Californians’ credit reports will be safe from most medical debt in the coming year under a new law Gov. Gavin Newsom signed today.
Medical debt can hurt people’s credit scores and harm their chances of negotiating a loan or mortgage on favorable terms. The law will not forgive someone’s debt, but by keeping it off credit reports, it might provide some reassurance that Californians won’t suffer more financial repercussions because of a medical balance.
“No Californian should be unable to secure housing, a loan, or even a job because they accessed necessary medical care,” said Sen. Monique Limón, a Santa Barbara Democrat who authored the law. “With this new law, California is stepping up to protect consumers.”
Her legislation was backed by Attorney General Rob Bonta and consumer advocacy groups. Limon and supporters contended that medical debt should not be treated like other kinds of debt because people incur it through no fault of their own. Experts and consumer advocates say medical debt is also more prone to inaccuracies because of mistakes in billing or disputes with insurers.
“With ballooning out-of-pocket health care costs, we need a fair credit system that does not punish California’s patients for seeking health care when they need it,” said California Nurses Association President Michelle Gutierrez Vo in a written statement commending Newsom’s signature of the new law.
The law has a loophole that lawmakers created late in the legislative session — it will not apply to debt charged to so-called medical credit cards.
Bankers and lenders lobbied to exclude medical credit cards from this bill. They said medical credit cards can be used for non-urgent services, including gym memberships and cosmetic procedures. Instead the law…
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