Merkley intros bill to protect patients’ credit scores

Sen. Jeff Merkley, D-Ore., introduced legislation, the Medical Debt Relief Act of 2019, on Tuesday, saying he wants to make sure Americans’ credit scores are not left in ruin simply because they had the misfortune of needing costly medical care.

The Medical Debt Relief Act is cosponsored by Sens. Richard Blumenthal (D-CT), Elizabeth Warren (D-MA), Bob Menendez (D-NJ), and Dick Durbin (D-IL).

“Going through an intense medical event is stressful enough,” Merkley said. “The last thing healing families need is to be financially punished for years on end, making it even harder for them to get back on their feet. It’s time for Congress to help the tens of millions of Americans who have paid off their medical debt by restoring their credit opportunities.”

“Medical challenges should not fatally infect financial health. Americans suffering from injury or illness should be free to focus on their recovery, without financial distraction,” said Blumenthal. “Medical debt is not the same as credit card debt–getting injured or sick shouldn’t permanently prevent an American from buying a home or a car.”

“Far too many families are one bad diagnosis away from financial ruin,” said Warren. “The Medical Debt Relief Act would protect Americans who need medical care from also suffering from long-term damage to their credit and financial future.”

“All the financial planning in the world can’t prepare a family for a sudden medical emergency or unforeseen illness — and the bills that come with them,” said Menendez. “And these consumers shouldn’t be denied credit or be forced to shell out more money in interest payments just because they got sick or injured. That’s not fair. And we need to fix it. We’re introducing the Medical Debt Relief Act to keep medical debt from continuing to harm consumers’ credit scores even after it has been paid off or settled.”

“Medical bills are bankrupting Americans every day, many of which come from unexpected emergencies, sickness, or treatments. It’s not fair that people are seeing their credit scores damaged because of unforeseen medical circumstances, and our bill gives people more space for recovery so that these medical situations do not result in financial ruin,” said Durbin.

One in six Americans has a past-due health care bill on their credit report, and medical debt is the number one reason why Americans file for bankruptcy. Often medical debt can be a significant financial burden that, unlike credit card debt or loans that consumers take on willingly, is a result of an unexpected accident or illness outside of the consumer’s control.

Many consumers don’t realize that medical debt can cause significant long-term damage to their credit scores. But once unpaid medical bills are assigned to collections, they result in derogatory marks that scar credit scores for years.

How the Medical Debt Relief Act Works

This legislation would defer derogatory marks on credit scores for medical debt collection by one year, giving patients time to pay their medical bills before their records are affected. During this one year-year period, a consumer may communicate with an insurance company to determine coverage for the debt, and apply for financial assistance. In addition, the Medical Debt Relief Act will prohibit consumer reporting agencies from reporting an individual’s medical debt for one year. That means consumers will have one year to settle or pay medical debts without reporting the debt to a reporting agency.

The Medical Debt Relief Act also requires all paid-off or settled medical debt to be removed from consumers’ credit reports and credit scores, ensuring that consumers hit by difficult medical expenses aren’t haunted by their medical debt for years after it’s been paid off.

This legislation is also supported by the National Consumer Law Center (NCLC) and the National Patient Advocacy Foundation (NPAF).

The full text of the Medical Debt Relief Act is available here.