Senators Introduce Bill to Provide Relief to Americans Struggling with Medical Debt

Washington, D.C. – Senators Jeff Merkley (D-OR),  Byron Dorgan (D-ND), Chuck Schumer (D-NY), Robert Menendez (D-NJ), Dick Durbin (D-IL), and Tom Harkin (D-IA) introduced legislation today that will prohibit companies from using paid off or settled medical debt in assessing consumer credit scores.  The Medical Debt Relief Act will assist approximately 72 million Americans affected by medical bill problems and medical debt.

“It’s already incredibly difficult for families to pay off the high cost of medical treatments for serious injuries and diseases,” said Merkley.  “To add insult to injury, after families pay off their exorbitant medical debt, they continue to take a hit on their credit scores.  That’s simply unfair.  This bill will give families a fair deal and ensure that their future financial transactions won’t be negatively affected by a bad credit score just because of past medical debt.”

“This is a straight forward solution to a problem plaguing thousands of Americans,” Dorgan said.  “Right now, just one unresolved medical bill – whether or not it is being disputed – can damage a consumer’s credit score for years.  In other cases, patients who face costly treatments suffer the aftereffects of dealing with poor credit even after their debts are paid.  With this legislation, we are standing up for the American consumers who need protection from such practices.”

Currently, even medical debt collections that have been completely paid off or settled can still significantly damage a consumer’s credit score for years.  As a result, consumers can be denied credit or pay higher interest rates when buying a home or obtaining a credit card.  Because many medical bills are submitted first to insurance companies, consumers often do not learn that they are responsible for a medical bill until they hear from a collection agency, by which time their credit score has already suffered.

The Medical Debt Relief Act will fix this inequity by prohibiting consumer credit agencies from using paid off or settled medical debt collections in assessing a consumer’s credit worthiness.  In addition, the bill will require the creditor or credit rating agency to expunge the medical debt from the consumer’s record within 45 days from the day it is paid off or settled.