23-04-2025
Medical Debt Will No Longer Affect Credit Scores for 300,000 Americans
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Lawmakers in Washington have approved a bill that stops collection agencies from reporting medical debt to credit agencies.
Why It Matters
Many Americans struggle with medical debt, which can affect their credit scores and in turn their ability to borrow the funds necessary to buy a house or car. According to KFF Health, in 2021, 6 percent of U.S. adults, or 14 million people, owed more than $1,000 in medical debt, while about 3 million people owed medical debt of more than $10,000.
In Washington, the outlet reported, 380,000 people carried medical debt between 2019 and 2021.
What To Know
On Tuesday, Governor Bob Ferguson signed legislation banning medical debt from appearing on credit reports into law, after the proposed bill passed both the Washington House and Senate.
According to an August 2024 report by Northwest Health Law Advocates, about six in 10 Washington adults could not pay an unexpected $500 medical bill, and about 30 percent said they lived in a household with medical debt, even if they had health insurance.
Fifty-seven percent of surveyed Washingtonians said they had avoided seeking medical treatment or modified their use of prescriptions in the prior year because of the cost.
In January, the Trump administration blocked a similar rule to eliminate medical debt from credit reporting that the Consumer Financial Protection Bureau had finalized. The rule was projected to boost credit scores for 15 million Americans by an average of 20 points.
A stock image of a medical bill arranged with U.S. dollars and a stethoscope.
A stock image of a medical bill arranged with U.S. dollars and a stethoscope.
GETTY
What People Are Saying
Washington state Senator Marcus Riccelli, who co-sponsored the bill, said in a news release on Tuesday: "One of the top concerns in my district is rising costs, especially when it comes to health care. This bill will ensure that people in our state who have a medical emergency will be better protected from a credit rating change that can threaten basic needs like buying a car, renting an apartment, or even getting a job. No one should have to endure financial ruin to seek life-saving care, especially when so many people are struggling to afford the basics."
Washington Governor Bob Ferguson said on X, formerly Twitter: "Medical debt is a significant issue for many Washingtonians. SB 5480 prohibits the reporting of medical debt to credit agencies. If it is reported, it will be void and unenforceable. This doesn't erase medical debt, but it lessens impact to credit scores."
Adam Zarrin, the director of state government affairs for the Leukemia & Lymphoma Society, said in a news release: "Medical debt isn't a choice—it's a consequence of rising health care costs. Thanks to Gov. Ferguson and Sen. Riccelli, thousands of Washingtonians can finally breathe easier, break free from crushing medical debt, and focus on their health and families."
What Happens Next
The legislation is scheduled to take effect on July 27.
