New York: Medical Collections Can No Longer Be Reported To Credit Reports

NY Governor Hochul has signed four new laws, the interesting one from our perspective is that medical collections can no longer be report to a consumers credit report (Legislation S.4907A/A.6275A). There has been a lot of changes to how medical debt has been reported recently (for example debts under $500 are no longer reported nationwide and debts over $500 aren’t reported for a full year).

It’s important to remember that medical debt and other debt are not equivalent. This is mostly due to the fact that medical debt is often unplanned and unavoidable. NY also recently made it so consumers have 90 day grace period for redeeming credit card rewards.

Hat tip to CardRight

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Burgers? (@guest_1759470)
December 16, 2023 08:52

It’s a positive move but they’re ignoring the elephant in the room of price transparency. Force providers to post all prices or take away their tax breaks.

mark (@guest_1759551)
December 16, 2023 11:50

The issue is not the providers, the issue is the insurance companies (government and private). Providers for cash-only clinics often do provide their prices upfront (or a flat fee). Even for non-cash only clinics you can often ask them how much it would cost to pay out of pocket. The issue is that insurance companies have their own terms/pricing that are in their contracts with providers. Either the provider complies or they cannot accept the insurance. Most people are also not paying full amount out of pocket when they use their insurance, they have copay/deductible/coinsurance/etc.

I am not even sure what “tax breaks” you are talking about, but the issue is not the healthcare facilities, it is the massive government bureaucracy surrounding healthcare. If you do not want to deal with insurance, there are many cash-only options out there with much simpler pricing. The issue is that with laws like Obamacare it has become increasingly difficult to escape the system and costs have skyrocketed due to subsidization of care for certain groups.

Russ (@guest_1759366)
December 16, 2023 00:17

It’s not just that medial debt is unplanned or unavoidable… in my experience, the people who manage the billing will not correct errors. My family has had a lot of medical bills the past 10 years and with certain billers, I’d say roughly half have errors. From simple things like misclassifying something, to not posting payments, to double billing. We gave up trying to get things fixed after a couple years of going around in circles. Now I know which ones are legit and pay them, while the ones that are wrong go in a file in case they get around to suing me.

Only one that ever went on my credit report was an ~$80 error (we’d already paid) that they wouldn’t correct. It disappeared shortly after the Obama admin enacted the $500 rule. Others claim I’ve owed them thousands for years (incorrectly) and seem to do nothing about it. I hear about it now and then when the debt is sold to another collector.

The thing that really makes me angry is that the billers have armies of people who go through and (mis)classify services with codes. These codes are not divulged to the consumer, and the purpose of the army is to apply the highest cost code to any given service.

If the govt really cared to get things under control, they’d require the costs to be presented at the time of service and signed off on by the patients (like how it works with every other service you can buy.) Instead we get mandatory insurance where the only way for the insurance co to make more money, is for them to pay more money, so OF COURSE costs go up.

Yukun (@guest_1759454)
December 16, 2023 07:32

You’re grossly oversimplifying why health care costs so much. Yes, private insurance companies are part of it. But Americans also use a lot of health care because:
1) As a population we are very unhealthy, and have huge burden of chronic diseases.
2) We’re also older on average, so more health care is being used.
3) Americans also tend to believe that more health care is better, despite a lot of health care being “sick care.” So we keep people in critical care even when they are probably going to die, we opt for expensive treatments that don’t work or really provide a lot of value (i.e., aggressive cancer treatment that buys very little time).
4) We also overpay for everything. Doctors make more money in the US than any other developed country, drugs, medical devices, everything costs more.
5) We also don’t invest in public health sufficiently (two cents on every dollar) so that results in more illness = higher costs.
6) Not having people covered by insurance also contributes to this because illnesses aren’t managed or caught in time, and so people seek care only when things get really bad or an emergency forces it.
7) This is not an exclusive list.

