New York yesterday became the second state to ban the credit reporting of medical debt, with the new law going into effect immediately after it was signed by Gov. Kathy Hochul.
What it Covers: Under the law, medical debt is defined as an obligation or alleged obligation of a consumer to pay any amount related to the receipt of health care services, products or devices provided to a person by a hospital licensed by the state, a health care professional or an ambulance service. Medical debts do not include debts charged to a credit card unless the card is issued under an open-ended or closed-end plan offered specifically for the payment of health care services or products.
- Not only are healthcare providers barred from reporting unpaid medical debts, but they also must included a provision in their contracts with collection entities prohibiting the collector from reporting any information about the debts to a credit reporting agency.
- Any debt that is reported to a credit bureau will become void.
The Big Picture: Much has been done at the federal level with respect to limiting the reporting of medical debts to the credit reporting agencies. And the Consumer Financial Protection Bureau is moving forward with a proposed rule that would ban medical debts from being included in consumers’ credit reports.
- Colorado is the only other state to so far enact a law banning the reporting of medical debts.
The Last Word: “I am so grateful to Governor Hochul and our coalition for standing together to relieve New Yorkers from the burden of medical debt’s impact on credit reports,” said State Sen. Gustavo Rivera, the bill’s sponsor. “The Fair Medical Debt Reporting Act will stop medical debt from damaging patients’ financial stability and mitigate the fear of seeking medical care due to cost in our most vulnerable communities. I look forward to working together to eradicate medical debt and ensure quality, affordable healthcare for every New Yorker.”