Not always. My mom had a quadruple bypass about 6 years ago during a gap year where she stopped working but didn't have Medicare yet. Unlucky. I think she was billed for around $180k.
She told them "I'm on Social Security for $1000/mo, I'll pay you $50/mo". It was basically that or sending it to collections and never getting a dime from a retiree. So they accepted and told her a "non-profit" paid for the doctor's portion of the bill, which was all but about $40k.
She'll probably be around another 10 years max, which means she'll end up paying about $10k of that balance.
Medical debt is the least concerning type of debt for most lenders. If you ever fall into this hole, don't sweat it. [Unsolicited advice.] Just let it go to collections. You'll get harassed for a little over a year. Debt older than a year is almost never pursued by collections agencies. After things quiet down start sending letters to the credits agencies saying the collections debt has been settled. The collections agency will usually slip up and not respond at some point and it'll be gone from your credit history.
I worked with somebody who at 23 was bitten by a cat and it got infected. She didn't want to seek medical treatment even though her hand swelled up like crazy--"I don't have insurance, I will get better". I basically forced her to go to the hospital and she ended up spending a couple of days in the ICU. They told her if she waited another day, she might not have made it.
Total cost, something around $23,000 I think. This is somebody who was making maybe $10/hr. They took a payment plan of around $15/month, so she will be paying it back for the next 128 years.
Another anecdote about my mom. A few months ago she was rushed to the hospital for symptoms of a pulmonary embolism. She spent 36 hours in the critical care unit. They couldn't determine what caused her episode; no clots, etc. They charged her $25k for that. That's how fucked up the situation is. A single night in a hospital that may save your life ends up costing almost what your kid/grandkid is paying for a year of college.
Recently she got a bill for $250 for the ambulance, which she paid, and another letter saying her bill for the hospital stay was settled. She told me she would have offered $15/mo had they held her to the $25k or told them to screw off if they didn't accept. They're not even bothering anymore.
> Medical debt is the least concerning type of debt for most lenders.
Just another data point, a large property management company I used to work for specifically exempted bankruptcies due to medical debt when calculating applicant credit scores.
I have a friend who sells debtor data for a living. He literally sells Excel spreadsheets of debtor data (name, address, SSN, amount owed, etc) to collections agencies for $5k-$25k a pop. He makes mid-six figures doing it. The quality of the data is what commands the price. He said the least desirable debt are debts older than a year and medical debt. He can't even give that crap away.
Also, if you're ever called by a collections agency, you should ask them to provide proof that they actually hold the debt you're obligated to pay. In some cases they've just bought the data, usually from another collections agency who couldn't collect, and they're trying to shake you down. Once you use the magic phrase "provide proof" they give up and stop hassling you, because they have no proof.
I'm not sure I believe that debt over a year old is not pursued. Anecdotal, but...
I've had 4 different cell phone numbers in my lifetime. All of them were still getting debt collection calls or still are up to 15 years later. I've had my current number for over 15 years. I'd love to meet Tanya who ran up the bills for my current number.
Also, I had my appendix rupture right after getting laid off and going on COBRA. I am still getting occasional calls about that even though the insurance eventually paid off. That was over 10 years ago.
COBRA is another scam. $1650 per month that my employer was paying ~$600 for.
Scumbaggery is rife in the insurance industry. The Rainmaker should be required watching...
> Just let it go to collections. You'll get harassed for a little over a year. Debt older than a year is almost never pursued by collections agencies.
I don't understand. Is there no penalty to not paying other than a hit on your credit score? Can't you end up with wage garnishments or liens or something like that?
It'll definitely show up on your credit report. The key is a lot of lenders supposedly will just look past it. Ultimately it's up to them if you get a loan or not, not just based on the number alone.
One caveat, you definitely want to contest the debt in writing regularly. If it goes away because the collector failed to respond you are fine. If it goes away because they "forgive" the debt, its seen as income by the IRS and you will pay taxes on it. So imagine the tax bill if 200K of "income" is added to your taxes one year.
Where I live (Arizona) there's a statute of limitations on consumer debt, think it's 2 years for random bills and 3 years for recurring payments...or something similar.
