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One short stay in a Texas hospital can leave many patients with large unpaid medical bills.
You may have been uninsured at the time or an out-of-network doctor or anesthesiologist left you with a surprise balance bill.
Texas has a very strong and comprehensive set of consumer protection laws. They can help residents cope with unfair medical billing practices, and protect their rights once a collection agency begins calling.
Follow this three-part roadmap for help in dealing with medical debt.
- Options for financial assistance that may reduce what you owe
- Medical debt collection laws: statute of limitations, garnishment, credit reports
- List of laws that apply to medical billing for out-of-network providers
Financial Assistance for Medical Bills in Texas
Financial assistance for medical bills in Texas comes in many forms. Often the programs have different names. You need an open mind to every opportunity to reduce the amount of money owed to your doctor, dentist, or hospital.
Skim through this list of financial aid opportunities. Pick the one that offers the most hope – given your situation.
Take out a personal loan to pay off medical bills. If approved, use the funds to retire any outstanding dental or hospital bills before the provider refers them to a collection agency. Take this step right away to preserve your ability to borrow money in the future.
Collection agencies frequently report unpaid medical bills to the credit bureaus. Once it appears, this negative information is difficult to remove. The black mark could hurt your rating and make it difficult to finance a car or home.
Debt consolidation programs sometimes offer longer-term relief. If you owe more than $10,000 in unpaid medical bills, credit card balances, personal loans, a settlement program may help reduce what you owe.
Speak with an expert to find out if the approach meets your needs. The most qualified applicants are actively working and earning an income. However, they simply do not have enough savings or free cash flow to stay current on their regular ongoing obligations.
Do not overlook federal and state government grants for help paying medical bills. Four different government grant-like programs relate to income. This is a big issue as many patients are unable to work while recovering from a health event.
- Texas supports unemployment claims for health reasons. Workers who voluntarily terminate employment because of their own serious medical condition are eligible for benefits once they are physically able to resume working. Family caregivers are also eligible to collect once they are available to re-enter the workforce.
- Short-term disability replaces a portion of income for injured or sick workers. However, Texas does not offer this coverage to private workers. You must purchase a private policy in advance of the need. Social Security replaces income for those with permanent disabilities.
- Family medical leave laws in Texas offer unpaid job-protected time off from work and healthcare benefit continuation. It is difficult to pay medical bills without a job or health insurance. These regulations protect patients and caregivers who must stop working temporarily.
- Most unreimbursed medical and dental expenses are IRS tax deductible. However, Texas does not have a state income tax, so this second form of potential savings is not available. Residents have two options for maximizing the value of these government grants.
- Flexible spending accounts offer first dollar tax savings on future unreimbursed medical and dental expenses. You must elect to contribute pre-tax payroll contributions before treatments begin.
- File Schedule A with form 1040 if unreimbursed medical and dental expenses exceed 10% of adjusted gross income. You can deduct any qualified charges within one calendar year.
Medicaid Past Bills
Texas Medicaid may cover up to three calendar months of past unpaid medical bills counting backward from the application date. Applicants must eventually meet the eligibility criteria, which include income and other factors.
Several Medicaid rules may exclude retroactive coverage.1
- The applicant must be Medicaid-eligible at the time of service
- Any treatment must be medically necessary
- Providers can choose whether to accept Medicaid reimbursement retroactively
Single mothers dealing with a pregnancy qualify under criteria which are much looser. This entitlement helps mom make choosing life more affordable.
Purchase individual health insurance if your income exceeds Medicaid limits. You may still qualify for income-based subsidies for plans obtained on the state exchange. A private plan will cover future medical expenses – not retroactive charges. People with chronic health conditions should own a policy.
If you injured yourself on-the-job, workers compensation offers direct assistance with all medical bills. However, the state of Texas does not require employers to carry workers compensation insurance.2 It is voluntary.
If your employer carries worker’s compensation, the plan will cover medical bills and replace lost income. You should not face any unreimbursed medical expenses for on-the-job accidents and illnesses. However, you have limited rights to sue your employer for damages.
If your employer does not carry worker’s compensation insurance, the healthcare plan could pick up the costs. However, the condition could affect future earnings. Hire an attorney. Non-subscribers face unlimited damages from a personal injury lawsuit.
If you injured yourself in a car accident then an auto insurance policy may help with medical bill payment. In Texas, it does not matter who caused the accident. Scour your policy declaration page for the coverage limits on these two features.
- Medical Payments Coverage – reimburses medical and funeral expenses resulting from an accident.
- Personal Injury Protection – replaces 80% of lost income and covers the cost of hiring a caregiver for the injured person.
Medical Debt Collection Laws in Texas
Texas medical debt collection laws protect consumer rights, but do not make the problem go away. Doctors, dentists, and hospitals can send your account to a third party collection agency.
The Texas medical debt collections statute of limitations does not absolve patients of any responsibility or force credit bureaus to remove negative information. It does time bar agency rights to file a lawsuit. Other regulations limit the use of liens and garnishment. Others ensure fair treatment.
Disclaimer – the following does not constitute legal or professional advice.
Consult an attorney licensed in Texas.
Statute of Limitations
The statute of limitations on medical debt in Texas is four years. The statute of limitations time bars the collection agency’s rights to file a lawsuit in court to collect an outstanding obligation.
