Ending the Credit Crisis of Illness: The Fair Medical Debt Reporting Act
On October 1, 2025, the Maryland Fair Medical Debt Reporting Act (HB 1020) took effect, fundamentally reshaping how medical debt impacts the lives and financial futures of Marylanders. This law provides vital protections for consumers, offering a path to greater financial stability and significantly increasing access to justice by removing a major barrier to economic opportunity caused by health-related costs.
Shielding Credit from Illness
The central pillar of the Fair Medical Debt Reporting Act is the near-total exclusion of medical debt from consumer credit reports, protecting individuals whose lives and credit histories have been derailed by unexpected illness or injury.
Specifically, the law prohibits medical providers, their agents, and debt collectors from disclosing any portion of a medical debt to a consumer reporting agency. In a corresponding move, consumer reporting agencies themselves are barred from creating, furnishing, or maintaining reports that contain adverse information related to medical debt, including any collection activity. Furthermore, a person may not use medical debt information included in a consumer report when making a determination of a consumer’s creditworthiness.
This change is critical for access to justice because medical bills are often complicated, involving insurance appeals, confusing billing practices, and information that is frequently inaccurate or inflated. Allowing this debt to tank a credit score has historically created a “poverty trap,” denying people access to fair housing, employment, and affordable loans, all based on a debt that may not even reflect their actual willingness or ability to pay. By removing this non-predictive information, the law ensures a fairer assessment of an individual’s financial character.
Closing Collection Loopholes
To ensure compliance, the law includes stringent requirements for the debt collection industry. Any agreement entered into on or after October 1, 2025, between a medical provider and a collection entity for the purchase or collection of medical debt must include a provision prohibiting the disclosure of any portion of that medical debt to a consumer reporting agency. A contract that does not include this provision is deemed void and unenforceable. This provision effectively uses contract law to enforce the credit reporting ban, providing a strong legal tool for consumers to challenge unlawful debt reporting.
Comprehensive Protection and Clarification
The law provides a broad definition of “medical debt,” ensuring comprehensive coverage. It includes obligations owed to a person whose primary business is providing medical services, products, or devices, or their agent or assignee. Importantly, it specifically clarifies that this exclusion does not apply to general-purpose credit card debt, unless the credit card was issued solely for the payment of health care services, products, or devices.
This sweeping action by Maryland, along with other state laws like HB 428, which restricts money judgments and liens on primary residences for medical debt, and HB 268, which bans collection on debts under $500 and requires a 240-day waiting period for financial assistance, is part of a national shift to fill the void left by the vacating of a federal rule aimed at banning medical bills from credit reports.
By removing the devastating consequence of adverse credit reporting for individuals struggling with healthcare costs, the Fair Medical Debt Reporting Act directly improves the economic security of Marylanders and enhances their access to financial markets, fulfilling a core mission of justice and equity.