New law will keep medical debt off credit reports
STATE HOUSE – Legislation sponsored by Rep. Mary Ann Shallcross Smith and Sen. Melissa A. Murray to protect Rhode Islanders from credit problems resulting from medical debts has been signed into law.
The legislation (2024-S 2709A), 2024-H 7103A), which Gov. Dan McKee signed June 24 following Assembly passage June 11, will prohibit debt collectors from reporting all medical debt to credit bureaus. It also sets rules for communication with consumers, false and misleading representation by debt collectors and a prohibition against collections during insurance appeals. The bill will take effect Jan. 1.
“Medical debt is a growing and persistent problem that so many of our friends and family consistently face,” said Representative Shallcross Smith (D-Dist. 46, Lincoln, Pawtucket). “Unlike other types of debt, where people spend beyond their means, medical debt occurs because people have the misfortune of getting sick. This bill looks to provide compassion and relief to Rhode Islanders by instituting common-sense reform.”
The consumer-protection bill was included in the Rhode Island HEALTH initiative (Holistic Enhancement and Access Legislation for Total Health) put forward by Senate leaders to improve health care access and affordability in Rhode Island.
“In a recent survey by healthcare.com, all living generations reported that medical debts had harmed their credit scores, with millennials reporting the highest incidence, at 52 percent. Medical debts have significant long-term financial consequences, preventing individuals from getting home loans or other credit they need and causing some to make harmful sacrifices such as not paying rent or utilities or buying food or medicine. The stress they cause can exacerbate a person’s health problems further,” said Senator Murray (D-Dist. 24, Woonsocket, North Smithfield). “This bill is a measure to prevent medical debt from sending Rhode Islanders into a financial downward spiral for something over which they had no control.”
Medical bills are among the top reasons underlying bankruptcy among Americans. A 2019 National Institute of Health study found that 66.5% of bankruptcy filers who responded indicated that medical expenses or problems contributed to their bankruptcy.
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