Good news is coming for those dealing with health care debt. After September 15, 2017, debt for medical care will be handled differently by the credit reporting agencies (CRA). The big three CRAs, Experian, Equifax, and TransUnion, will provide a 180 day abatement or grace period before reporting medical debt.
This has come as a result of two things. First, the Consumer Financial Protection Bureau published a report that showed large numbers of consumers were being unnecessarily penalized for medical bills that resulted from errors in the billing process. Delays between the invoice date and the date when insurance companies paid a claim caused bills to be reported past due. The CFPB Report is dated December 11, 2014, and it found the following highlights:
- Fifty percent of all reported past due debt is for medical debts.
- Twenty percent of consumer reports show overdue medical debt.
- Medical debts are the only debts reported on histories of approximately 15 million consumers.
- Consumer reports indicate the average medical debt is $579.
Second, the Attorney General for the State of New York settled an investigation of reporting practices of the CRAs that included major changes in medical bill reporting. This was followed two months later by a similar settlement reached with 31 other states. The settlements make some major changes in credit reporting practices connected with medical bills.
The changes are expected to eliminate many of the harmful effects caused by the billing and payment practices of medical care providers and health insurance companies. The new, six-month grace period is intended to ensure that consumers have sufficient time to resolve disputes with insurers that often result in payment delays. More than that, the credit bureaus will remove medical debts from consumers’ credit reports once they have been paid by an insurer.
While announcing the second settlement, the Attorney General for the State of Ohio outlined a number of improvements that are contained in the global agreement. These changes will be implemented, for the most part, in all fifty states.
- Those who furnish data to the CRAs will be held to higher standards, and states will be entitled to receive information about them.
- Direct marketing to consumers has been given new limitations, CRAs are required to inform consumers that purchasing credit monitoring or related products is not required to dispute their credits reports.
- Enhanced guidelines to protect consumers who dispute credit reports, including a process for handling disputes for involving identity theft, as well as information sharing between the CRAs for such cases.
- Prohibitions against reporting fines and tickets.
- Prohibits CRAs from placing ads on their websites.
We will continue to report on these improvements. For now, keep in mind that the new procedures will help millions of people. You may be one of them. Better credit scores will allow you and millions of others to get better loans, insurance rates, and other products and services that are priced according to credit scores.