WASHINGTON, D.C. — The Biden administration is set to finalize a significant rule today that will prohibit the inclusion of medical debt on consumer credit reports. This move is expected to have far-reaching implications for millions of Americans.
The new regulation will also remove an estimated $49 billion in medical bills from the credit histories of about 15 million people, according to the Consumer Financial Protection Bureau (CFPB).
Under the new rule, According to CNN, medical debt will no longer impact individuals’ credit scores, helping to alleviate financial burdens on those who struggle with medical expenses. The change is part of broader efforts to address the growing concerns about the impact of healthcare costs on personal finances, particularly for those who have fallen behind on medical payments.
In addition to removing medical debt from credit reports, the rule will also prohibit lenders from using medical devices—such as wheelchairs or prosthetic limbs—as collateral for loans. This protection ensures that patients cannot lose access to critical healthcare equipment if they cannot repay their loans. Furthermore, the rule bars lenders from repossessing these essential devices in the event of a default.
Initially proposed in June 2024, the measure is set to take effect 60 days after its publication in the Federal Register. However, Congress will have a limited time to review and potentially rescind the final rule, though this is unlikely.
Advocates for the new rule argue that medical debt should not be used as a financial tool to penalize individuals, especially considering the unpredictability and high healthcare costs in the United States. “This rule will provide millions of Americans with much-needed relief by ensuring that medical debt doesn’t follow them throughout their lives or prevent them from accessing credit,” said a CFPB spokesperson.
The finalization of this rule represents a major victory for consumer protection advocates and is expected to ease the financial pressures faced by millions of Americans dealing with medical debt. The change is also seen as making healthcare more affordable and less financially devastating for patients.
