My husband is currently retired and his only income is a small pension from the state of Maryland when he was a CO, VA disability checks (100% service connected) and social security disability checks. I work full time and make about $80,000 a year with salary and quarterly bonuses.
He has had several hospitalizations over the past few years. We just recently received a new explanation of his private insurance benefits through the state of Maryland and it appears they took back the money they originally paid the hospital and now, almost a year and a half later, the hospital is sending us new bills for these visits. which totaled almost $10,000.
My first question is: is this even legal to do?
My second question is, if we just don’t pay him and leave him in collection, can his disability checks or his pension be garnished? Can they go after me for his medical debt and garnish my wages? Thanks in advance.
— Swimming in medical debt
Dear Swimming,
Insurance companies have the right to accept back payments made to service providers in error. Under Maryland law, they only have six months after the initial payment to cancel it, but they can have up to 18 months if the cancellation is based on your spouse having access to other insurance that would cover the service (called coordination of benefits or COB) . These rules vary by state.
If you believe his insurance plan should cover the services, you can appeal to your insurance company for a chance to overturn their decision. If you do this, notify your service providers in the meantime so they don’t send your bills to collections.
What happens if you don’t pay the medical bills?
Regardless of the source of your insurance, bills are owed to service providers—hospitals, doctors, labs, etc. – so these are most likely private companies. (Unless he received services from a VA hospital or clinic; those are owned and operated by the federal government.)
When you owe a debt to a private company — including a debt collector — they have to sue you to win the right to garnish your wages; you should not be blinded by it. Your spouse will need to get a summons to appear in court where they have the opportunity to fight or plead whatever they want. Wage garnishment should be a last resort; he may be able to negotiate an agreement so that he can eliminate the debt with a lower lump sum or payment plan.
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Maryland is not a community property state (as nine states are), so you are not responsible for your spouse’s debts. A debt collector cannot win the right to garnish your wages in a lawsuit against them. However, they may consider your total household income as part of your spouse’s resources when deciding on a settlement or monthly payment amount.
As of April 2023, the major credit bureaus will no longer include medical debt that is less than a year old or any individual bill that is under $500 on your credit report, so the debt will have less of an impact on your credit rating than it may have in the past.
Dana Miranda is a Certified Personal Finance Educator®, author, speaker and personal finance journalist. She writes Healthy richnewsletter on how capitalism affects the way we think, teach and talk about money.
5 companies that send people money when they ask nicely
When you log into your bank account, what do your savings look like? It’s probably not as good as you want it to be. It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down or you have a sudden medical bill?
Ask one of these companies to help…