For existing medical debt, a few practical pieces of advice can go a long way.
First, if you intend to pay your debts it helps to take a cooperative attitude you’re your health care provider. If you show that you intend to pay the debt, and explain why you can’t pay immediately, most providers will be less likely to turn the debt over to a collection agency.
Once the debt has reached a collection agency, the situation changes. You are no longer in the hands of an organization that delivers health care. You are in the hands of a company that exists to collect debts. Collection agencies do not know you, and they are less likely than your health care provider to appreciate your cooperative attitude.
Often, providers expect to full payment at the time you receive medical services. When you talk with your provider, ask to set up a reasonable payment plan and stick with it. A good plan will help you to pay as quickly as possible, while avoiding debt collection agencies.
When setting up a payment plan, the provider may ask personal questions about your financial situation. Your provider might ask for proof of your income - a recent pay stub or income tax returns. The provider must keep your income private, except in the process of collecting a debt.
Any hospital operating as a non-profit must offer financial assistance, often called charity care. If you qualify for charity care, the hospital will cover all or part of the bill. Only certain people qualify for charity care based on income and family size. Each hospital will have its own eligibility requirements, but many hospitals will offer discounts to people across a wide range of incomes.
The Affordable Care Act outlines the requirements of charity care for non-profit hospitals. Most hospitals can’t turn your bills over to collections until they give you the chance to find out if you qualify for charity care. A hospital’s financial assistance staff should help you to understand if you qualify for financial assistance. For more information on charity care see our section on the Affordable Care Act.
When you apply for Medicaid or BadgerCare Plus, your benefits usually start the first day of the month when you apply. If you have any medical bills during the three months before the month when you apply, you can ask to see if you qualify for backdated coverage. If you met all the eligibility requirements for any of the three months before the month you applied, you can get Medicaid or BadgerCare Plus for those months. Once you get approval for backdated coverage, you can ask your health care providers to bill Medicaid for those services. If you paid out of pocket for any health care, you can ask them to bill Medicaid and you should get repaid the amount that Medicaid pays your health care provider.
Using Medical Debt for Medicaid Eligibility
Some people whose income is too high for MA can become eligible by meeting a deductible or “spend down” amount. If you already have medical bills or have regular medical expenses, including health insurance premiums, you can subtract those amounts from your income to become eligible for Medicaid.
Once you meet the deductible amount, it doesn't erase the debt you used to lower your income, but it does give you Medicaid coverage for the next six months. That can help you get treatment you need and can save money on out-of-pocket costs if you also have health insurance. If you don’t have health insurance, the end of your Medicaid coverage can give you a special enrollment period. That can give you a chance to enroll in other coverage, like a Health Insurance Marketplace plan, to avoid a coverage gap and stay on top of your health needs while avoiding unnecessary debt.
In Wisconsin, pregnant women and children under age 19 can get BadgerCare Plus coverage by meeting a deductible. People with disabilities and people over age 65 may qualify for Medicaid coverage by meeting a deductible.
Case Study: David is 37 and unmarried. He receives SSDI because he has a disability and is unable to work. His SSDI is $2,061/month. He incurred medical debt last year when he didn’t have insurance. He makes payments, but he has ongoing health needs and the bills will keep piling up. He isn’t sure how he’ll get ahead. He applies for Medicaid with a deductible. Since his income is above the monthly limit for “regular Medicaid”, he can meet a deductible using his medical bills. The amount he needs to meet is $6,000. David owes about $8,000 in medical bills. When he applies for Medicaid, he can send in copies of his bills to meet this deductible. Once approved, he has Medicaid coverage for 6 months, allowing him to try to catch up on his bills without worrying about incurring new medical bills.
Challenging Medical Debt and Fighting Forward!
If you and your medical provider can’t agree on a payment plan, then the provider may send your bill to a collection agency. This can cause extra stress, especially when you are sick or have an illness in the family, because collection agencies are often aggressive and intimidating. Once a creditor places your debt with a collection agency, it will hurt your credit score, even if you later pay off the debt. For more information on your credit score see our section on The Modern Debtors Prison.
Appealing Denied Insurance Claims
If your health insurance refuses to pay for services you think should it should, remember that you have the right to appeal! Every insurance plan has to offer a process to appeal negative decisions. Among other things, you can appeal denials of claims for services, requests for preauthorization or precertification, and requests for referrals to out-of-network health care providers. Most insurance plans have a one-step appeal process, but some plans offer two levels of appeals.
If you want to appeal a health insurance decision, the first thing to know is that you have a deadline to ask for an appeal. Most plans give you 180 days to ask for an appeal, but some plans have shorter time limits. You need to look at your insurance policy to find out what time limit applies to your plan.
When you appeal an insurance decision, a group of people not involved in making the original decision will review your claim. You will have a chance to send items that support your claim, like letters of support from your doctors. You may also have a chance to make your case in person.
