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Credit bureaus to eliminate 70% of medical debt tradelines

Federal Issues CFPB Medical Debt Consumer Finance Credit Report Credit Reporting Agency

Federal Issues

On March 18, three major credit bureaus released a statement announcing that they are eliminating nearly 70 percent of medical collection debt tradelines from consumer credit reports. According to the statement, beginning July 1, “paid medical collection debt will no longer be included on consumer credit reports. In addition, the time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.” Finally, starting in 2023, medical collection debt under $500 will no longer be included on credit reports issued by the three credit bureaus.  The statement noted that the decision to remove medical tradelines from credit reports was taken “after months of industry research.”

The same day Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, issued a statement supporting the credit bureaus’ announcement regarding medical debt. Brown noted the changes followed a CFPB announcement that it would hold consumer reporting agencies accountable for inaccurate reports (covered by InfoBytes here). Brown expressed his view that the CFPB is taking “real action for consumers” and noted he intends to collaborate with the CFPB to “address the growing burden of medical debt, protect working families, and hold bad actors accountable.”

Earlier on March 16, the CFPB a released a data spotlight regarding senior adults (those age 65 and older) and medical debt. The survey used information from the 2018 “FINRA Foundation National Financial Capability Study,” which was administered online to a sample of 27,091 adults ages 18 and older. In total, there were 5,166 respondents ages 65 and older. The study found that 8.5 percent of adults over 65 carried medical debt. The Bureau suggested this outcome “is likely the result of older Americans having the highest health insurance coverage rates of all age groups due to their eligibility for coverage through Medicare,” but referenced Medicare coverage as “limited.” The data spotlight also pointed out that, “[m]edical debt is more common among older people of color, older adults with incomes near the poverty line, people who are uninsured, who are currently unmarried, and who don’t own a home,” specifically noting that “[n]on-White older adults and older adults who are not married more often report medical debt than their counterpart.” The Bureau observed that 76 percent of seniors with medical debt are retired, while 17 percent are still employed and nearly 7 percent are disabled, sick, or unable to work. The Bureau noted that a recent job loss, declining health, or the onset of a disability may explain this data. The survey also found that older adults who had medical debt were significantly more likely to report significant cost-related health care challenges and hardships than others in the same age group without medical debt. More than 33.8 percent of older adults with medical debt have skipped medical treatment or a doctor’s visit due to cost, but just 6 percent of seniors without medical debt skipped medical treatment or a doctor’s visit due to cost, according to the survey data.

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