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The payments aren’t late, but the debt collectors are calling. What does it mean?

The payments aren’t late, but the debt collectors are calling. What does it mean?
Debt collectors who call about bills that aren't overdue may be legally handling the billing for medical providers and others. (Oleg Kalina / Getty Images/iStockphoto)

Dear Liz: In the last few months, I have received collection calls and emails for payment, sometimes before I even got the invoice and in every case before payment was due. For example, on Sept. 25 I was emailed for the second time for payment on an invoice with an Oct. 17 due date. Some but not all of these communications relate to medical bills. Is this legal?

Answer: Probably. Most companies wait until a bill is seriously overdue before turning it over to collections. Some hire collection agencies much sooner, however, and a few — including some medical providers — turn over their whole accounts receivable process. That means the collectors are responsible for regular billing, not just debt collection.

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It’s unpleasant to hear from collectors, especially on an account that isn’t overdue, but you’re not likely to face credit score damage as long as the bill gets paid on time. Even if it’s past due, there is now a 180-day waiting period before unpaid medical debts can show up on people’s credit reports. (The clock starts on the bill’s first due date.)

Collectors may justify their “outreach” calls and emails by saying many people are confused by medical billing and put off paying because they think insurance will take care of the bill. That doesn’t make such contacts less annoying for those who pay on time.

Consider letting the medical providers and other companies know that you don’t approve of these tactics. Some may care enough about customer service to change their billing approach, or require the collection company to stop the premature contacts.

A surviving spouse gets a pension surprise

Dear Liz: I have a question about my late husband's pension. He was with a company for 25 years and retired early with a defined benefit pension of about $3,700 per month. When he died four years ago, the pension stopped. The company said it was a “single life” pension, but when I tried to get records proving that, they said they had no records. Do you think I have any recourse to petition for some kind of pension? Should I find a lawyer and if so, what kind of lawyer handles this type of thing?

Answer: Traditional pensions typically give workers two options: a single life annuity, whose payments are higher but cease when the recipient dies, or a joint-and-survivor annuity that continues for a surviving spouse’s lifetime. When someone is married, the default option is supposed to be the joint-and-survivor annuity unless the spouse signs a waiver giving up rights to lifetime income. If the company can’t or won’t provide proof of such a waiver, then you’d be smart to get legal help to pursue the issue.

You may be able to get free legal assistance through the U.S. Administration on Aging's Pension Counseling and Information Program, which currently serves 30 states. If you live in one of the states that isn’t served, you may be able to get help by visiting PensionHelp America, a site run by the nonprofit Pension Rights Center.

Small firms have special Medicare Part B rules

Dear Liz: You recently answered a question about whether someone 65 or older with employer-provided health insurance needs to sign up for Medicare Part B, which covers doctors’ visits and requires paying premiums. Your answer was correct for an employee of a large employer. If the employer has 20 or more employees on a typical business day, then the group insurance coverage is primary when the employee has both Medicare and group insurance. So the employee does not need to purchase Medicare Part B. However, if the employer has fewer than 20 employees on a typical business day, then Medicare is primary for the employee. In that situation, the employee should buy Medicare Part B. The group health plan will not pay what Medicare should have paid had the employee elected Part B. Your answer needs the appropriate clarification.

Answer: The question was from a spouse who wanted to make sure that the rules covering her husband — the employee — also applied to her, which they do. The employee was told by his employer that he would not need to purchase Medicare Part B until he retired (and even then, there is an eight-month grace period before penalties start to accrue). That applies to spouses covered by the health insurance as well.

But you’re correct that smaller companies have different rules. It’s always a smart idea to seek clarification directly from a company’s human resources department and the health insurer as well as from the Medicare helpline at (800) MEDICARE ([800] 633-4227).

Liz Weston, certified financial planner, is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the "Contact" form at asklizweston.com. Distributed by No More Red Inc.

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