Most insurance plans also have to offer an independent review if they deny coverage after the appeal. These reviews are done by companies that don’t work for the insurance company. Any letter from your insurance plan informing you of the denial of a claim should also tell you how to ask for an independent review. That information should also be in the appeals section of your insurance policy.
Appealing Medicaid/BadgerCare Plus Decisions
If you get a negative decision about Medicaid or BadgerCare Plus benefits, you have special rights to appeal the decision. You can appeal almost any kind of decision that affects your benefits, like a denial of eligibility or a denial of coverage for certain types of medical services.
Every Medicaid or BadgerCare Plus member has the right to ask for a “fair hearing” to appeal a decision. A fair hearing works like a court hearing, but it is much less formal. Fair hearings usually take place by telephone. Before the hearing, you can send in any items that you think will help make your case. At the hearing, an administrative law judge (ALJ) will listen to your side of the story and, in most cases, will also hear from the Medicaid agency. After both sides have made their cases, the ALJ will issue a written decision – usually within about four weeks after the hearing.
If you get your Medicaid health care through a managed care plan, you get an extra chance to appeal. If you want, you can start with asking your managed care plan to do its own review of the decision – much like the way you can appeal a decision with a health insurance company. If you aren’t happy with the managed care plan decision, you can still ask for a fair hearing.
If you are unhappy with your fair hearing decision, you can ask for review by your county court, but you may have to pay a filing fee. In most cases, you can’t present any new information to the court. That means it’s important to make a strong case at the fair hearing stage. If you think you need a fair hearing, you may want to see if you can find someone to help you prepare. For ideas about where you might find help with a Medicaid fair hearing see our list of resources in our section “Get Outside Help.”
Appealing Medicare Decisions
Medicare has a five level appeal process. The first two levels of appeal are through a process that looks a lot like an appeal to a health insurance plan. The third level is a hearing like the fair hearing you would get for a Medicaid decision. The fourth level is a review by the Medicare Appeals Council, and the fifth level is review by the federal courts.
If you have a Medicare Advantage (Part C) plan, you can get even one more level of review. You can start with asking your Medicare managed care plan to do a review that works like the appeal process for a regular health insurance plan. If you don’t like the decision, you can move on to the five-step appeal process.
The Medicare appeal process can be more complicated than other types of appeals. If you want to appeal a Medicare decision, a good place to ask for help is your local Aging and Disability Resource Center (ADRC).
Credit Scores: The Modern Debtor’s Prison
In the old days, people were often jailed for not paying their debts. Today, a low credit score can act like a modern debtors’ prison. Your credit score can be used by landlords to refuse to rent to you, by insurers to charge you more, and by banks to give you higher interest rates on loans. Although the modern debtors’ prison is not made of brick and mortar, it is just as hard to escape.
For more info, visit: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
Case Study: Jeff is a senior in college who wants to attend graduate school. Because of some unpaid medical bills and credit card debt, Jeff's credit score is low. As a result, several of his rental applications have been denied. This has made it difficult for Jeff to find a place to live. Jeff tried to consolidate his debts by getting a credit card with a lower interest rate, but the credit card company denied his application. They labeled Jeff as an applicant with a high risk of not paying back his debts. Jeff decided to take out a loan to buy a car that he could use to get to a new, higher paying job. Jeff's low credit score meant that the interest rates on his loan were higher than he could afford. Without a car, Jeff had to stay at his lower paying job, making it harder for him to afford graduate school.
What is a Credit Score?
A credit score is a number between 300 and 850 that rates your likelihood of paying your bills. Your credit history determines your credit score. You build your credit history by having bills in your name and paying your bills on time. Most people have credit scores between 650 and 799.
Here is a break-down of what makes up your credit score:
35% of your score is your payment history. If you make payments on time and pay in full, your score will be higher. If you often pay late or only pay part of your bill, your credit score will be lower.
30% of your score is how much debt you owe. Some types of debts, like credit cards, carry extra weight.
10% of your score comes from how much of your debt is new debt. The more new accounts you have open, the lower your score. On top of that, the number of credit checks run on you in the past year can lower your score.
15% of your score comes from the length, in years, of your credit history. The longer your history, the higher your score.
10% of your score comes from having a healthy mix of different types of credit. There are four different types of credit: (1) “service credit” which includes utility bills; (2) loans; (3) “installment credit”, which are loans like car loans that require you to make more than one payment; and (4) credit cards.
Your current income and employment history do not change your credit score, though lenders may consider them before making a loan.
Finding your Credit Score
Lenders can use one of several different types of credit scores, but most use a rating system called the FICO score. FICO scores use information from your credit report. Thee major national credit bureaus create and give your FICO score to lenders - Equifax, Experian, and TransUnion. You can get your score from each of the credit bureaus and you may find that you have a different score with each different credit bureau.
