Washington Gov. Bob Ferguson yesterday signed a medical debt credit reporting bill into law. Senate Bill 5480 officially prohibits the reporting of medical debt to consumer credit agencies.
🧠 What’s new: The new law will take effect on July 27, and mirrors a now-paused federal rule from the Consumer Financial Protection Bureau. It aims to shield Washington consumers from the long-term financial damage of medical debt by rendering such debt void and unenforceable if it is reported to a credit bureau.
📜 Key provisions in the bill:
- Medical debt is defined as any debt owed to a person or entity whose primary business is providing medical services, products, or devices, including non-delinquent and previously paid debt.
- Cosmetic surgery is excluded from the definition of medical debt unless it is reconstructive following trauma or illness.
- Debt reported to a credit agency in violation of this law is legally void, and doing so constitutes a violation of the Washington Consumer Protection Act.
- Hospitals and providers are explicitly prohibited from furnishing medical debt to credit bureaus.
- The legislation eliminates a provision from the original version of the bill that required contracts to include a disclosure about the credit reporting prohibition.
🆚 What changed from the original bill:
- The original version proposed requiring contracts for medical debt to include specific language warning consumers that their debt could not be reported to credit agencies. This requirement was removed in the final version.
- The final version narrowed the definition of medical debt, excluding certain detailed categories of medical equipment and credit card debt used to pay for care that were originally included.
- Enforcement now hinges on reporting actions, not the terms of the medical debt contract itself.
📊 Context:
- According to the Leukemia & Lymphoma Society, around 30% of Washingtonians report living in a household with medical debt.
- Nearly 60% say they would be unable to pay a surprise $500 medical bill.
- A similar federal rule introduced under President Biden was expected to improve credit scores for 15 million Americans by an average of 20 points, but has since been paused under the Trump administration and is facing legal challenges.
Read the final version of the bill
