Medical expenses are increasing all the time and unfortunately consumers who are in need of medical procedures not covered by insurance plan are left with few options for financing. The credit card industry took note of the consumer need and acted. Several health care credit cards were developed and marketed to consumers who need to finance medical debts. Recently, reports have been surfacing that the cards aren’t what they appear to be and it has reached the ears of a prominent attorney general.

Attorney General Andrew Cuomo of New York has begun an investigation after hundreds of consumer complaints have come in. The Attorney General’s office has received correspondence from consumers who stated dentists and doctors have encouraged their patients to apply for the cards. The investigation encompasses the providers who have been pushing consumers to finance procedures including cosmetic surgery, dental work, and even veterinary services that were not covered by insurance plans on their health care credit cards. Cards are being sponsored by a number of providers including GE Money’s CareCredit card, Citibank Health Card, Visa Health Benefits, and Chase’s Health Advance.

Early investigation reveals that providers are given incentives to push the card use on patients. For instance, CareCredit will charge a provider a fee to offer the card to patients and if the provider brings in business, part of the fee is refunded. Providers received payment within two days of the charges being made thereby increasing the incentive to promote the cards.

Consumers have been reporting feelings of being misled with many not even understanding they are applying for a credit card when trying to obtain financing for procedures. Consumer advocacy group Consumers Union stated that health care providers are marketing high-interest health care cards to their patients but aren’t providing proper disclosures or information about the reality of the financing.

So far, 10 providers that market the GE CareCredit card have been subpoenaed and medical associations that associate with the cards are also being asked to explain their stake in the cards. GE Money has received a subpoena that requires them to provide a list of customers. To date, the GE card is accepted by over 125,000 health care providers across the nation.

Meanwhile, customers are left with high balances on a high interest credit card they had no interest in applying for or the capability of paying off after the procedures have been completed. Due to the lack of disclosures, patients are seeing decreases in their credit scores caused by the high, unpaid balances. The Attorney General stated that health care debts are the leading cause of individual bankruptcy cases in the country and the health care credit card situation is only going to add to the burden.

Health care credit cards have been around for some time now and have become a last resort for people who are struggling to come up the cash to have expensive medical procedures done. Many cards offer promotional incentives to pay off balances quickly but after the promotional period ends, the interest rates rise considerably and consumers are left in a financial bind.

Experts recommend that medical debt is never paid for by credit. For medical procedures that can’t wait, a deal can usually be negotiated between the patient and the hospital. If the bill is paid by credit card, consumers are left with the penalties and fees incurred in addition to the original debt.

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Tags: Credit, Credit Cards