Washington state has taken a major step toward protecting consumers from the harmful effects of medical debt. This week, Governor Bob Ferguson signed Senate Bill 5480 into law, introducing new safeguards around how medical debt is defined and reported.
What the New Law Does
At its core, the legislation aims to shield Washington residents from the long-term financial harm that can result from medical debt appearing on credit reports. Among its key provisions:
- Medical Debt Redefined: The bill introduces a new definition of medical debt as any debt owed by a consumer to a person or entity primarily providing medical services, products, or devices—or their agents or assignees. This clearer definition is expected to set a precedent for other states crafting similar policies.
- Void if Reported: Medical debt will be considered void and unenforceable if it is reported to a consumer credit reporting agency or bureau. This provision essentially removes the leverage of credit damage from medical debt collection efforts.
- Reporting Restrictions: The bill prohibits certain entities from reporting medical debt to credit bureaus. Violating this restriction would constitute a breach of the state’s Consumer Protection Act, carrying potential legal consequences.
Looking Ahead
The legislation is set to take effect on July 27. As more states evaluate how to handle medical debt and its role in consumer credit, Washington’s law could serve as a model for broader reform. By redefining what counts as medical debt and limiting how it affects credit scores, the bill seeks to reduce the financial strain on consumers and create a fairer system for managing healthcare-related expenses.
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Author: 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 clients’ 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. Jennifer’s 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.
