Credit Relief From Settled Medical Debt

February 21, 2013 in Credit Reporting, Medical and Healthcare by Brad Council

Democratic Oregon Senator Jeff Merkley reintroduced the Medical Debt Responsibilities Act as Senate Bill 160 in January of this year.  This bill was previously introduced last year, but died in the Senate Banking Committee. Senator Merkley is joined by Senators Dick Durbin (D-IL), Chuck Schumer (D-NY), Tom Harkin (D-IA), Sherrod Brown (D-OH), Robert Menendez (D-NJ), and Richard Blumenthal (D-CN) in his introduction of the bill.  So far the bill has been read twice and referred to the Committee on Banking, Housing and Urban Affairs.

The Medical Debt Responsibilities Act basically requires any medical debt that has been paid in full, collected or settled to be expunged from the consumer’s credit report within 45 days of settling the account.  The Senators have reasoned that medical debt is unplanned debt that has debatable significance in calculating a debtor’s reliability for repaying deliberate debts.  The bill states that “Americans do not choose when accidents happen or when illness strikes.”  The Senators are making the argument that due to the involvement of insurance companies and the complex process of medical billing the consumer’s credit rating is often damaged before the consumer even becomes aware that they have a delinquent medical debt.  In Senator Merkley’s statement about the bill he declared that “Oregonians shouldn’t have to pay more on their mortgage or their credit card simply because they had the bad luck to need medical care. Unforeseen accident or illness can happen to any one of us.  We can’t change that fact, but we can change the law so that responsible working families aren’t hit with unfair credit reports for years after medical debt has been paid off.”

This piece of proposed legislation should not be misconstrued as a law that lets Americans off the hook for their medical debts.  If passed, the Medical Debt Responsibilities Act will not remove all medical debt from a person’s credit history and it does not excuse non payment of medical bills.  This bill simply provides relief to those who have taken responsibility for their debt and have fully settled their accounts.

Many thanks to Brittany Page for her contributions to this article.  Brittany is a paralegal with Slovin & Associates Co., L.P.A.