TLDR: Health care costs are not that simple. Pinning it all on insurance companies is a gross oversimplification. If it was that simple costs would have come under control already.

mark (@guest_1760166)
December 17, 2023 16:24

The same people who want “free healthcare” (i.e. taxpayer funded) are also going around telling people “fat is beautiful” and have decriminalized knowingly spreading HIV in states like CA.

Bobbi (@guest_1759469)
December 16, 2023 08:52

Thanks for sharing Russ, agreed.

mark (@guest_1759554)
December 16, 2023 11:57

The issue is not needing more government involvement, the issues is needing less. The complexity of medical billing and skyrocketing costs is the result of over-regulation. As the government has gotten more involved with time, particularly since Obamacare was passed, the rate of healthcare price increases and complexity of billing has gone up dramatically, not down.

If you want simplicity, look at clinics that do not accept insurance (private or government). Cash-only pricing is often readily provided upfront.

Grace (@guest_1759571)
December 16, 2023 12:21

Good point! I hit my out of pocket maximum September 30th forthe first time ever in my life. My provider keeps billing me despite sending to billing my letter stating that. My acupuncturist keeps charging me copays. Oddly, Walgreens was totally on it and never charged for my RX the minute they were informed by my insurance. I never even had to tell them. I know come January 1st I’ll be in a battle with accounting and be refunded everything. Also, I need up paying a bill that threatened to go collections. I doubt I owed it but I’d rather lose it than take a hit on my credit.

JJ (@guest_1759601)
December 16, 2023 13:51

On the one hand, it’s awful that you have to deal with that. On the other, I’d start racking up subs on these expenses and get reimbursed by the insurance.

Mikhail (@guest_1759356)
December 15, 2023 23:42

I don’t understand why medical debt still exists. Healthcare must be universal and free for everyone.

Chad Dankbutt
Chad Dankbutt (@guest_1759536)
December 16, 2023 11:34

Uh huh, who pays for everything?

mark (@guest_1759558)
December 16, 2023 12:09

Medical debt exists because people have to pay for goods and services. Medical care does not grow on trees, it requires capital for innovation, payment to people offering healthcare, etc, etc etc. The same reason people have to pay for food.

And there is no such thing as “free healthcare”, just taxpayer funded. The average tax rates in countries with universal heathcare is typically 10-20% higher than countries without. If you earn $75,000 per year and the government charges you an extra $10,000 per year in income tax to subsidize universal healthcare, is your healthcare “free”? Are people more or less likely to be in debt?

It also does not work as people think. “universal healthcare” does not mean every service and medicine is covered. It means the government gets to pick which services and medicine are covered. You still have to pay out of pocket for non-covered services. Look at Medicaid and Medicare. There is an entire industry for offering people additional insurance plans to go on top of their government provided Medicare despite the massive expenses that go into Medicare (and costs taxpayers pay during their lifetime for Medicare).

Lars (@guest_1759610)
December 16, 2023 14:15

Don’t forget housing, food, transportation, and entertainment!

PK (@guest_1759727)
December 16, 2023 19:09

I agree Mikhail. It is free and available in many other countries. We don’t have it in the USA because we are an evil greedy empire, a corporatocracy ruined by capitalism and rich selfish people. We won’t get free healthcare here because many billionaires are made in the private health insurance and medical provider sectors.

Our government also has no interest in giving us single payer healthcare because if it did then it would be easier for us to band together, revolt, and do more general worker strikes like in Europe because as it stands now, health insurance is still heavily tied to your employment status and who you work for.

Don’t worry though, history has shown that capitalism fails 100% of the time. Things will definitely get worse but at some point the citizenry will revolt and we will have an opportunity to reset things…either that, or things will be so bad domestically that another nation will conquer us and along with it bring free universal healthcare.

You just have to love the other yahoos that would have people suffer, get into debt, have their credit ruined and literally die because we don’t have enough of, or don’t want to give up a small amount of a completely made up item, otherwise known as money. There’s always enough fake money to go around for other things but the citizens be damned.

