Medical debt removed from credit reports

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.wsj.com/articles/most-medical-debts-to-be-remove…

**Most Medical Debts to Be Removed From Consumers’ Credit Reports**
**Equifax, Experian and TransUnion are making sweeping changes to how they report medical debt in collections beginning this summer**
**by AnnaMaria Andriotis, The Wall Street Journal, 3/18/2022**

**The biggest credit-reporting firms will strip tens of billions of dollars in medical debt from consumers’ credit reports, erasing a black mark that makes it harder for millions of Americans to borrow.... Beginning in July, the companies will remove medical debt that was paid after it was sent to collections. These debts can stick around on a consumer’s credit report for up to seven years, even if they are paid off. New unpaid medical debts won’t get added to credit reports for a full year after being sent to collections.**

**The firms are also planning to remove unpaid medical debts of less than $500 in the first half of next year. ...**

**The Consumer Financial Protection Bureau estimates that some $88 billion in medical bills sits on 43 million credit reports. The three credit-reporting firms maintain reports on more than 200 million people in the U.S....** [end quote]

This is a HUGE change that will help millions of people.

Covid-19 has infected 80 million in the U.S. About 4.5 million were hospitalized. Although the Covid vaccinations were free, medical care was not.

https://coronavirus.jhu.edu/us-map
https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidvi…

Many people have health insurance, but even the insured often have high deductibles and copays they can’t afford. Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most…

Note that the change in policy will be for medical debt that is paid. It doesn’t include unpaid medical debt.

Even so, removing the burden of previous medical debt from credit reports will improve many consumers’ ability to borrow at lower rates. This will be a positive for the Macro economy.

Wendy

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Many people have health insurance, but even the insured often have high deductibles and copays they can’t afford. Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
Wendy

Left with ‘unpayable’ copays is almost the same as not having any coverage.

Why even have that kind of ‘coverage’? If you are left with copays that swamp the budget?

Minimizing copays costs more, but in the long run, it’s “cheaper”.

Doing the math and forecasting can some times be a hidden black art.

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<Left with ‘unpayable’ copays is almost the same as not having any coverage. Why even have that kind of ‘coverage’? >

This shows that you have never suffered a serious medical crisis needing extensive tests, hospitalization, chemotherapy, surgery, etc. The cost can be astronomical.

I had bilateral invasive ductal carcimoma (breast cancer in both breasts) which required a double mastectomy in 2015. Fortunately, the cancers were detected while very small (Stage 1) so I didn’t need chemotherapy. The hospital stay was only a single night. I didn’t need physical therapy, antibiotics or the Intensive Care Unit.

The price tag for that single surgery with one night in the hospital was over $150,000. I almost fell off my chair when I saw that.

My deductible was $5,000 and my copay was up to a maximum of $7,000. A second surgery later that year was an additional $150,000 (to place silicone implants). Since I had already paid my deductible and copay I didn’t have to pay out of pocket for that. If I had needed more care (oncology, chemo, etc., even a checkup for a broken hangnail), I wouldn’t have had to pay.

That’s why people buy health insurance.

The problem is that many people do not have the resources to pay their deductible and copays.

https://www.cnbc.com/2021/08/18/one-third-of-americans-could…

Roughly 27% of American families couldn’t cover an unexpected $2,000 expense within a month, and 33% were struggling to make ends meet in January 2020.

Hospital billing departments are willing to work with patients to pay their bills over time. It would be a lot easier to pay off a $12,000 bill than a $300,000 bill.

That’s why people get health insurance. The Wall Street Journal did a survey of economists, asking them how they figured out the best health insurance to buy. They uniformly agreed that this was a hideously difficult puzzle that all of them had trouble figuring out.

You got that right, pardner.

Wendy

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WendyBG

This shows that you have never suffered a serious medical crisis needing extensive tests, hospitalization, chemotherapy, surgery, etc. The cost can be astronomical.

Sorry to hear your serious history.

