NJ may block doctors from reporting medical debt to credit bureaus

If you have an unpaid bill from a doctor's office or hospital, your health care provider currently has the right to send that information to a credit bureau, allowing the outstanding balance to impact your credit score.

A proposed state law looking to scrap that right narrowly cleared a panel of New Jersey lawmakers in December.

By a vote of 3-2, the Senate Commerce Committee advanced a measure that blocks health care providers from reporting any unpaid portion of a medical debt to any credit reporting agency, bureau, or data collection facility.

The bill, sponsored by Democratic Sens. Richard Codey and Nellie Pou, was originally written to include a prohibition on reporting such debt to collection agencies, but that language was removed.

Even if medical providers were blocked from reporting an unpaid bill to a credit bureau, once the debt is reported to a collector, the information can then be passed on to credit bureaus.

In July 2022, the major credit bureaus began clearing paid medical debt from consumers' credit reports.

Should NJ block medical debts from credit scores?

The proposed law raised concerns from lawmakers and advocates ahead of its Dec. 19 passage.

Sen. Jon Bramnick, R-Union, said the proposal "goes too far" and leaves would-be creditors in the dark about one's repayment history.

"I'm sympathetic to individuals with large amounts of medical bills, but what about the third party that's going to lend money to this person?" Bramnick said. "The innocent third party who's loaning money is in a position to think that there is no outstanding debt."

According to Christine Stearns, chief government relations officer for the New Jersey Hospital Association, hospitals rarely report unpaid bills to credit bureaus. But this move, she said, could still affect facilities' ability to collect debts.

"Alerting consumers that that can happen does sometimes inspire those who do have the resources to pay their debts," Stearns said.

Legal Services of New Jersey went on the record as "strongly in support" of the legislation, noting that people don't go out of their way to incur medical debt.

An Assembly version of the legislation has not seen any activity since its introduction in May.

Dino Flammia is a reporter for New Jersey 101.5. You can reach him at dino.flammia@townsquaremedia.com

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