Medical debt often raises credit issues for disabled
Researchers have found that adults with disabilities are more likely to have unpaid medical bills than those without a disability, even when they have health insurance.
According to a 2017 report called “Financial Capability of Adults with Disabilities” by the National Disability Institute, people with disabilities tend to seek medical care more frequently than others and often need a range of services, equipment and supports that are not be fully covered by insurance plans or other programs.
This outstanding debt can cause credit issues that could prevent a person from securing a loan.
To address concerns about medical debt, Congress passed the Medical Debt Relief Act in 2016, which provides some protection for individuals facing high medical expenses. According to the law, if an unpaid medical bill goes to a collection agency, the firm must notify the patient of the action.
The patient has 180 days from the notification to pay off the debt before the agency is allowed to report it to credit bureaus. Additionally, once a medical collection has been paid, the medical debt must be removed from the patient’s credit report within 45 days, according to the law.
“Most of the time, people don’t even know what is on their credit reports,” said Larry McCabe, who manages Access Loan New Mexico, a statewide financial loan program for people with disabilities.
Oftentimes, a medical bill is outstanding because the hospital failed to bill Medicaid or an insurance company for the service or never received payment due to an error by the Medicaid program or insurance firm. The errant process might lead the hospital to turn the bill over to a collection agency without the patient’s knowledge of payment problems.
“I tell folks they need to contact the hospital to straighten things out,” McCabe said.
Provisions under other federal laws provide an individual with the right to receive a written confirmation of a debt as well as the rights to dispute it and to dispute inaccurate information on credit reports.
Under the federal Affordable Care Act, some patients are protected from debt collection if they have contacted a nonprofit hospital in writing regarding their medical bills and requested options for financial aid to cover medical expenses.
McCabe has managed Access Loan New Mexico for the past 13 years and has made over 200 loans.
Access Loan New Mexico, was established in 2005 by the Farmington-based San Juan Center for Independence, a state and federally funded nonprofit organization that supports people with disabilities. The program’s loans are available to anyone with a disability in New Mexico in need of home modifications, hearing aids, adaptive vehicles or other out-of-pocket services or equipment.
McCabe said he also provides assistance through the organization’s Last Resort Fund. He works with other organizations, including the Elks Lodge and the Carrie Tingley Hospital Foundation to jointly fund projects and stretch dollars.
As far as help getting a loan, “It all comes down to affordability,” McCabe said. “I’ll do an affordability assessment when someone applies for a loan and provide credit counseling.”
When someone needs a van with a lift to go to school or a modified truck, it could cost anywhere from $40,000 to $60,000, he said. And even with a 2.8 percent interest rate, the monthly payment could be $600 to $800.
The client would need a source of income and a budget to manage these new costs, he said. Still, he added, “We work with everyone and try to make it work.”
Andy Winnegar has spent his career in rehabilitation and is based in Santa Fe as a training associate for the Southwest ADA Center. He can be reached at email@example.com.