In Texas, the medical debt statute of limitations clock starts counting from the date of last activity. The date of last activity could be the day you received treatment, the last day you made a payment on the account, or the day that you acknowledged liability to make payment.
The statute of limitations means the healthcare providers can take patients to court anytime within four years of the date of last activity.
- Doctors can sue a patient for non-payment
- Hospitals can sue for unpaid medical bills
- Third party medical collection agencies can sue on their behalf
Liens and Garnishment
If the doctor, hospital, or third party medical collection agency wins the lawsuit, the court will enter a judgment. Several Texas and Federal laws restrict the use of liens and garnishment of property to compel payment of a medical debt.
- If the hospital places a lien on your house, the Texas homestead exemption rule prevents the forced sale of your home. The homestead is the primary residence of the debtor.3
- Providers cannot garnish your wages for an unpaid medical bill. The state of Texas allows wage garnishment for child support, spousal support, student loans, and back taxes only.
- Hospitals can garnish money in your bank account. The garnishment writ can attach to a checking account, savings account, or any other funds held by a third party.4
- Hospitals cannot garnish Social Security disability checks. Only the federal government can legally withhold money from your check.
- Hospitals cannot garnish your IRS tax refund. Only government agencies can legally take your refund to satisfy a prior debt.
The laws regarding medical bills on credit reports in Texas are all federal statutes. It is legal for collection agencies to report the medical debt to the credit bureaus. This is a common business practice in all 50 states. Unpaid hospital and medical bills can affect your credit score.
The Fair Credit Reporting Act states, “A consumer-reporting agency shall not furnish a report containing medical information unless the information pertains solely to transactions, accounts, or balances relating to debts arising from the receipt of medical services, products, or devices.”
Many people confuse the statute of limitations with the rules regarding the expiration of medical debt on credit reports. They are two completely separate issues.
- Statute of limitations time bars lawsuits 4 years after the last activity date.
- Medical debts delete from credit reports 7 years after the date of first delinquency.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) is a federal regulation that provides safeguards to Texas residents with unpaid medical obligations. This nationwide law applies to out-of-state office locations of the healthcare provider or third party collection agency.
The FDCPA offers these basic consumer safeguards.5
- The right to sue for violations
- Protection from harassment
- Disclosure of debt to others
- Contact at inconvenient times
- Proof of obligation
Texas Debt Collection Act
The Texas Debt Collection Act (Title 5 Subchapter 392) offers additional protections to patients with unpaid medical bills. The law outlines these additional consumer safeguards.6
- Surety bond
- $10,00 bond requirement
- Claims against the bond for violations
- Information in files of a collection agency
- 45-day limit to report information to the consumer
- Correction or erroneous information
- Prohibited debt collection methods
- Threats or coercion
- Harassment or abuse
- Unfair or unconscionable means
- Fraudulent, deceptive, or misleading representations
- Deceptive use of credit bureau name
- Use of independent debt collector
In Texas, the responsibility for paying the medical debt after the death of the patient depends on several factors. When the person dies, the estate pays the outstanding obligations through the probate process. The estate is all the qualifying assets owned by the deceased.7
- If the estate owns insufficient assets, the creditors must settle for a smaller amount.
- The surviving spouse may still owe the money, as Texas is a community property state.
Consult with your probate attorney for more information and guidance.
Texas Laws Regarding Medical Billing Practices
Texas has several laws regarding medical billing practices that can help. These additional codes give consumers tools to avoid surprise charges. Surprises crop up frequently with untimely invoices and balance billing.
Balance bills occur when a patient uses an out-of-network healthcare service provider. The consumer is responsible for paying the difference between the larger charged amount (out-of-network retail price) and the smaller allowed amount (in-network wholesale price).
Follow this partial list of laws that apply to billing for medical services in Texas.
The Texas Civil Practices and Remedies Code requires that a healthcare service provider bill the patient or another responsible third party no later than the first day of the 11th month after the date of service. In addition, they must meet the deadline in any contract with the health benefit plan.
The healthcare service provider cannot recover any fees or charges if they fail to invoice the patient or insurance company in the specified period. This means that individuals can successfully dispute any medical invoices submitted after either deadline.8
Texas Senate Bill 1731 requires that healthcare providers and insurance companies provide a price estimate within 10 business days – when requested by the consumer. The intention of this law is to help healthcare consumers avoid surprise balance bills.9
Many hospitals, doctors, and dentists will publish a patient’s bills of rights. This document often lists both rights and responsibilities.
- Rights to an estimate of expected charges
- Responsibility to understand your insurance coverage
The responsibility to understand your insurance coverage extends to identifying which providers are in and out-of-network.
Texas Senate Bill 481 took effect in September of 2015. The new law lowers the mediation threshold to $500 for unpaid hospital and medical bills. It also requires health providers to notify patients of this right when sending an invoice.
The intent is to help patients deal with the large amounts associated with balance billing. During mediation, the out-of-network provider, a health plan representative, and the responsible party speak over the phone in an effort to negotiate a settlement.10
- Workers Compensation
- Homestead Exemption
- Fair Debt Collections Practices Act
- Title 5 Subchapter 392
- After Death
- Civil Practices & Remedies
- Price Estimates
- Senate Bill 481