Ok but can't the hospital (or the collections agency) take you to court? Let's say you have 100k bill from the hospital that you just ignore. They sell it to a collections agency for 60k. You refuse to pay the collections agency. Now what happens?
Yes, the hospital or collections agency can sue you to try to garnish your wages. If they win, you're boned.
If they lose, or they never sue for garnishment, it's unclear what happens if you refuse to pay. From what I can tell, the debt disappears from your credit report after seven years, but the debt is still valid and they can still try to recover the money from you, but they won't be able to use the courts to do it.
However, there's always the option of declaring bankruptcy. Even if they garnish wages, declaring bankruptcy will wipe it away. Obviously, that's the nuclear option and will destroy your credit rating for seven years.
The software industry is doing this somewhat. I know of initiatives at my company where they'll assist with bootcamp tuition if you're interested in becoming a developer. It's up to the discretion of your manager (and theirs usually) whether or not you have a job waiting for you afterward.
Bootcamps are a decent alternative to a college tech degree. Instead of taking out $40k+ in loans, you can escape your poorly paid job by dropping $10k-$20k of your own (or your parents') money. It's usually worth it if you have the means, since your salary will probably double and you'll recoup the cost within a year.
Bootcamp students are basically useless when they graduate, but they can open an editor, write unit tests for dog.speak() and use git. The senior devs on the team they join end up training them. So it becomes like an apprenticeship system where the prospective apprentice shows serious interest by supplying a "modest" payment.
This sounds very similar to sub-prime lending behavior that occurred before the recent recession. I don't expect a different outcome this time, if the behavior continues.
The article paints a pretty bleak picture. My nieces (well, their parents) didn't have enough money to pay for a 4-year college. Instead of taking out student loans one decided not to go to college and the other one decided to join the Army for GI Bill benefits. The one in the Army has been having anxiety issues and they've started her on the path to medical discharge, which she is fighting.
It's really a shame that something we tell young adults is so necessary leads many of them to financial ruin or being a poorly paid servant to the government for years. My guess is that many of them will get sick of it and choose not to go, and the industry will have to adapt to employees with no higher education.
> It's really a shame that something we tell young adults is so necessary leads
We tell them it's necessary because it is for most people. The decades of data made this an indisputable fact: people with college degrees earned higher salaries, had better jobs, enjoyed much lower unemployment rates, and were generally better off than their under-educated peers.
The problem is not that we push people to attend college, the problem is entirely the cost of education.
The decades of data only make sense when you consider that a very small percentage of the population was attending college. Of course they were highly paid; they were rare.
If everybody has a college degree, then those skills aren’t rare and you won’t get paid highly for them. Salary is about how hard you are to replace, not how good/qualified you are.
The problem definitely is that we push people to college. You don’t need a college degree for 90% of the jobs out there and we’ve completely watered down what a college degree is because we wanted everyone to have one.
> If everybody has a college degree, then those skills aren’t rare and you won’t get paid highly for them. Salary is about how hard you are to replace, not how good/qualified you are.
I disagree. Your model only works under the assumption that the economy can only have so many jobs. If the US graduated 10x as many engineers from 1990 until now, the economy would be much larger than it is today. Which means that salaries may even be higher because despite a 10x increase in workforce, the demand for them may have increase by 15x.
This is an easily observable situation. Regions with concentrations of talent tend to have much higher salaries for such people than regions where that talent is scarce.
She told them "I'm on Social Security for $1000/mo, I'll pay you $50/mo". It was basically that or sending it to collections and never getting a dime from a retiree. So they accepted and told her a "non-profit" paid for the doctor's portion of the bill, which was all but about $40k.
She'll probably be around another 10 years max, which means she'll end up paying about $10k of that balance.
Medical debt is the least concerning type of debt for most lenders. If you ever fall into this hole, don't sweat it. [Unsolicited advice.] Just let it go to collections. You'll get harassed for a little over a year. Debt older than a year is almost never pursued by collections agencies. After things quiet down start sending letters to the credits agencies saying the collections debt has been settled. The collections agency will usually slip up and not respond at some point and it'll be gone from your credit history.