Hospitals Ordered to Halt 'Extraordinary' Debt Collection -- For Now

January 16, 2014
debt settlement news
Proposed IRS regulations require that nonprofit hospitals cease “extraordinary” debt collection unless they can demonstrate that a patient is ineligible for financial aid. While the agency has not yet made a final decision on restriction of medical debt collection, it recently announced that hospitals can “rely” on the proposed regulations as they are written until a final version is published.

Under the plan, nonprofit hospitals must give patients up to 120 days to decide whether they want to seek financial assistance. They then must allow another 120 days for the patient to actually apply for aid, during which time hospitals cannot engage in “extraordinary collection actions.” These actions include selling the patient's debt to a third party; foreclosing on a patient's real property; garnishing a patient's wages; placing a lien against or foreclosing on a patient's property; or reporting a patient's debt to a credit bureau, among others.

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