Medical debt will no longer appear on New Yorkers’ consumer credit reports under a new state law.
Gov. Kathy Hochul on Wednesday signed the bill, which passed the Legislature in June. It prohibits hospitals, health care providers and ambulance services from reporting medical debt to credit reporting agencies. Any medical debt illegally reported to a credit reporting agency will be voided, the new law states.
Previously, hundreds of thousands of New Yorkers had medical debt that was reported to credit bureaus, negatively impacting credit scores and making it more expensive – or impossible – to buy homes, cars or secure loans.
How bad is medical debt in New York?
About 740,000 New Yorkers currently have medical debt on their credit reports, with people of color twice as likely to have medical debt referred to a credit bureau and low-income people three times more likely, the governor’s office noted, citing a 2023 Urban Institute study.
How will medical debt be tracked in NY?
Hospitals and healthcare providers will still be able to pursue medical debt through lawsuits and collection agencies under the new legislation.
However, the new law states that healthcare providers must include a provision in any debt collection contract that makes clear the prohibition on reporting medical debt to a credit reporting agency.
Previously, New York lawmakers and Hochul passed a state law in 2022 that ended the use of liens and wage garnishment in medical debt collection.