(TNND) — New research points to the connection between medical debt and housing instability.
Meanwhile, a financial educator said medical debt is a problem leading many folks to seek help from professional credit counselors.
“So, it’s not necessarily the only thing going on in their financial lives, obviously. But it’s sort of the thing that’s top of mind at the moment that they contact us,” said Thomas Nitzsche of Money Management International, one of the country’s largest nonprofit credit counseling organizations. “So, you can consider it sort of like the straw that breaks the camel’s back, so to speak. They might be kind of limping along with a lot of credit card debt or other types of debt, and then they have a medical event, and this big bill shows up.”
Nitzsche said that about one in five of MMI’s clients indicates medical debt as their primary cause for financial hardship.
And a new study published in JAMA Network Open found that people with medical debt had a significantly higher probability of experiencing housing instability, such as difficulty paying their rent, eviction or foreclosure. That was true even when adjusting for a broad set of other factors that could influence housing instability, according to researchers.
“The really insidious part about medical debt, though, is that it prevents access to care in a lot of cases, because if the client already has outstanding debt, they’re less likely to seek care when they need it,” Nitzsche said.
Credit card debt might sneak up slowly on people. Nitzsche said medical debt, on the contrary, can be a “payment shock.”
An emergency could land a person in the hospital without enough of a safety net, and they’re suddenly facing thousands of dollars in medical bills they can’t pay.
Nitzsche said education is key in managing medical debt.
His advice to people: Take action, but don’t panic.
“It’s important not to wait too long, because the longer you wait, the fewer options you’ll probably have,” he said.
And Nitzsche said help is available.
If medical debt is under $500, it won’t be reported to credit bureaus.
If medical debt is over $500, there’s a year grace period to pay it off before it lands on your credit report.
In the meantime, charity care is potentially available to help low- to moderate-income folks.
The money comes from the hospitals, many of which are nonprofits. As such, they must provide a certain amount of charity care to patients who are income qualified.
Nitzsche said MMI partners with Dollar For, a third-party nonprofit that helps people navigate the charity care process.
Dollar For offers an eligibility tool on its website and experts to help people understand their options.
“First and foremost, make sure you’re applying for charity care, even if you think you don’t qualify for it, because it can eliminate a part or even all of the bill, and then of course, if you’ve applied for it, sometimes that opens up more options,” Nitzsche said.
One bonus is that it might allow an applicant to tap into a longer repayment plan for their medical debt.
Lean on a trusted family member or friend to help figure out the options to deal with medical debt, Nitzsche said.
And Nitzsche said MMI is there to point people in the right direction.
People with medical credit cards or bills paid with other cards can include them in an MMI debt management plan to significantly lower the interest rates, Nitzsche said.
In 34 states, medical collection debt can be included in a debt resolution plan at MMI, reducing balances by an average of 50%.
“We’re also a HUD-approved housing counseling agency,” he said. “So, if your rent or your mortgage has fallen past due, we can help get that back on track, work as the intermediary with your lender to hopefully get a workout plan, a modification or forbearance or deferral, something to help get the mortgage back on track. Because you don’t want this to snowball.”
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