But, in fact, we have had some astronomical charges.

But, in the mean time, along the way, also pay ‘astronomical’ monthly premiums.

(Currently $600/month, $7200/year, spouse and self.)

Haven’t gotten to the astronomical copays yet; maybe that’s a coming attraction for us?

Life can be such a wonderful unending of newsreels of revelations. And gotchas.

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<But, in the mean time, along the way, also pay ‘astronomical’ monthly premiums.

(Currently $600/month, $7200/year, spouse and self.)>

Do you have corporate health insurance as a benefit?

Sounds like it, if you are paying only $300 per month each for yourself and spouse.

DH and I (in the dangerous years between 60 and blessed Medicare) received a tax subsidy from the ACA (Obamacare), but when DH went on Medicare, the insurance gods determined that I would have to report our entire household income as mine alone. That kicked me out the ACA, which forced me to pay $1,200 per month just for myself. I had to reimburse the IRS $16,000 worth of subsidy that I had received but unknowingly didn’t qualify for. Fortunately, I’m only a year younger than DH so that only lasted a year.

<Haven’t gotten to the astronomical copays yet; maybe that’s a coming attraction for us?>

If you retire early and have too high an income to qualify for the ACA, yes.

At this point, intercst will jump up and down waving his hand like a sixth-grader, “Ooh, Ooh, call on me!” and tell you that putting 100% of your assets into non-dividend paying stocks will enable you to qualify for the ACA even if you are a millionaire like him. And that may work for you if you don’t think the risk of holding so much in stocks (especially non-dividend payers) is excessive.

https://www.multpl.com/shiller-pe

Wendy

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At this point, intercst will jump up and down waving his hand like a sixth-grader, “Ooh, Ooh, call on me!” and tell you that putting 100% of your assets into non-dividend paying stocks will enable you to qualify for the ACA even if you are a millionaire like him. And that may work for you if you don’t think the risk of holding so much in stocks (especially non-dividend payers) is excessive.

Avoiding dividend paying stocks doesn’t have to be risky. Berkshire Hathaway doesn’t pay a dividend and 20% of it’s market cap is cash. It’s actually more cash for me than the 10 years worth of living expenses I’m holding in a short-term bond fund and other near cash assets.

intercst

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WendyBG

<But, in the mean time, along the way, also pay ‘astronomical’ monthly premiums.

(Currently $600/month, $7200/year, spouse and self.)>

Do you have corporate health insurance as a benefit?

Sounds like it, if you are paying only $300 per month each for yourself and spouse.

No corporate. (Retired 20 years ago.)

We’re on Medicare***; the $7200 per year goes to Anthem BlueCross Medigap Plan “F”.

(***And, of course, pay for the MC. Gets deducted from our SS payments ~~~$100 per month.)

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At this point, intercst will jump up and down waving his hand like a sixth-grader, “Ooh, Ooh, call on me!” and tell you that putting 100% of your assets into non-dividend paying stocks will enable you to qualify for the ACA even if you are a millionaire like him. And that may work for you if you don’t think the risk of holding so much in stocks (especially non-dividend payers) is excessive.

Avoiding dividend paying stocks doesn’t have to be risky.

Sometimes my eyes glaze over and I almost fall out of my chair at this stuff … but I have to ask … what does owning dividend paying stocks have to do with qualifying for healthcare coverage?

I will probably be sorry for asking but speaking of eyes glazing over I’ve been informed that I have to go to an optometrist (who will probably try to sell me glasses) to get a referral to an ophthalmologist in order for the visit to be paid for. I’ve decided once again to defer that whole thing until I get back from vacation and put up with the irritating slightly fuzzy area in my right eye.

Tim

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…what does owning dividend paying stocks have to do with qualifying for healthcare coverage?

Dividends count as income thus may send you over the limit of qualifying. Capital gains can too but you control when you get capital gains by when you sell your stock.

