Recently I wrote about the agreements big banks were striking with colleges to make money off their students. The Washington Post ran an article about similar agreements between hospitals and banks for lending money to patients to pay for their medical expenses. From a New York bankruptcy context, debtors should try to avoid these loans if at all possible, even though these kinds of debts are unsecured and can be discharged in a typical chapter 7 bankruptcy. Here are a few important points on these loans as described in the article.
One, hospital staff appeared to aggressively offer these loans to patients while they were receiving their medical care. If ever there was a place where high-pressure financial sales tactics don’t belong, it’s when you’re on a gurney. Although hospitals are required to abide by transparency laws, it’s still not a good place for debtors to consider whether these loans are a good idea. The article’s advice about waiting before deciding to take one of these loans is a good one.
Two, in individual story the article provided to show a human connection, the hospital offered a loan to the patient without regard to her procedure’s cost or whether she had insurance. It’s especially odd because the patient worked at the local public university, which usually give their employees very good health insurance coverage. The $830 bill turned out to only be a $150 copay once insurance stepped in. At the same time, the hospital based the cost on the list price for its services, meaning that if the patient had accepted the loan, she would have paid much more than even what her insurer would’ve paid.
Three, I should note that the loans in question are zero-percent, which is good for debtors who might struggle to keep up with the monthly payments. However, the advantages of zero-percent loans will be swamped by the exorbitant prices the hospitals charge.
Four, the article advises patients to research ways to reduce their hospital costs. For example, nonprofit hospitals offer financial assistance to low-income patients, so looking into eligibility for that can be worth the effort. It’s also possible to bargain with hospitals to reduce their charges.
The article can be found here.
Much of the article’s suggestions will be of little comfort to debtors who have high-deductible insurance plans and owe substantial amounts after their insurance carrier covers its portion. If you owe significant medical debts, then talking to an experienced New York bankruptcy lawyer can help you assess your options.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
