3 Changes to Reporting and Collection of Medical Debt

Starting on July 1, 2022, the three nationwide credit reporting agencies, Equifax, Experian and TransUnion have agreed to three changes in how medical collection accounts are reported.

The three credit reporting agencies will no longer include paid medical collection debt on consumer credit reports. Furthermore, the time period before unpaid medical collection debt will appear on a consumer’s report will be increased from six (6) months to one (1) year. This change is anticipated to give consumers more time to work with insurance and/or healthcare providers to address medical collection debt before it appears on credit reports.

Additionally, starting in the first half of 2023, medical debt collection accounts under at least $500.00 will no longer be included on consumer credit reports.

This change in reporting is a result of the Consumer Finance Protection Bureau’s released research on medical debt and how it impacts a consumer’s financial security.

In addition to the above, there are several pieces of legislation that are pending, that if passed, includes language that prohibits the collection of medical debt by debt collectors for the first two years and credit reporting debt arising from any medically necessary procedures. This would be within the Comprehensive Debt Collection Improvement Act (H.R. 2457).

Further, the National Defense Authorization Act for Fiscal Year 2022 included amendments to the House version that would prohibit the collection of medical debt for two years for servicemembers.

These new steps evidence an even greater movement that will require creditors to be very careful in how medical debt is reported and collected. Failure to comply with these new provisions, if passed, could lead to violations of many Federal Consumer Protections statutes and creditors would be well served to develop best practices sooner rather than later. It is likely, that with the CFPB’s backing, this legislation will pass in some format.

Please contact Vincent J. Averaimo for further inquiries.