New Yorkers Turn to Credit for Medical Debt; State Offers Consumer Tips
Medical Financial Products Make Up Significant Portion of Medical Debt
The Department of State’s Division of Consumer Protection is sharing tips to help New Yorkers navigate medical financial products for the cost of health care procedures that are not covered by insurance. Medical financial products include certain credit cards and third-party installment loans designed solely for paying for health care services, including dental services. A recent Gallup Poll found that Americans’ inability to pay for medical bills has increased, with a disproportionate impact on lower-income households. Americans carry an estimated $195-220 billion in total health care services debt with medical financial products now making up a significant portion.
“An unfortunate reality is that many New Yorkers must rely on medical financial products to cover their out-of-pocket health care expenses,” said Secretary of State Walter T. Mosley. “While these products can provide short-term relief for individuals and families in need of financial assistance, it is critical to know your rights as a patient and be cautious of financial traps that could become extremely costly down the road.”
State Health Commissioner Dr. James McDonald said, “Medical debt should never come between a patient and the care they need. While some financing products may seem like an easy solu tion in the moment, they often carry hidden costs that can trap families in long-term debt. I urge New Yorkers to understand their rights, ask questions, and make informed decisions before signing up for any medical financial product.”
What Are Medical Financial Products?
Medical financial products are a type of alternative financing increasingly used by families and individuals struggling to pay for their out-of-pocket medical and dental expenses. Financial institutions market these credit options to healthcare providers, who are incentivized to promote them to patients. According to The National Consumer Law Center, a dental office is the most frequent setting where patients are offered financing through a medical financial product.
COMMON CONSUMER COMPLAINTS
Common complaints from consumers to the Consumer Financial Protection Bureau include misleading deferred interest terms and fee-related issues like unexpected surcharges and hid den processing costs. The cards often offer “no interest” as a highly marketed feature while drawing little attention to inter est rates reaching as high as 30% after the interest-free promotional period.
One practice frequently reported by consumers involves marketing these credit products to patients who are in a diminished capacity to consent, leaving them feeling pressured to sign up for a credit card to cover “unexpected costs” and are later faced with credit card debt they never intended to incur.
KNOW YOUR RIGHTS WHEN VISITING A DOCTOR OR DENTIST IN NYS:
In New York State, when visiting any health care providers, including doctors or dentists, you have the right to considerate and respectful care including:
Clear Information: You have the right to receive complete, current, and understandable information about your diagnosis, treatment options, and prognosis.
Informed Consent: You must receive all information necessary for you to make a voluntary and informed decision about your course of treatment prior to and separate from any discussion of consent to payment.
Transparency about financial obligations required by law:
Healthcare providers are prohibited from requiring credit card pre-authorization or requiring a patient’s credit card information prior to the delivery of “emergency or medically necessary services.”
Patients must be notified of the risks of using medical financial products to pay for health care services.
No healthcare provider (including dentists) can complete any part of a medical financial product application for you. Dis engage with a provider attempt ing to do so.
Professional standards:
Providers are required to act professionally and can’t abandon or neglect a patient in immedi ate need of care. No medical provider, including dentists, can abandon your medical treatment during a dangerous medical state.
The NYS Office of Professional Medical Conduct investigates and prosecutes complaints of misconduct against physicians, physician assistants, and specialist assistants.
The NYS Education Department Office of the Professions investigates complaints of misconduct against dentists and related licensed providers.
TIPS TO AVOID A FINANCIAL TRAP:
Ask questions: Ask questions about the services and costs in advance. Remember, though, that you are not required to agree to payment prior to receiving services.
Understand all terms: If you decide that you wish to apply for a medical or dental credit card, carefully review and understand the terms and conditions - especially interest rates, deferred interest clauses, and fees - before you agree to anything. Every lender is different, so carefully review the terms of any offers and understand how those terms will impact your budget.
Get written agreements: Insist on receiving copies of the credit card agreements to review before agreeing to the financing.
Monitor your accounts and make timely payments: Keep track of your account and payment schedules. Automate payments so you don’t miss an installment payment.
Report suspicious activity: Report any suspected fraud or scams to the Consumer Financial Protection Bureau (CFPB) and the NYS Division of Consumer Protection.
MEDICAL DEBT AND CREDIT REPORTING:
While New York and other states have enacted statutes shield ing medical debt from credit reporting require ments, recent litigation has created uncertainty in connection with medical debt protection laws. Consumers should be aware that medical debt may potentially be reported and could impact credit ratings. REMEMBER: It is important to take the time to understand the terms of any credit agreement to ensure you can make the necessary payments.
The New York State Division of Consumer Protection provides voluntary mediation between a consumer and a business when a con sumer has been unsuc cessful at reaching a resolution on their own. The Consumer Assistance Helpline 1-800-697 1220 is available Monday to Friday from 8:30am to 4:30pm.