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The reporting agencies said removing the debt would help people recover from pandemic-related financial strain and cited Kaiser Family Foundation data that two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.
“After two years of the COVID-19 pandemic and a detailed review of the prevalence of medical collection debt on credit reports, the NCRAs (National Credit Reporting Agencies) are making changes to help people to focus on their personal wellbeing and recovery,” the statement said.
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Effective July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports. In addition, the time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file. In the first half of 2023, the agencies will also no longer include medical collection debt under at least $500 on credit reports.
An AffordableHealthInsurance.com survey found that more than half of insured Americans had unpaid medical debt, Bloomberg reported earlier this month.
This story first appeared in our sister publication, Crain’s Chicago Business.
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