Significant steps are being taken to ease the financial strain caused by medical debt. New federal rules aim to remove medical debt from credit reports — here's what you need to know.
Acacia Chiropractic Clinic accepts most health insurance plans. This allows us to care for many people in the Tega Cay, Fort Mill, and Steele Creek area who suffer with neck pain, low back pain, headaches, and other ailments. While chiropractic care is relatively affordable, other forms of necessary medical care can be devastating to a family's finances.
New Rules to Remove Medical Debt from Credit Reports
Significant steps are being taken to ease the financial strain caused by medical debt. A final rule was announced that will remove medical debt from credit reports, ensuring that unpaid health-related bills no longer affect individuals' credit scores. This rule aims to eliminate approximately $49 billion in medical debt from the credit reports of 15 million Americans, as reported by the Consumer Financial Protection Bureau (CFPB).
The rule addresses concerns that debt collectors have exploited the credit reporting system to pressure individuals into paying for medical bills — sometimes even when the debt is not legitimate.
What the Rule Covers
In addition to removing medical debt from credit reports, the rule also prohibits lenders from using certain medical information — such as the need for wheelchairs or prosthetics — as collateral for loans. It also ensures that lenders cannot repossess these necessary medical devices if the borrower struggles to repay their loans.
The Impact on Americans
The change is expected to have a significant positive impact. Individuals with medical debt on their credit reports may see their credit scores increase by an average of 20 points, and around 22,000 additional mortgages are anticipated to be approved annually as a result. Research by the CFPB has shown that medical debt is not a reliable indicator of a person's ability to repay other types of loans.
As part of this broader effort, the three major credit reporting agencies — Equifax, Experian, and TransUnion — agreed to remove nearly 70% of medical debt from consumer credit reports. They no longer include paid-off medical debt, and the grace period for unpaid medical debt on credit reports has been extended to a full year, up from six months.
In a related effort, states, counties, and cities have eliminated more than $1 billion in medical debt for more than 750,000 Americans using funding from the 2021 American Rescue Plan Act.
At Acacia Chiropractic Clinic, we're committed to making quality chiropractic care as accessible as possible for families in Tega Cay, Fort Mill, and the surrounding communities. We accept most major insurance plans and offer same-day appointments.
