Medical Debt Relief Act of 2025
- Sponsor
- Sen. Merkley, Jeff [D-OR]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Jul 29, 2025
Bottom line
The Medical Debt Relief Act of 2025 aims to remove medical debt as a factor in consumer credit reporting and lending decisions, potentially improving credit access for individuals with such debt.
What it actually does
This bill amends the Fair Credit Reporting Act (FCRA) to prohibit consumer reporting agencies from including any adverse information related to medical debt on a consumer report. It also mandates the Bureau of Consumer Financial Protection (BCFP) to issue regulations preventing creditors from using medical debt information when making credit extension decisions. The bill defines 'medical debt' broadly to include any debt arising from medical services, products, or devices.
Proponents argue
Proponents argue that medical debt is often unexpected, involuntary, and not indicative of a consumer's financial responsibility or ability to pay other debts. They contend that removing medical debt from credit reports will prevent individuals from being unfairly penalized for health-related financial burdens, improve credit scores for millions, and reduce barriers to housing, employment, and other financial opportunities. They also highlight that this could alleviate financial stress for patients and families.
Opponents contend
Opponents might argue that medical debt, like any other debt, reflects a consumer's overall financial picture and should be available to creditors to accurately assess risk. They may contend that excluding this information could lead to less accurate credit assessments, potentially increasing lending risks or causing creditors to raise interest rates for all consumers to compensate for the reduced visibility into a borrower's financial health. Some may also raise concerns about the potential for moral hazard if certain debts are no longer factored into creditworthiness.
The bill is very short and clearly written, making it highly accessible for any reader to understand its core provisions within minutes.
Section 2(a)
Definition of Medical Debt
This section adds a new definition to the Fair Credit Reporting Act (FCRA) for 'medical debt.' It specifies that medical debt includes any debt, in whole or in part, that arises from receiving medical services, products, or devices. This broad definition ensures comprehensive coverage for the subsequent prohibitions.
Supporters argue
Supporters argue that a clear and broad definition of medical debt is essential to ensure that the protections intended by the bill are applied consistently and comprehensively, preventing loopholes that could allow some forms of medical debt to still appear on credit reports.
Critics contend
No specific opposition is typically raised against the definitional aspect itself, assuming the overall policy is accepted. However, if the policy is opposed, the breadth of the definition would be a point of concern for those who believe medical debt should be reported.
Tradeoffs
The tension lies in balancing a broad protective definition for consumers against the desire of creditors for a complete financial picture of borrowers. This definition leans towards consumer protection.
Section 2(b)(1)
Exclusion of Medical Debt from Consumer Reports
This provision amends Section 605(a) of the Fair Credit Reporting Act to explicitly prohibit consumer reporting agencies from including any adverse information related to medical debt on a consumer report. This includes medical debt that has been sent to collections, charged off, or subjected to similar actions. This is a significant change, as it removes all adverse medical debt information from credit reports.
Section 2(b)(2)
Technical and Conforming Amendments to FCRA
This section makes several technical adjustments to Section 604(g) of the Fair Credit Reporting Act. These amendments remove existing language that allowed for certain uses of medical contact information or medical information under specific conditions. By striking these clauses, the bill ensures that the blanket prohibition on reporting medical debt is consistently applied throughout the FCRA, eliminating any potential exceptions for medical information use in credit decisions.
Section 3
Modification of Regulations on Use of Medical Debt Information by Creditors
This section directs the Director of the Bureau of Consumer Financial Protection (BCFP) to amend existing regulations (specifically 12 CFR 1022.30) within one year of the bill's enactment. The purpose of this amendment is to explicitly prohibit creditors from obtaining or using any information related to a consumer's medical debt when deciding whether to extend credit. This reinforces the bill's intent by directly regulating creditors, not just consumer reporting agencies.