Washingtonās Senate has approved Senate Bill 5480, a measure designed to reform how medical debt is treated, particularly in relation to credit reporting. The bill now heads to the governorās desk for final approval, marking a significant shift in consumer debt protections within the state.
A major focus of the bill is to redefine and regulate how medical debt is reported. An updated amendment now defines medical debt as a debt owed by a consumer to a business primarily involved in providing medical services, products, or devicesāor to an agent or assignee of that business.
The legislation aims to reduce the financial burden of medical debt on consumers by implementing the following key provisions:Ā
- Medical debt will be considered void and unenforceable if it is reported to a credit bureau or consumer credit reporting agency.Ā
- It will be a violation of the Consumer Protection Act for certain entities to report medical debt to credit bureaus.Ā
These changes reflect growing concerns over the impact of medical debt on credit scores, especially when consumers face unexpected healthcare expenses.Ā
Kelsi Hamilton, legislative chair of the Northwest Collectors Association and director of compliance and legislative affairs at Dynamic Collectors Inc., played a key role in shaping the bill. She testified before the Washington Senate in March, emphasizing that while patients are responsible for their medical bills, aggressive credit reporting practices can lead to broader financial harm. Hamilton also noted that when healthcare providers are unable to collect payment, they may be forced to raise costs for other patients.Ā
The Northwest Collectors Association focused on minimizing the billās potential negative impacts while working to maintain the sponsorās consumer protection goals. āWe knew this legislation was a priority bill for the sponsor,ā Hamilton said. āThis is why we worked hard to significantly lessen the negative impact of the bill while still preserving his goal.āĀ
The association plans to continue monitoring the billās implementation and related legal developments, with the option to revisit the issue in future legislative sessions if needed.Ā
Related Developments
Washington lawmakers have also moved forward on Senate Bill 5651, which increases garnishment exemptions in non-bankruptcy proceedings. Initially proposing a $5,000 exemption, the bill now sets the automatic exemption for consumer debt at $2,000. The bill passed both chambers and is also awaiting the governorās signature.Ā
The Northwest Collectors Association worked closely with the billās sponsor to negotiate the exemption limits, making this legislation another advocacy priority this session.Ā
Meanwhile, similar legislative efforts around medical debt were introduced in Virginia, South Dakota, Indiana, Montana, and Wyoming but did not move forward.Ā
Washingtonās steps may signal a broader trend in consumer protection efforts, especially around medical debt, as states continue to grapple with the balance between collection practices and consumer financial stability.Ā Ā
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Author:Ā Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clientsā criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jenniferās guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
