Editor’s note: This article discusses the proposed Medical Debt Forgiveness Act. As of March 2026, the bill has not been enacted into federal law. However, other policy changes have affected how medical debt appears on credit reports.
Key takeaways:
- In 2021, the federal government proposed revisions to the 2016 Medical Debt Relief Act. These revisions are known as the Medical Debt Forgiveness Act.
- If passed, the act will provide people with more time to pay their medical debt and will remove some paid medical debt from credit reports.
- There are several methods a person can use to pay off medical debt.
For many people in the United States, a healthcare visit can come with a grim prognosis: expensive medical bills. Even with insurance, some Americans face large medical bills that can lead to debt.
According to the Kaiser Family Foundation (KFF), nearly 1 in 10 American adults struggles with medical debt. To put it into perspective, that’s about 23 million people.
To help people struggling with medical debt, the federal government has proposed reforms through the Medical Debt Forgiveness Act. Let’s dive into what this bill proposes, what you need to know, and what it might mean for your wallet.
The Medical Debt Forgiveness Act, defined
In early 2021, the federal government proposed amendments to the 2016 Medical Debt Relief Act. These revisions are known as the Medical Debt Forgiveness Act, which aims to protect people who are struggling with medical debt. More specifically, if passed, the act will help people with medical debt in two specific ways:
- The bill will provide people with more time to pay.
- The bill will remove past medical debt from credit reports.
Provide more time to pay
The 2016 Medical Debt Relief Act provides people with six months to pay off their outstanding medical debt before it can be reported to a credit bureau. When unpaid medical debt is reported to a credit agency, it’s added to your credit report and factored into your credit score.
Even one reported unpaid medical debt can lower a credit score by 50 to 100 points. A low credit score can hurt your ability to get approved for new credit cards, loans, and a higher credit limit.
If passed, the Medical Debt Forgiveness Act will give people more time to pay off their outstanding medical debt before it appears on their credit report. This act would require credit agencies to wait 1 year rather than six months before reporting an outstanding debt related to medical expenses.
Remove paid medical debt from credit reports
Currently, debts stay on an individual’s credit report for 7 years, even if the debt has been paid off or settled. That can make it hard for people with previous debt to rebuild their credit, take out a loan, or be approved for a credit card.
If the act is passed, credit bureaus will remove some medical debt already paid or settled from credit reports.
These debts include:
- Medical debt that was in collections and has been paid off or settled
- Medical debt in collections for less than a year
What medical bills aren’t covered?
It’s important to note this act will not completely erase medical debt from credit reports. For example, unpaid medical debt that’s more than $500, and has been owed for more than a year, may still appear on credit reports.
Additionally, the act doesn’t apply to medical debt paid for using a personal loan or medical debt that has been paid for by a credit card. If you pay for a medical bill with a credit card, it’s classified as credit card debt, not medical debt. Discover ways to pay down your medical-related credit card debt here.
Pro tip: Separately, Equifax®, Experian™, and TransUnion® have decided that in the first six months of 2023, they’ll no longer include healthcare debt under $500 on your credit report. This policy also includes debts in collections.
What to do if you still have medical debt
Although some types of medical debt will no longer appear on your credit report, you still need to pay for what you owe. If you have outstanding medical debt, creditors can contact you for payment and may sue you for the balance.
If you’re not sure where to start, here are three ways you can pay off your medical debt:
1. Negotiate it down
Before your medical bill is past due, contact your medical provider or hospital and try to negotiate the price. Many people reach out and ask their providers for discounts on their medical bills. When asked, some providers are prepared to reduce bills.
Keep in mind, you are more likely to get a discount if you can prove it’ll be difficult for you to pay the full amount based on your current financial situation.
Pro tip: Under the Affordable Care Act, nonprofit hospitals need to provide financial assistance to low-income patients. If you qualify, you could be eligible for a full or partial reduction of your bill.
2. Take out a medical loan
A medical loan is a type of unsecured personal loan you can use to pay for unexpected hospital bills and planned medical procedures. Lenders typically offer loan amounts that range from $1,000 to $50,000, so they can be beneficial if you have a lot of healthcare debt.
If you have a limited credit history, it may be difficult to get approved for a medical loan with favorable terms. However, some lending platforms, like Upstart, know that people are more than their credit scores. Upstart’s model considers other factors like your education¹ and work experience when reviewing your loan application.
3. Get a debt consolidation loan
If you’re juggling your medical bills along with several other debts, consider applying for a debt consolidation loan. With a debt consolidation loan, you take out a new personal loan to combine two or more debts into one payment.
In addition to streamlining your payments, debt consolidation may help you save more in interest if you qualify for favorable loan terms.
Final considerations
Although the Medical Debt Forgiveness Act will provide some protection and relief to people struggling with medical debt, it’s still essential to create a plan to pay off your medical debt. Before you apply for a loan, check your credit score and your current financial situation to help you better understand what option may be best. If your debt hasn’t been sent to collections, call your healthcare provider to negotiate and talk about payment options.
¹Neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.
Won't affect your credit score¹