Medical debt is changing: What it means for Long Islanders

A Biden-era rule that would have kept medical debt from impacting consumers’ credit scores was vacated by a federal judge, but New Yorkers still have limited safeguards under state law.

Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas ruled Friday that the Consumer Financial Protection Bureau’s medical debt rule “exceeds the bureau’s statutory" authority, according to a court order.

The rule, approved Jan. 7 by the Biden administration, barred third-party debt collectors from reporting medical debt to credit reporting agencies, according to the CFPB. It was set to take effect in March, but implementation was delayed following lawsuits from the credit reporting industry and debt collectors, according to a congressional report. The opposition found support in Trump appointee Russell Vought, director of the Office of Management and Budget and acting head of the CFPB, who had moved to vacate the rule.

Despite the ruling, some protections remain in place for New Yorkers.

How does New York protect residents with medical debt?

The state's Fair Medical Debt Reporting Act bars medical debt from being collected or reported by consumer reporting agencies, according to the New York State Senate.

Gov. Kathy Hochul's office said in a statement Tuesday they were "reviewing this federal court decision in Texas for any potential impacts on New York."

The federal ruling does not affect the state law, said Elisabeth Benjamin, vice president and managing director of the Community Service Society of New York, which lobbied for the legislation.

“Every New York consumer is still protected,” Benjamin said.

What are the exceptions?

There are caveats. If a patient pays medical bills with a general-use credit card, the debt is treated as consumer debt — not medical — and is not protected, according to the New York State Department of Health.

The law also applies only to medical debt incurred from providers within New York, according to nonprofit advocacy group Community Health Advocates.

Where can I go for help with medical debt?

Patients looking for financial assistance or discounts on care should reach out to hospital financial counseling, billing or social work departments. Under state law, all New York hospitals must offer financial assistance for emergency and medically necessary care to eligible low-income, uninsured, underinsured or financially burdened patients using a standardized form patients can fill out. Patients earning up to 400% of the federal poverty level may qualify, and immigration status cannot be used to deny aid. Hospitals can also provide financial assistance at their discretion for people who might not meet the criteria above.

It's important for patients to advocate for themselves, said Dr. David Himmelstein, a professor of public health at Hunter College. "Anyone who goes to a hospital or clinic needs to ask up front: ‘Am I eligible for some fee reduction or completely free care?’ ” he said.

In New York, patients can also call Community Health Advocates at 888-614-5400, which is part of CSS, said Benjamin. The group will help people enroll in insurance, answer medical debt questions and help with lawsuits and bills.

Veterans can find medical debt assistance with the Department of Veterans' Services.

Additionally, here are several nonprofit organizations that help with medical debt:

• HealthWell Foundation assists with copays, premiums, deductibles and out-of-pocket expenses for essential treatments and medications.
• Patient Access Network Foundation provides financial support to underinsured individuals with chronic or life-threatening diseases, covering expenses like copays and travel costs. More than 80 diseases are covered.
• Patient Advocate Foundation provides case management for those with chronic, life-threatening illnesses.
• Undue Medical Debt (formerly RIP Medical Debt) buys medical bills in bulk from collectors.

If you feel you've been unfairly targeted financially by a health care organization, file a complaint with the Consumer Financial Protection Bureau: consumerfinance.gov/complaint.

With Bloomberg News