Crippling Cost of Medical Care – Know Your Options and Rights

The crippling cost of medical care continues to be a major issue for many Americans, disproportionately impacting seniors and individuals with disabilities. It is important to know your options and rights.

Nonprofit Hospitals

The Affordable Care Act did address the issue of medical debt, and provides some relief for patients seen at nonprofit hospitals. Under the Act, nonprofit hospitals must have a written Financial Assistance Policy (FAP) that applies to all medically necessary care provided by the hospital and by a substantially related entity. The FAP must be widely publicized and include:

• Eligibility criteria for financial assistance and whether such assistance includes free or discounted care;
• The basis of calculating amounts charged to patients;
• The method for applying for financial assistance;
• For a hospital facility that does not have a separate billing and collections policy, the actions that may be taken in the event of nonpayment;
• If applicable, any information obtained from sources other than an individual seeking financial assistance that the hospital facility uses to presumptively determine that an individual is FAP-eligible; and
• A list of any providers delivering care in the hospital facility that are not covered by the FAP.

The FAP eligibility criteria are not regulated, except that they must be reasonable for the community. Therefore, unlike with Medicaid, there is no uniformity and no independent source to consult in order to see if a person is eligible. Typically, the FAP covers individuals who are not eligible for Medicaid.

The FAP regulations require that the policy be easily accessible, specifically in plain language, available without a fee, and translated into any other language of which there are a significant number of speakers in the community.

There are limits on the charge that can be made to FAP-eligible patients, even if they have not yet applied for financial assistance.  Nonprofits cannot charge FAP-eligible patients more than the “amount generally billed.” Before this law went into effect, some nonprofit hospitals were notorious for charging very high rates to indigent patients, ostensibly to discourage them from seeking medical care.

Nonprofit hospitals are also required to contact patients to determine whether they are FAP-eligible before engaging in certain collection actions or denying care due to nonpayment.

Credit Agencies

The three largest credit reporting agencies — Experian, Equifax, and TransUnion — agreed in a settlement with state attorneys general to no longer report medical debts that are less than six months past due.  This gives individuals time to deal with insurance and/or hospital financial assistance programs.  The agencies also agreed to remove from credit reports any debts that are later paid by insurance.

Medical Debt and Spouses

A frequently-asked question is whether spouses are responsible for each other’s medical debts. The federal Equal Credit Opportunity Act expressly forbids creditors from requiring one spouse to cosign for the sole debts of the other. However, this does not end the inquiry. New Jersey has a common law rule holding spouses responsible for certain debts.  The rule states that where there is no agreement between a creditor and both spouses, a creditor may seek payment from the second spouse’s income and property only if: (1) the debt was incurred for “necessaries” for the spouse; and (2) the assets of the debtor spouse are insufficient to pay the debt.