Unpaid medical debt will no longer appear in New York residents’ credit reports under a new bill that was signed into law by Governor Kathy Hochul on December 13, 2023. A new article 49A was added to the New York Public Health Law, titled the Fair Medical Debt Reporting Act, which went into effect immediately.
Under the new law, “medical debt” means an obligation or alleged obligation of a consumer to pay any amount related to the receipt of health care services, products, or devices from an Article 28 hospital, a health care professional, or a certified ambulance service. Health care professionals covered by the law include all the licensed professions under Title VIII of the Education Law, which includes physicians, physician assistants, and nurse practitioners as well as all the other health professionals who hold a license.1 Notably, medical debt does not include debt charged to a credit card, unless the credit card is issued under an open-ended or closed-ended plan offered specifically for the payment of health care services, products, or devices provided to a person.
Hospitals, health care professionals, and ambulance companies are barred from reporting unpaid medical debts to consumer reporting agencies and also must include a provision in their contracts with collection entities prohibiting the agency from reporting any information about the debts to a credit reporting agency. Consumer reporting agencies are prohibited from including information on medical debt in their reports or files on a consumer regardless of the date the debt was incurred. Any debt that is reported to a credit bureau will become void.
According to a 2023 study from the Urban Institute, 740,000 New Yorkers have medical debt on their credit reports, with people of color twice as likely to have medical debt referred to a credit bureau and low-income people three times as likely. The burden of medical debt damages a patient’s financial stability, deters them from seeking medical care, and impacts their ability to buy homes, get loans, or save for retirement. New York is now the second state after Colorado to remove medical debt from credit reports and ban the reporting of medical debt in an effort to make health care more accessible and affordable.
If you have any questions regarding the content of this alert, please contact Fran Ciardullo, special counsel, at fciardullo@barclaydamon.com, or another member of Barclay Damon’s Health & Human Services Providers Team.
1This includes chiropractors, dentists, veterinarians, physical and other therapists, pharmacists, midwives, podiatrists, optometrists, psychologists, social workers, and mental health practitioners, among others.