My proposal is simple, for those that don’t want to pay $0.00000001 per year for another human being to live, can opt out for life and continue with their own version of health insurance while the rest of us join single payer. See how quick companies drop health insurance and then those that complain about the costs are now the people who don’t have good healthcare, because the complainers always have healthcare but don’t want others to have it.

Good day.

Ken (@guest_1759877)
December 17, 2023 01:36

Plenty of people in the US have free health care because they go to the ER (which can’t turn them away) and just don’t pay their bills. And the hospital has to get paid so they push those unpaid bills to people who pay their bills. It’s another contributing factor as to why health care is so expensive in the US.

I live in Japan and 100% of the population (except US military and other SOFA sponsored people that get screwed) is required to have national health insurance, and people here follow the rules. Even without the JP NHI and paying full (or double to the foreigner unfriendly places) we still pay way less than stateside. NHI isn’t free, but it’s very cheap compared to out of control US insurance premiums. I’d be happy to pay $150/month for JP NHI with no deductibles or copays vs $600+ stateside plus $2k deductibles and $10k OOP yearly maxes.

pocket pet
pocket pet (@guest_1759884)
December 17, 2023 01:59

Deductibles are $3500 or $6800 depending on which plan you choose, and the out of pocket max is $12000. I guess you have been gone for a while.

Ken (@guest_1759895)
December 17, 2023 02:24

The numbers I posted were our current plan’s pricing that is higher than it was last year. We still have US insurance since we’re civilians at a US Navy base. Your numbers are INSANE. I don’t know how people in the US can afford anything anymore. Don’t know if we’ll ever go back.

Educator (@guest_1759331)
December 15, 2023 22:42

 William Charles , medical debt charged to a medical card can no longer be reported to credit agencies. This means medical debt not put on a medical debt can still be reported to collections. So, a 10k hospital bill not paid can still be reported.

HelpyBoi (@guest_1759080)
December 15, 2023 16:11

I have no clue why I can’t prepay for non-emergency medical items and why I must be sent a bill for it randomly afterwards with a random figure from a random person.

If I walk in and say I want CPT code D1110 (Dental cleaning), I should be able to pay a 100 bucks and walk out of the door and have no interaction ever again with you.

If you send me a bill with a random figure, that’s not a mark of my creditworthy ness, it’s a mark of my guilibility to pay it.

mark (@guest_1759309)
December 15, 2023 22:06

You can contact your insurance company and the clinic in advance of your visit to determine your anticipate costs. Obviously if the care provided deviates from what you think you need then there will be a difference. Also, there are many cash-only clinics that function more like what you are envisioning. Many clinics exist that do not accept insurance where you can do this sort of thing. The way billing and contracts work with the government and insurance companies make things much more complex. A lot of the current rise in healthcare costs are simply due to the massive growth in the bureaucracy surrounding healthcare and subsidization of care for certain groups.

This is why some people opt for only catastrophic plans and just pay cash for everything else. Although Obamacare has made it much more complex and costly for people to try and escape the system.

Quan Titative
Quan Titative (@guest_1759938)
December 17, 2023 05:51

Let’s not even involve insurance or the government in this transaction. I was talking about a specific cash only service provided with a specific CPT code. IMHO, there’s no reason these folks should get the benefit of the credit system. I’m not being extended credit here, only asking for a price to be advertised upfront.

And , no, calling up 30 different places to ask their prices don’t count. I just want to sort price low->High and choose the cheapest place, but that seems like an impossibility.