JLC

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“Sometimes my eyes glaze over and I almost fall out of my chair at this stuff … but I have to ask … what does owning dividend paying stocks have to do with qualifying for healthcare coverage?”

In America, have to be 65 before you are Medicare eligible, so if you don’t have retiree
healthcare benefit, the ACA is the way to go.
ACA premiums are based on income, and of course dividends increase income, so intercst
avoided them before he turned 65 to help keep his premium down.

Feel really fortunate to have retiree health benefits via employer. That ends upon age
65, everybody goes on medicare then, as far as I know.

It is a weird, convoluted system we have here, that’s for sure.

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<i<…but when DH went on Medicare, the insurance gods determined that I would have to report our entire household income as mine alone.

Thanks for that heads up. I am 4 years younger than DH and will need to figure out health insurance for when he goes on Medicare I we lose Retiree Healthcare.

IP

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Capital gains can too but you control when you get capital gains by when you sell your stock.

Unless of course they come through the back door via mutual fund manager decisions that the consumer has no say over. We still own some that we bought pre ETF. At least the distributions don’t get reinvested in the fund.

IP

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Feel really fortunate to have retiree health benefits via employer. That ends upon age
65, everybody goes on medicare then, as far as I know.

It is a weird, convoluted system we have here, that’s for sure.

While our medical stuff is mostly under single payer, Pharma isn’t yet though current PM is trying to add it. I have mine covered through PSHCP (Public Service Health Care) in my case Military Pension where they withhold something like C$32 of my monthly pension and cover 80% of prescription cost at point of sale. It also covers up to $500K emergency travel insurance which is really only useful when travelling in US. The provinces have a system (Intergovernmental billing) where they bill each other for services provided for out of province medical care.

None of this has anything to do with my investment income. This year (2022) is the first year where all of our dividends are tax free as all of our dividend payers are Canadian in TFSA (Tax Free Savings Accounts). I do not own any non-dividend or non-Canadian dividend payers as IRS does not recognized TFSA accounts as being retirement accounts and insist upon me filing US income taxes on US holdings which I have no intention of doing.

Anymouse

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tim443 asks,

Sometimes my eyes glaze over and I almost fall out of my chair at this stuff … but I have to ask … what does owning dividend paying stocks have to do with qualifying for healthcare coverage?

There’s an annual income limit for the Obamacare tax subsidies, but no asset limit. So you could own $100 million dollars of a non-dividend paying stock like BRK, and still qualify for a big health insurance tax subsidy as long as you keep your taxable income low.

It obviously doesn’t work if you’re employed and getting a weekly paycheck. (Paychecks tend to come with some regularity.) But if you’re living off an investment portfolio of mostly stocks that pay little or no dividends, you have to volunteer to show any taxable income by selling something and taking the taxable gain. You have the flexibility of drawing your income in the fashion that creates the least tax liability.

intercst

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speaking of eyes glazing over I’ve been informed that I have to go to an optometrist (who will probably try to sell me glasses) to get a referral to an ophthalmologist in order for the visit to be paid for. I’ve decided once again to defer that whole thing until I get back from vacation and put up with the irritating slightly fuzzy area in my right eye.

Tim,

During an exam before COVID, my opthalmologist surprised me with news that I had started developing cataracts. That’s why my vision is getting fuzzy. She said I should expect to need cataract surgery in a few years.

I don’t know why I was surprised by the idea of cataracts. Both my grandmothers had cataract surgery

  • one in her 60’s and the other in her 80’s.

Maybe that’s what’s happening to you.

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Since we’re on the topic, I decided to do some drilling in our medical billing records. Comparing premiums for Medicare coverage and Blue Cross Medigap Plan ‘F’, then (before Obama Care) and now.

Figures are per person, per month.

(Before their large increases, Blue Cross was billing bi-monthly; they went to monthly billing to help with family budgeting.)


Date	M'Care	BC Medigap 'F'
2010	$96 	$150 
2022	$170 	$300 
% Incr	77%	100%

YMMV