By Ana B. Ibarra | CALMatters
Everyday people across the country skip medical care because of cost. Those who do seek medical help may end up with a balance they can’t pay off. That debt can hurt people’s credit scores, resulting in long-term financial burdens.
Starting Jan. 1, a new state law will prohibit health providers and debt collectors from reporting medical debt information to credit agencies. That means unpaid medical bills should no longer show up on people’s credit reports, which consumer advocacy groups say is a boon for patients with debt.
Here’s why: While the law will not forgive someone’s debt, by keeping it off credit reports, it might provide some reassurance that a hospital stay or trip to urgent care won’t later affect their credit standing. Lower credit scores usually result in higher interest rates and make it harder for people to qualify for a home rental, a car loan or even employment.
During legislative hearings, the law’s author, Sen. Monique Limón, a Democrat from Santa Barbara, contended that because people don’t choose to have a medical emergency or illness, this type of debt should not count against them. Supporters also argued that medical debt is more prone to inaccuracies because of billing mistakes by health providers and insurers.
