California Gov. Gavin Newsom signed legislation that will prevent medical debt from appearing on credit reports, providing relief for residents struggling with unpaid medical bills. Sponsored by Sen. Monique Limón and supported by AG Rob Bonta, the new law will prohibit healthcare providers and collection agencies from reporting medical debts to credit agencies, starting in January. This move aligns California with eight other states that have implemented similar protections in the past two years.
The legislation aims to protect consumers from the negative impacts of medical debt on their credit scores, making it difficult to secure employment, housing, or loans. However, there is a loophole in the law that excludes medical debt paid with high-interest medical credit cards or loans from removal on credit reports, a concession made due to opposition from the financial industry.
Although some credit agencies have stopped listing certain medical debts, millions of Americans continue to have medical bills affecting their credit scores. In California, where 4 in 10 residents carry medical debt, the new law is expected to benefit low-income and minority patients disproportionately affected by medical bills.
In addition to the credit reporting protections, Newsom also signed a bill banning hospitals from using liens on property owned by low-income individuals, expanding current protections for patients. This legislative effort to address medical debt reflects a nationwide trend, as dozens of states have enacted similar measures to protect consumers from surprise billing and aggressive debt collection practices.
The new law represents a significant step towards alleviating the burden of medical debt on California residents, offering much-needed relief to those grappling with healthcare costs.
Source
Photo credit www.dailynews.com
