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New rules may mean lower medical bills for some in Arizona

Readers of the Mesa, AZ, Bankruptcy Law Blog may have read the post "When unexpected events cause debt, consider bankruptcy filing," which discussed the turmoil that unexpected events can cause on finances. These unexpected events might include a sudden illness leading to medical bills that Arizona residents are not financially equipped to handle.

As patients are struggling with their health needs, they are often confronted with soaring medical bills and the threat of a damaged credit score if the hospital reports them to a credit-reporting agency. Large amounts of medical bills are one of the leading causes of people turning to bankruptcy for relief. Filing for personal bankruptcymay be the only option for some to treat medical debt problems and regain control of their finances.

The Internal Revenue Service, at the behest of Congress, has drafted rules to protect patients from situations like this by mandating hospitals add consumer protection and services for patients qualifying for medical financial aid and charity. These rules apply to hospitals operating as charitable, tax-exempt, non-profit medical centers as defined by the IRS.

Most importantly, if the rules are finalized, low-income patients struggling to pay their medical bills will not be pressured by a hospital's aggressive debt collection methods.

Additionally, the proposed rules stipulate that hospitals must publicize their reduced or free medical care policies to patients rather than keep them in the dark. Currently, patients may not be aware they can reduce their medical bills at certain non-profit hospitals.

The proposed rules forbid hospitals from garnishing wages, placing liens or foreclosing on property and filing civil suits, in addition to other aggressive tactics. The public can comment on the rules until the end of September, after which they may become effective.

However, the rules, which are part of health care reform, are not mandating free health care. By 2014, everyone must have health insurance or pay an annual fee based on their income.

Until these rules are put into place, Arizona residents might want to ask for adjustments on their bills, even retroactively, and attempt to minimize the medical bills that they owe to any hospital. Becoming aware of the hospital's policies on medical bills is essential. After doing this, Arizona residents who are still struggling to make payments may want to consider filing for bankruptcy to wipe out their debts and start their financial life anew and healthy.

Source: Fox News, "IRS to Tax-exempt Hospitals: Go Easier on Medical Debt Collection," Connie Prater, July 5, 2012