Before a loved one passes, they may spend some time in the hospital. Hospital bills and treatment expenses can add up quickly, especially with a progressive illness like cancer that requires expensive care. Debt collectors may start calling you at all hours, even while experiencing bereavement.
Rest assured that the law is in your favor. In most cases, spouses and family members are not directly responsible for paying medical debt after death. Instead, New York provides a legal pathway for hospitals and medical facilities to recover payment from the deceased’s estate. If a debt collector is harassing you for your loved one’s medical debt, contact the Law Office of Andrew M. Lamkin, P.C. An experienced elder law attorney like Andrew Lamkin can explain your rights and help you stop invasive debt collection calls.
What Happens to Medical Debt After Death?
Even if a loved one had health insurance, chances are that they left at least some medical expenses unpaid at the time of their death. The medical provider has a right to recover the costs of their medical care. The provider will typically make a claim against the deceased’s estate to recover these costs. A creditor has seven months to file a claim against the estate, including for medical bills.
The estate collects all the assets in the deceased’s name, such as bank accounts or cars. The estate goes through probate court under the control of a fiduciary, known as an administrator, executor, or personal representative. The fiduciary will collect the deceased’s assets, assess the creditor’s claims, and pay estate taxes before distributing the remaining assets to the family. If your loved one had a will, the distribution would follow their wishes. Otherwise, the distribution will follow the state’s intestacy laws. An elder law legal practitioner can answer your questions about how distribution will occur with your family’s assets.
Who Is Responsible for Medical Debt After Death?
If the estate’s assets were not enough to cover the medical bills, they usually go unpaid, and the provider will write them off. There are several exceptions to this general rule, and a provider will likely try to collect on the debt regardless. The exceptions to look out for are:
- You signed a document accepting responsibility for the medical bills;
- You are the spouse, and you live or were married in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin);
- You live in a state where the law requires the estate executor to pay an outstanding bill out of property jointly owned by the surviving and deceased spouse.
Often hospitals will have a spouse or other family member sign papers at admission. Signing these papers may obligate you to pay the bill if left unpaid, so you should read them carefully. States with community property laws consider property owned by one spouse to be marital property. The estate can collect property placed in one or both spouses’ names in these states. New York does not follow community property laws. Rather, New York law says that property owned by one spouse is not necessarily owned by the other.
The Doctrine of Necessities
New York recognizes the doctrine of necessities. The doctrine requires spouses to support one another. A spouse must pay for necessities such as food, clothing, shelter, and medical care. New York courts limit creditor recovery to cases where they can demonstrate that:
- Necessaries were furnished on the non-debtor spouse’s credit, and
- The non-debtor spouse can satisfy the debt.
If the provider did not use your credit to guarantee your spouse’s bills and you do not have the means to pay, a medical provider cannot pursue repayment through this doctrine.
New York law also allows Medicaid to recover its payments from the recipient’s estate. The law allows repayment from certain assets that may otherwise not be part of the estate because the spouses jointly owned them. These assets include jointly owned bank accounts, securities, real property, life estates, trusts, annuities, and life insurance payouts.
Medical Debt After Death and Debt Collectors
Under the Fair Debt Collection Practices Act (FDCPA), debt collectors may contact the estate’s executor and certain family members of a deceased person to discuss the debt, including the spouse, parent (if the deceased was under 18 years old), and guardian. If collectors contact other family members, they are allowed to obtain the name, address, and telephone number of the deceased person’s spouse, executor, administrator, or whoever has the power to pay the deceased’s debts. They cannot discuss any other details of the debt.
You have the right to ask the debt collector to stop calling you. Under the law, debt collectors may not harass, oppress, or abuse anyone. For the collector to stop calling, you must send them a letter. Once the collection company receives your letter, it can only contact you to confirm it will stop contacting you from then on or tell you it plans to take a specific action, like filing a lawsuit. However, even if you ask collectors to stop calling, the responsible party must still pay the debt.
How to Settle Medical Debt After Death
Sometimes the law says you are responsible, but you cannot pay the unpaid bills. In that case, the best thing to do is work out a payment plan with the provider. Medical providers have three years to sue to recover the medical debt. However, medical providers understand that unpaid medical debt is a significant cause of bankruptcy (one study estimated that medical debt caused 58.5% of bankruptcies). They know that you may not be able to pay even if they obtain a judgment. Although the provider would prefer you pay in full, they prefer some payment over nothing. Your lawyer can help you negotiate a payment plan that works for you.
How Can an Elder Law Lawyer Help Resolve Medical Debt After Death?
A medical provider can start pursuing medical debt immediately after a loved one’s death while you are still grieving. If a debt collector is harassing you, you should not hesitate to contact an attorney. Andrew Lamkin has focused his practice on elder law, estate planning, and special needs planning, including wills and trusts, Medicaid planning, estate administration, and residential real estate transactions. He has the compassion and experience to support you while you manage the legal and financial aspects of your loved one’s death. Trust Andrew Lamkin to help you resolve any unpaid medical debts and ensure that your loved one’s estate will be distributed properly. Contact our office today to learn more.