Curmudgeon (@guest_1758947)
December 15, 2023 13:49

So when people simply don’t pay their medical bills and the collection companies file suit and get a judgement, will that judgement also be excluded from credit reports? Why would anyone pay a bill if all that happens is they get a bunch of angry letters in the mail?

scott (@guest_1758972)
December 15, 2023 14:14

A judgment can allow for garnishment of wages and seizure of assets. That can happen regardless of whether that judgment is shown on your credit report.

mark (@guest_1759101)
December 15, 2023 16:25

What is the benefit to individuals or lenders for the government to pass a law that hides such debt from credit reports? Who benefits from not reporting outstanding medical debt that can have significant impact on your financial stability and ability to payback loans? How is it any different than lying on a lending application?

yvrite (@guest_1759249)
December 15, 2023 20:05

Lotta caping for a bunch of businesses that wouldn’t pee on you if you were on fire–or, if they did, would charge you $67/ml for the privilege.

mark (@guest_1759562)
December 16, 2023 12:13

I did not mention businesses at all in the comment you replied to, no clue what you are talking about.

Curmudgeon (@guest_1759111)
December 15, 2023 16:33

Well, thanks Captain Obvious. Judgements lower credit scores too, so if they aren’t allowing medical debts to appear on credit reports it seems kind of worthless if judgements stemming from those debts aren’t excluded. But that would be typical for politicians – never thinking things through.

People who don’t care about credit scores won’t care about a judgement either.

yvrite (@guest_1759251)
December 15, 2023 20:07

Medical providers won’t file lawsuits over relatively small amounts of money. If it’s worth it to them to collect, they’ll do so. This just doesn’t let them use credit reporting as a means of imposing any debt they happen to feel like on you.

Dougiechurns (@guest_1758942)
December 15, 2023 13:36

Awesome especially considering how privatized our medical industry has become just to profit immensely off of sick people. Hopefully other states follow suit

mark (@guest_1759074)
December 15, 2023 16:02

Competition and the ability to earn profit in the US has driven global medical innovation and domestic quality of care. Most of the excessive healthcare costs in the US are not due to privatization or “capitalism” but over regulation. This is true with just about any complaint about “capitalism” including the banking industry, stock market, and educational system. This is common with any system managed by government bureaucracy. Healthcare costs are not any lower in countries with government health care, tax rates are often 10-20% higher than countries without government health care and typically the quality of care is lower and wait for care is longer. They often develop two-tiered systems of healthcare, where wealthy individuals have access to privatized healthcare and “the peasants” are stuck with highly restrictive government healthcare. The US already has massive amounts of money going into providing healthcare for low income individuals and for the elderly. Even people in the US illegally are receiving subsidizations from taxpayers for their healthcare in some places.

jpv (@guest_1758885)
December 15, 2023 12:18

Wish this was the case in our state.

Have had super high credit for decades, but only been sent to collections over medical bills.

Most of the time it comes down to the insurance trying to screw you over and you have to spend tens of hours fighting them to pay what they should.

Worst part is if you were seeing that one of the State University affiliated hospital systems, your collections goes to the attorney general, which is much more aggressive than a regular collections letter because they’re threatening to seize your assets and have a lot more power to do so.

scott (@guest_1758974)
December 15, 2023 14:16

Our health care system is beyond a joke. They’ve turned into third world haggling. They send you a bill for more than they know they will get and then you waste all that time going back and forth negotiating. In the meantime they scare the hell out of most people with the original egregious bill amount.

mark (@guest_1759094)
December 15, 2023 16:21

The insurance system has become a joke as the government has gotten more involved. Look at things since Obamacare, not only have premiums shot up even faster, but the amount of covered services and covered costs has dropped. It is essentially a warning shot for how it will look if everybody were on government healthcare coverage. People live in delusion that universal healthcare means you can get whatever you want covered for free, but all that it really means is that the government chooses what healthcare you can get, and the quality of care is going to be limited to the amount of money that the government is willing to pay clinics. This is why most countries with universal healthcare have a two-tiered system, with wealthy individuals utilizing separate privatized care.

