Medical debt

These are different from “regular” credit cards. Medical credit cards can generally be used only to pay for medical services, products, or devices. If a credit card can be used to pay for both medical and nonmedical goods and services, it may not be a medical credit card. Debt charged to medical credit cards is considered medical debt and gets legal protections that nonmedical debt does not. 

This is a type of personal loan used to pay only for health care expenses. It cannot be used for nonmedical goods and services. Debt from medical loans is considered medical debt and gets legal protections that nonmedical debt does not.

This is debt charged to a medical credit card; a medical loan; or bills for health care services, products, or devices provided to a consumer by a hospital, health care provider, or ambulance service certified by New York state. 

If you pay for health care services, products, devices, or ambulance services with a regular credit card, that debt is not considered medical debt. 

This can be used to pay for both medical and nonmedical services and products. If you use this type of credit card to pay for medical services, products, or devices, that debt may not be considered medical debt and may not get the legal protection that medical debt gets.

These include doctors, physician assistants, dentists, chiropractors, physical and occupational therapists, and certain licensed mental health providers.

A specific amount of money charged to a credit card is put on temporary hold. This hold allows a provider to ensure that you have enough funds to pay for the service. 

These are health care services that are reasonable and necessary to prevent, diagnose, or treat a condition, illness, or injury. Health care providers use medical evidence to determine medical necessity, but insurance companies and other payors review the services to decide whether they qualify as medical necessity under their benefits plan.

A medical credit card is used only to pay for medical services, products, or devices. If your charge is approved, the medical credit card company will pay your provider. Then you are responsible for paying back the medical credit card company, similar to how you pay for charges on a regular credit card.

Medical credit cards often offer promotional interest rates. But if you miss a payment or fail to make payments on time, the interest rate may increase significantly, and you will be responsible for both the original amount of the debt and the interest.

A medical loan is a type of personal loan that you can use to finance health care services. You repay the loan by making fixed monthly payments that include interest. The length of the loan varies, and your interest rate will depend on your credit score.

Yes ─ but, if you put your debt for health care services on a credit card, even when you believe it is a medical credit card, you may have fewer protections related to how medical debt can be reported. You could also worsen your credit score. Learn more about how credit-reporting agencies report your medical debt under the FMDRA.

Instead of using a credit card, you may be better off negotiating a lower bill, asking for a hospital or provider payment plan, or seeking hospital financial aid. These payment plans typically do not charge fees and often have lower interest rates. If you are not sure if your credit card is a medical or regular credit card, ask your credit card company before you use the card.

Yes. But you do not have the same protections that you would have if you use a medical credit card or a “regular” credit card. This is because a debit card takes money directly from your account and does not create debt. Many of the legal protections for medical and “regular” credit cards are for debt from paying for health care services.

No. A health care provider or hospital ─ or anyone working with them ─can give you an application. In addition, they can answer your questions about the application. But they cannot help you complete the application. This protects you from being pressured into filling out an application that will benefit the health care provider or hospital, but increase your debt.

If this happens, the health care provider or hospital has violated New York law. Call our helpline at 1-800-771-7755 or file a complaint online.

If you are seeking a medical service that is not medically necessary, the hospital or health care provider can require you to get credit card preauthorization or have a credit card on file before treatment. For example, a hospital or doctor could request preauthorization or a card on file for an elective cosmetic procedure, such as liposuction. In addition, hospitals and health care providers can ask you to voluntarily put a credit card on file for medical services that are not medically necessary, as well as medical services that are medically necessary.

If this happens, the health care provider or hospital has violated New York law. Call our helpline at 1-800-771-7755 or file a complaint online.

Each time you use a credit card to pay for medical services at a hospital or other health care provider, the provider must do all of the following:

• The provider must notify you that medical bills paid by regular credit card are not considered medical debt, and that you lose federal and state protections for medical debt when you use a regular credit card.
• You must be told that you will lose protections that prevent health care providers from seeking wage garnishment or property liens, or reporting medical debt to credit bureaus. You must be told that you will also lose protections that limit the interest rate on unpaid consumer debt and judgments to two percent.

You must then acknowledge that you have received both of these notifications.

The health care provider or hospital has violated New York law. Call our helpline at 1-800-771-7755 or file a complaint online.

If you believe that a hospital or health care provider acted unlawfully toward you when you applied for or used a credit card or medical loan to pay for medical services, call our helpline at 1-800-771-7755 or file a complaint online.

By regular credit card, we mean an all-purpose card that is not specialized for medical products and services. If you use this kind of card to pay for health care services, products, or devices, the credit card company is allowed to report that debt to consumer reporting agencies. The consumer reporting agencies can list that debt on your credit report. The debt is no longer considered medical debt under the FMDRA, even if it is from a hospital, health care professional, or ambulance service.

Unlike regular all-purpose credit cards, medical credit cards are offered specifically for the payment of medical services, products, or devices.

If you charge bills for health care services, products, or devices to this type of credit card, these bills are considered medical debt under the FMDRA. Consumer-reporting agencies are prohibited from reporting that debt.

But be careful: If a card can be used for non-health care items (even if it is called a “health” or “wellness” card), charges for nonmedical expenses do not qualify as medical debt under FMDRA. For example, you might use such a card to pay for veterinary services or a nonmedical product at a pharmacy. Credit card companies might not consider any of the debt placed on those credit cards to be medical debt. Credit card companies could then report all of the charges, including medical ones, to credit reporting agencies.

If you are not sure if the credit card company of a health or wellness card reports medical debt, inquire before applying for the credit card.

Dispute any incorrectly reported medical debt with the consumer-reporting agency. Incorrectly reported debt is considered void under the FMDRA. The reporting agency should remove it from your credit report.

Yes, you can. The FMDRA does not generally prevent hospitals, health care professionals, and ambulance service providers — or their debt collectors — from coming after you for a medical debt. However, if they reported your medical debt to a consumer-reporting agency, then you can argue that the medical debt was improperly reported.

Debt collectors can sue you to recover their money for medical debt, as well as other types of debt. If the judge or court decides in their favor, they can garnish your wages, levy or remove money from your bank account, or place a lien on your home. This means credit card companies can, with a court judgment, garnish your wages or place a lien on your home. 

By contrast, if you owe the medical debt to a hospital or health care professional, they cannot garnish your wages or put a lien on your primary residence. Examples of health care professionals that fall into this category: doctors, physician’s assistants, dentists, chiropractors, physical and occupational therapists, and certain licensed mental health providers. 

In addition, some other facilities licensed by the New York State Department of Health cannot garnish your wages or put a lien on your primary home. These include: 

• freestanding health clinics (also known as diagnostic and treatment centers)
• rehabilitation centers
• ambulatory surgery centers
• certain dental clinics
• nursing homes

These health care professionals and medical providers can still seek to sue you and obtain a bank levy to remove money from your bank account.