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New rule protects citizens from emergency room debt collection

Our Minnesota readers probably know that years ago there were national laws created to protect consumers from creditor harassment. For example, to collect a past-due credit card debt, a collector must refrain from abusive practices such as after-hours phone calls.

Recently a new rule will have a similar impact on those with debts who seek medical treatment in charitable hospitals. The U.S. Treasury Department has released new rules that are designed to protect patients from abusive debt collection practices at hospitals that are nonprofit. The rules are part of the Affordable Care Act passed in 2010. If a nonprofit hospital violates the collection policies; they could lose their nonprofit tax deduction status under the Internal Revenue Service tax code.

In a widely reported story, a woman who was in a Fairview Health Services emergency room was in pain with what turned out to be kidney stones. She testified before a Senate committee that though in pain, she recalled a debt collector in the ER asking her to pay the $700 or $800 she owed.

Apparently there are many other similar stories which contributed to the new debt collection practices included in the ACA. It was reported that about three out of five hospitals are nonprofit. The new debt collection practice seems to apply only to the nonprofits.

In addition to banning abusive debt collection, the new rule also requires nonprofit hospitals to create and publicize financial assistance policies, while assuring flexibility, so the hospitals can meet the community's needs.

As we mentioned in earlier posts, a legal or other professional can help negotiate a payment plan or other option for debt that is either state or federal taxes owed.

Source: Kaiser Health News, "New Rules Will Ban ER Debt Collections At Charitable Hospitals," Jenny Gold, June 27, 2012

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