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Action Taken to Eliminate Medical Debt Impact on Credit Scores

finger pointing to color ring with credit score in middle

1.5. minute read

The Biden Administration has announced a plan to ban medical debt from credit scores. Currently, having a low credit score can make it more difficult for a person to rent an apartment, get hired, or receive a loan. This change could impact tens of millions of Americans who currently have unpaid medical bills.

A Kaiser Family Foundation analysis found that credit reporting is the most common collection tactic used by hospitals to induce patients to pay their bills. However, researchers at the Consumer Financial Protection Bureau (CFPB) have found that medical debt is not a reliable predictor of creditworthiness. Despite this, medical bills account for about 58% of all uncollected debts reported to credit bureaus.

In 2022, the three largest credit agencies announced that they would no longer include some medical debt on credit reports, but this excluded patients with larger medical debts. This has prompted advocacy for further action by groups like the National Consumer Law Center and Community Catalyst. Opponents argue that regulations could prevent medical providers from getting their bills paid and could lead to upfront payment requirements for care. They also note that looser credit requirements could enable consumers with debt issues to get loans they can't repay.


Next Steps

The Biden Administration will develop this proposed regulation over the next year. It is likely to be challenged by industry opposition and make take awhile to enact new regulations. Download the bulletin for more details.

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National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Steve Smith

Steve Smith

Steve Smith, Employee Benefits Consultant for National Insurance Services, has his energy level permanently set at “high.” His maxim is “work hard, play hard.” Steve’s an expert in getting groups of people working together for a higher cause. Minnesota schools, cities, and counties rely on Steve’s unique and creative ideas of engaging employees in their own health and wellness to lower utilization trends. He has 20+ years in the health insurance field doing compliance, cost mitigation, utilization, analytics, wellness plans, and strategic planning. Steve is a licensed insurance agent and holds the designations for Managed Healthcare Professional (The Health Insurance Association of America), Certified Patient Protection and Affordable Care Act Professional (National Association of Health Underwriters), and Group Benefits Disability Specialist (Hartford School of Insurance). He specializes in Employee Benefits Consulting for Minnesota schools, cities, and counties including fully insured, self-insured, and stop-loss plans.