Guy Who Buys Stuff
Guy Who Buys Stuff (@guest_1759256)
December 15, 2023 20:17

So you’re saying that, by ‘providing for the common good,’ the rich would have fo use their wealth if they wished to access higher tiers of service than the commoners? And this is bad because the rich would be paying extra for… extras?

mark (@guest_1759563)
December 16, 2023 12:16

If your vision of “providing for the common good” looks like the Hunger Games, then yes.

staradmiral (@guest_1758862)
December 15, 2023 11:50

Exactly as it should be. Medical debt is not a loan and has nothing to do with credit worthiness.

raj (@guest_1758914)
December 15, 2023 12:57

Are you sure about that? Have you seen at the data? If I had to bet, defaulting on medical debt correlates very well to defaulting on non-medical debt

Ank (@guest_1759042)
December 15, 2023 15:21

defaulting on non-med debt is already gng on credit report so by your logic why does it matter if medical debt should too?

HelpyBoi (@guest_1759082)
December 15, 2023 16:12

As an anecdote, I’ve always defaulted on debt I’ve not agreed to with a dollar amount at the time of service (medical etc).
I’ve never defaulted on credit cards/ car loans etc, where I know the exact amount beforehand.

mark (@guest_1758838)
December 15, 2023 11:17

While medical debt may be “unplanned and unavoidable” (although also commonly not, as obesity is the number one cause of illness and medical costs in the US) it does not mean that the debt does not affect somebody’s ability to manage their current and future debt. If somebody has a house fire or car crash or loss of job, they might also have “unplanned and unavoidable” debt as a result but those do not get to be ignored. If you are one day late on a credit card payment by even $1, then your credit score and rates and limits could get obliterated. While I agree medical debt is a problem, everybody has their own life story behind the different type of debts that they might have that do not get explained in credit reports. Plus, there are countless resources for handling medical debt in the US, and also countless programs for financial assistance for medical care in the US.

In any case, what is the point of a credit score if their are selectively ignoring current debt that people may owe? Again, I am not diminishing medical debt, but this should be an objective score letting lenders know how much outstanding debt your have and your history of paying back debt, of all kinds. If you have massive amounts of medical debt then it makes sense that a lender would take it into account before lending you funds. All that changes like this make are to drive out businesses and/or raise costs for everybody.

Brad C
Brad C (@guest_1758995)
December 15, 2023 14:44

Credit cards don’t report late payments to credit reports until 30 or more days late.

mark (@guest_1759071)
December 15, 2023 15:55

Late credit card payments can affect credit and APY for the credit card where the payment is late immediately.

Lyte (@guest_1758997)
December 15, 2023 14:45

“Again, I am not diminishing medical debt”…”Again?”…how one could possibly think the comment was in any way “diminishing medical debt” when the entire comment is harping on all the theoretical reasons one personally can conjure as to why medical debt should matter to lenders escapes me. The evidence and referenced sources indicating, “All that changes like this make are to drive out businesses and/or raise costs for everybody,” also escaped my notice.

If one states “I agree medical debt is a problem,” what exactly is the problem one thinks there is with medical debt since apparently the commentary is all about how medical debt isn’t any different other than apparently having “countless resources” available to address it (as opposed to…)? Last I checked, resources are all finite for anything financial, and there is only so much currency issued of each type in every medium available at any given time everywhere in the real world and even online with crypto. Grants and resources for debt reduction exist for every type of lending debt, and having specialized credit available for medical costs is different from specialized credit available for home improvement, rent payment, education, etc.? How so?

mark (@guest_1759322)
December 15, 2023 22:26

Multiple types of debt exist, as even you pointed out, stating that medical debt should not be some special privileged class of debt when it comes to determining credit score or evaluating somebody for potential further lending does not mean that I am diminishing it. Not that difficult to comprehend.

People get into debt for all sorts of reasons. The idea that medical debt should not be reported to credit bureaus while other forms of debt are reported is not only nonsensical, but negligent.

It should be up to the entity utilizing the report to determine whether medical debt needs to be factored into whatever they are using the credit report to determine.