You can get a free copy of your credit report from each credit reporting agency once every week. When you ask for your credit report, you’ll need to provide personal information, like your social security number and other information that only you would know.
Only one website - www.annualcreditreport.com – is approved by the federal government to provide free credit reports. If any other website offers to give you a free credit report, it may be a scam.
You can also ask for your weekly free credit reports by calling toll-free at 1-877-322-8228. For more information about free credit reports, visit: How Do I Get My Credit Report
It’s a good idea to check your credit reports regularly so you can find mistakes and prevent old debts from coming back to haunt you. You have the right to dispute any wrong information in your credit report. In most cases, the credit reporting agency is required by law to investigate any item you dispute.
Recent Changes to Medical Debt Reporting
In 2022, the three nationwide credit bureaus announced that they were making significant reforms to their reporting of medical debt. The changes are all in effect as of April 2023, and remove medical debt that fits any of the following criteria:
*Medical collection debt that has been paid in full
*Unpaid medical debt that is less than 1 year old
*Medical collection debt under $500
The credit brueaus estimate that this will remove nearly 70 percent of medical collecting debt tradelines from consumer credit reports, and give patients more time to work with providers and insurance to address their debt. These changes were announced shortly after a Consumer FInancial Protection Bureau report that questioned whether any medical debt should be allowed on credit reports. WHile the changes are certainly welcomed, a CFPB analysis argues that the most devastating debts will be unaffected, so the most heavily-impacted patients may not receive needed relief.
Disputing Information on Your Credit Report
Disputing bad information can help raise your credit score. If you disagree with a debt that shows up on your credit report, you can file a dispute with the credit bureau that is reporting the bad information. You should explain why you disagree with the debt and provide a copy of any items that support your position. For medical debts, examples of documents that might support your position are your health care provider bills, insurance statements, a copy of a written payment plan, a notice of approval for financial assistance, or your Medicaid or Medicare enrollment information.
When you file a dispute, the credit bureau has to investigate it unless your reasons for disputing the debt won’t change the fact that you owe the debt. The credit bureau will send information about your dispute to the original creditor or whoever else reported the debt.
After the original creditor gets notice of your dispute, it must review your dispute and your supporting items and report back to the credit bureau. If the creditor decides that a debt on your credit report is wrong, it must notify all three credit bureaus to correct your credit report. You can then ask the credit bureau to send notices of the correction to anyone who received your credit report in the past six months. For potential employers who received your credit report, you can ask that the bureau go back two years. The credit bureau will usually complete its investigation within 30 days. After completing the investigation, the credit bureau must give you a written notice of the results and, if anything changed in your credit report, a free copy of your updated credit report.
Case Study: Georgia is in a long process of getting her insurer to pay for a surgery she received. The insurer has agreed to pay, but has not decided how much it will pay. In the meantime, Georgia discovers that her credit score was reduced. Her provider didn’t know she was working on getting her insurance to pay and they sent her bill to a collection agency. Georgia informs all three credit reporting agencies that she is working to have her bill paid by her insurer and that she disputes the debt. She provides the reporting agencies and the provider with documentation of her conversations with her insurer. The credit reporting agencies and provider investigate the debt and determine that it is incorrect. As a result, the debt is removed from Georgia’s credit report. In the mail, Georgia receives a letter explaining the results of her dispute, as well as a copy of her corrected credit report.
You can contact the three major credit bureaus to submit information you want included in your credit report or to dispute bad information in your credit report. You can send your dispute by mail, but it is often faster to dispute online.
If you want to dispute something in your credit report, you can use these addresses and websites:
TransUnion: PO Box 2000, Chester, PA 19016-2000
Dispute by Mail
Equifax: PO Box 740256, Atlanta, GA 30374
For more information on repairing your credit score visit: How Do I Disupte An Error On My Report
Dealing with Debt Collection Disputing a Collection Notice
If you got a collection notice from a debt collector about a debt you do not owe, you can dispute the debt directly with the collection agency. You should send written notice that you dispute the debt within 30 days of getting the collection notice. Once you file a dispute, the debt collector must investigate and verify the debt and may not tell any other company that you owe a debt without also stating that the debt is in dispute. If you ask the collection agency to verify the debt, it must stop collection activity until it sends you verification of the debt. If the agency cannot verify the debt, then it must stop trying to collect.
You can find sample debt dispute and debt verification letters at the end of this guidebook.
The Laws about Debt Collection
The Fair Debt Collection Practices Act and the Wisconsin Consumer Act give a good deal of power to you as a consumer. Not only can you force a collector to stop harassing you, but you can sue for damages if the collector does not stop.
