Medical debt weighs heavily on the lives of millions of Californians. It can ding their credit scores and hurt their chances of landing a rental or securing a home mortgage. Earlier this year, the Biden administration announced a proposal to stop medical debt from showing up on credit reports.
That proposed rule is under consideration with an uncertain timeline. California lawmakers are moving faster with a similar measure that would take effect as soon as January if it becomes law. Sen.
Monique Limón , a Santa Barbara Democrat, is carrying Senate Bill 1061 , which would remove medical debt from credit reports and prohibit debt collectors from reporting patients’ medical debt information to credit agencies. It would pertain specifically to debt owed to a medical provider, such as a hospital or a doctor’s office. It passed the Assembly on Monday and is heading to the Senate for a final vote.
Until recently, the bill would have also included debt charged to medical credit cards and specialty loans, but changes in the Assembly Appropriations Committee redefined “medical debt” to exclude these. Limón was surprised by the changes. The amendments were a win for a coalition of bankers and lenders that had been requesting that change for months.
Following the amendments, the coalition removed its opposition to the proposal. “This legislation passed through three Assembly policy committees without the most recent amendments by Assembly Appropriations, which substantially.