovery, and not in addition to the burden of recovery, deal with the burden of debt associated with a medical need,” she said.

“No one in our nation should have to go bankrupt just to get the health care they need,” Harris said.

Harris announced the administration’s four-point plan to address the issue. The plan includes:

1. The Department of Health and Human Services will request data from more than 2,000 providers on collection practices, lawsuits, financial assistance, debt buying practices and other factors that might “impact access and affordability of care and the accrual of medical debt,” according to the White House.

“The Department will, for the first time, weigh this information in their grantmaking decisions, publish topline data and policy recommendations for the public, and share potential violations with the relevant enforcement agencies of jurisdiction,” the White House added.

2. According to Harris, the administration will also ensure that the credit scores of individuals with medical debt do not suffer. This move comes after an announcement last month that the three major credit reporting agencies — Equifax, Experian and TransUnion — will remove nearly 70% of medical collection debt from consumer credit reports.

In addition, the companies will extend to one year the time unpaid medical debt appears on credit reports. The move is aimed to give people more time to work with health care providers and insurance companies to settle their debt. They will also stop including medical debt under $500 on credit reports.

The Department of Agriculture will no longer include recurring medical debts when calculating borrower repayment options for its homeowner programs.

The Department of Veterans Affairs will “review its underwriting guidelines to ensure we minimize or eliminate medical debt reporting as a proxy for creditworthiness, wherever possible,” the White House said in a statement.

3. The VA has either canceled or refunded $1 billion in copayments to veterans since the start of the pandemic in 2020. The agency will now streamline the process for lower-income veterans to request medical debt relief online.

“The bottom line is that vets always step up for this country when we need them most,” VA Deputy Secretary Donald Remy said at Monday’s White House event. “But COVID is one of those times when veterans have needed us the most, when vets need us to step up for them.”

4. The Consumer Financial Protection Bureau will help Americans understand the complex systems that make up medical billing and payments, and the agency encourages individuals who experience issues with aggressive debt collectors, coercive credit reporting or other problems to report them to its complaint portal.

“Our administration is also taking action against the bad actors, the folks who violate consumer’s rights to force people to pay medical debt,” Harris said Monday. “Some debt collection companies harass consumers with dozens of phone calls a week. ... Some who pose as law enforcement officials or threatened consumers with jail time. That sort of harassment and intimidation is unethical. And often, it is illegal.”

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