To take full advantage of your rights under both acts, keep a paper trail of each contact with the collection agency. Note the time, date, and content of each conversation. Keep all written communications you receive from the agency, noting the date of receipt on each. Keep a photocopy of anything you send the agency. Never send originals of your checks or insurance documents, send copies instead.
Restricted Activities and Your Rights
If you and your medical provider cannot agree on a payment plan, then the provider may send your bill to a collection agency. This can cause extra stress, especially when you are sick or have an illness in the family, because collection agencies are often aggressive and intimidating. Debt placed with a collection agency will hurt your credit score, even if you later pay off the debt. See our section on “The Modern Debtor’s Prison” to read more about your credit score.
If a collection agency contacts you, write down the following:
-The name, address and phone number of the company calling you,
-The name of the business you owe money to, and
-The exact amount they claim you owe.
The Fair Debt Collection Practices Act (FDCPA) and Wisconsin Consumer Act (WCA) prohibit debt collectors from taking certain actions to collect your debt.
Restricted activities include:
Contacting Third Parties
A debt collector may only speak with someone other than you to confirm your contact information, like your address and phone number. A debt collector can’t contact the same person twice, unless it has reason to believe that the person gave bad contact information and knows correct contact information.
In most cases, debt collectors cannot give information about your debt to anyone but you or your attorney. They can give information to credit bureaus as long as they reasonably believe the information is correct, and that information could end up on your credit report.
Contacting Your Employer
Unless you have been sued and have a court judgment against you, collectors can only contact your employer to confirm your contact information and where you work. A debt collector cannot call you at your job if it knows that your employer does not allow you take those types of calls at work.
Threatening Legal Action
A collection agency can’t threaten to sue you unless it has the legal authority to sue you and actually intends to sue you. Sometimes, collection agencies buy your debt from the original creditor, which gives them the right to sue you for the debt. More often, the original creditor keeps the right to sue for the debt. The collection agency only gets paid by convincing you to pay off your debt. Debt collectors cannot threaten you with criminal charges if you don’t make payment.
Harassment usually means that a collector used obscene or threatening language. This includes calling you names, insulting you, your job or your family, or questioning your personal financial decisions. Harassment includes contacting you at unusual hours - later than 9 p.m. or earlier than 8 a.m. - or calling you so often that it becomes more than an inconvenience.
You have rights when it comes to debt collection activities. The FDCPA and the WCA offer protections and limit harassment, abuse, deception, and other unfair collection actions.
The FDCPA applies only to a business whose main purpose is debt collection. That includes collection agencies and law firms that work mainly on collections. The Act requires a debt collector to give you certain information when it first contacts you. It also gives you the right to demand that the debt collector stop communicating with you.
The WCA does not just apply to collection agencies, but also to health care providers trying to collect a debt directly. It prohibits many of the same activities covered under the FDCPA, but it isn’t limited only to businesses whose main purpose is debt collection.
If a creditor or debt collector treats you unfairly, you should consider talking to a lawyer with experience in consumer law. You may be able to get a lawyer, even if you cannot afford to pay typical fees. Under the FDCPA, if you win a lawsuit against a debt collector, you may be awarded attorney’s fees and court costs. You may also recover wages for lost work time, payment for emotional distress, and a penalty award up to $1,000.
Under the WCA, you can recover any actual damages you suffered, like lost work wages, or double any finance charges on your debt up to $1,000 (whichever is higher). You can also receive damages for emotional distress without having to prove that you suffered any physical injury or illness as a result of the emotional distress. Like the FDCPA, the WCA also gives you a chance to recover attorney’s fees and court costs.
To learn more about the FDCPA visit https://www.consumer.ftc.gov/articles/debt-collection-faqs.
To learn more about the WCA visit https://www.wdfi.org/wca/business_guidance/creditors/debt_collection/prohibited_practices.htm
Get Outside Help
Outside legal help can lessen the burdens of medical debt significantly. If you need help with disputing a debt or understanding your rights, the Lawyer Referral and Information Service (LRIS) can help you search for an attorney. You can search for an attorney from https://www.wisbar.org/forpublic/ineedalawyer/pages/lris.aspx. You can speak to a legal assistant by calling (800) 362-9082.
If you have lower-income you may qualify for legal aid through a legal aid non-profit. Judicare Wisconsin helps lower-income people from Northern Wisconsin with legal issues. For more information about Judicare visit http://www.judicare.org/.
Legal Action Wisconsin (LAW) serves people with lower-income from Southern Wisconsin with legal issues. For more information about LAW visit https://www.legalaction.org/.
Disability Rights Wisconsin (DRW) serves people with disabilities who are residents of Wisconsin. For more information about DRW visit their website at: http://www.disabilityrightswi.org/
ABC for Health is a Wisconsin-based, nonprofit public interest law firm dedicated to linking children and families to health care benefits and services. For more information on ABC for Health visit our website at: https://www.safetyweb.org/index.html.