New York has taken a significant step to protect its residents from the financial repercussions of medical debt. Governor Kathy Hochul signed a new law on December 13, 2023, that prohibits hospitals, healthcare providers, and ambulance services from reporting medical debt to credit reporting agencies.
This landmark legislation, passed by the Legislature in June, aims to alleviate the burden of medical debt, which previously affected hundreds of thousands of New Yorkers, impairing their credit scores and hindering their ability to purchase homes, cars, or secure loans. The law declares any medical debt illegally reported to credit agencies as void.
The law’s enactment responds to a pressing issue in the state, where approximately 740,000 residents currently have medical debt on their credit reports. The impact is more pronounced among people of color, who are twice as likely to have medical debt reported to credit bureaus, and low-income individuals, who are three times more susceptible.
Despite the new law preventing the reporting of medical debt to credit agencies, healthcare providers can still pursue outstanding debts through lawsuits and debt collection agencies. However, they must now include a clause in any debt-collection contract explicitly forbidding the reporting of this debt to credit agencies.
This follows a 2022 state law, also approved by Gov. Hochul and lawmakers, which abolished the use of home liens and wage garnishments in collecting medical debts.
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