Medical Debts to be Removed from Consumer’s Credit Reports

On March 18, 2022, the three nationwide credit reporting agencies (NCRAs) – Equifax Experian, and TransUnion – announced significant changes to medical collection debt reporting to support consumers faced with unexpected medical bills. This approach isn’t entirely new, as the NCRAs have long been working with many State AGs to sanitize reports related to medical debts since 2015’s National Consumer Assistance Plan (“NCAP”), and H&H has been consistently working to accommodate those guidelines as they move.

What this new rule does, is further builds on the NCAP by implementing 3 new things:

  1. Effective July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports from the bureaus.
  2. The time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.
  3. In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports.

How does this impact H&H and its Provider clients?

  1. The NCAP from 2015 already required that the bureaus delete paid insurance accounts, where the account is paid through an insurance carrier after delinquent reporting is done on an account.  Effective 3 years ago, however, H&H began deleting most paid closed accounts on certain criteria as a benefit to consumers. H&H, after analyzing propensity to pay data, took action ahead of this new trend and remains unaffected by this specific development.
  2. The NCAP and IRS Rule 501r (for healthcare non-profits) currently disallow medical credit reporting currently for 6 months (180 days) from a “date of first delinquency” (when an account first is deemed delinquent) on a medical account. This new rule will push that reporting delay from 6 to 12 months.
  3. Currently, the balance minimum to report from the bureaus is $50. The new policy will automatically delete non-furnish medical accounts btw $50-500. H&H does report balances in that range sometimes, so we would lose that ability next year.

Many competitor agencies stopped reporting after the NCAP and the IRS 501r rules came out because these rules made things more complicated. H&H never stopped and continues to find compliant ways to continue credit reporting — and will do so in light of the recent changes as well.  Unfortunately, we will lose the ability to report on certain small balances and must further delay reporting on the still eligible balances, but we are confident that our technology will allow us to adapt to these changes and continue using reporting as a leverage tool where we can. There is also a chance that by publicizing the “delete all paid collections” rule, consumers will be more motivated to contact us regarding reported delinquencies!

Aryeh D. Derman, Esq.
General Counsel & CLO
Harris & Harris, LTD.

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