CFPB finds relationship between medical assistance and debt collection

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On August 24, the CFPB published a blog post exploring the link between eligibility for financial assistance for medical care and the prevalence of medical collections. According to the Bureau, Americans spent $4.1 trillion on health care in 2020 and continue to incur large medical expenses, despite private insurance coverage and government programs. The Bureau expects that number to reach $6.2 trillion by 2028. The Bureau found that as household incomes decline, a higher percentage of consumers have medical collections. For example, the Bureau reported that among those with household incomes between $20,001 and $40,000 in 2018, consumers had at least one medical collection on their credit report. The Bureau also reported that among people living in households with children and earning less than $40,000, “38.1% had at least one medical collection on their credit report in December 2018,” or about three times the rate for persons without children earning the same amount. . The Bureau noted that three national credit reporting companies recently began removing paid medical recoveries from credit reports and will, starting in 2023, stop reporting medical recoveries under $500. However, the Bureau explained that many low-income consumers will not benefit from this change, as their existing collections exceed $500 and therefore access to financial assistance continues to be important for these consumers. The Bureau concluded that more “research could explore the extent to which differences in legislative and regulatory environments influence the provision of financial assistance and lead to better financial outcomes for consumers”.

On the same day, the Bureau announcement that Director Rohit Chopra will host a virtual discussion to explore the challenges of debt collection practices in care homes and the impact they can have on financial well-being on September 8. According to the Bureau, the discussion “is a chance for the CFPB to listen to and learn about the experiences of consumer and individual advocates with care home debt collection and recovery practices.

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