Equifax, Experian, and TransUnion, three of the nation’s, credit reporting agencies, recently announced that a few major medical collection debt reporting changes are on the horizon starting, on July 1,2022.
A grace period will be increased from six months to one year will be provided for consumers to allow greater time for them to address unpaid medical collection debt with insurance and/or healthcare providers, before it appears on their credit file, according to a press release. Additionally, some paid medical debt appearing on credit reports will be removed.
Beginning in the “first half of 2023,” Equifax, Experian, and TransUnion will not include paid medical collection debt on credit reports, if the amount is less than $500. The change focuses on supporting individuals who are facing unexpected medical bills.
“Medical collections debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” the CEO’s of the three companies said in the joint statement.
Although this new change reportedly will remove almost 70 percent of medical collection debt, which was sent to collections before the debt was satisfied, Americans who are facing tougher medical challenges may not find as much grace provided through the revision.
In early March, Kaiser Family Foundation (KFF) presented data from the national 2020 Survey of Income and Program Participation. Adults were questioned about 2019 medical bills, including the amount.
“The 2020 survey suggests Americans’ collective medical debt totaled at least $195 billion in 2019, though with quite a bit of uncertainty,” according to details provided by KFF.
Debt collection agencies often present a strain for consumers who are entangled in billing questions. In a March report, The Consumer Financial Protection Bureau (CFPB) pointed out the complexities, which are generated by medical debts in collections. Reduction of credit access; bankruptcy risk-increase; not accessing medical care; and employment challenges may result from credit reporting, even when billing errors occur.0
CFPB’s “Medical Debt Burden in the United States” findings also concluded that “Black and Hispanic communities, as well as people with low incomes, veterans, older adults, and young adults of all races and ethnicities, particularly suffer great repercussions, when medical bills are sent to collections. COVID-19 related health services were cited as a reason, which recently worsened the burden of medical debt and medical billing system errors.
Experian’s blog offers insight about how medical debt can impact a consumer’s credit score. Click here to obtain more information.