New York Medical Bill and Credit Reporting Protection
New York has enacted a state-law ban on medical debt appearing on consumer credit reports. Fair Medical Debt Reporting Act (S4907A, 2023) bans medical debt on CR This stacks on top of the federal CFPB 2025 rule (which removes most medical debt from credit reports nationwide) and the Fair Credit Reporting Act -- giving New York consumers one of the strongest protections against medical-debt credit destruction in the country.
| Rule | New York Standard |
|---|---|
| State medical-debt CR ban | STATE BAN |
| Primary citation | N.Y. Gen. Bus. Law 380-v |
| Hospital financial-assistance (FAP) | N.Y. Pub. Health Law 2807-k (Indigent Care Pool) + IRC 501(r)(4) |
| Price-transparency mandate | New York Hospital Financial Assistance Reporting |
| Pre-litigation rules | 5-day pre-suit notice + hospital financial assistance offer (GBL 519) |
This page is about medical bills -- the pre-discharge hospital invoices that have not yet been sold, charged off, or litigated. For post-collection medical debt that has already cycled through lawsuits and credit reporting, see the companion site medicaldebtbankruptcy.com.
Hospital Financial-Assistance Policy (FAP) Requirement in New York
N.Y. Pub. Health Law 2807-k (Indigent Care Pool) + IRC 501(r)(4)
IRC 501(r)(4) is the federal baseline for non-profit hospitals: to maintain tax-exempt status, the hospital must adopt a written Financial Assistance Policy, widely publicize it, and offer discounted or free care to eligible patients. The 2014 IRS final rule also requires:
- 501(r)(5) limitation on charges: FAP-eligible patients cannot be charged more than the "amount generally billed" (AGB) to insured patients.
- 501(r)(6) billing and collection: No extraordinary collection actions until the hospital has made reasonable efforts to determine FAP eligibility.
If your New York hospital skipped FAP screening before sending your bill to collections, you have a Section 501(r)(6) claim that can void the collection effort.
Section 501(r)(6) -- Extraordinary Collection Action Bar
The 501(r)(6) rule is one of the most under-used patient protections. It requires tax-exempt hospitals to:
- Wait at least 120 days from first billing before any extraordinary collection action (ECA).
- Provide a plain-language summary of the FAP with each bill during the 120-day window.
- Accept FAP applications for at least 240 days from first billing.
Extraordinary collection actions include:
- Credit reporting the debt
- Filing a lawsuit
- Placing a lien on property
- Garnishing wages
- Seizing bank accounts
If your New York hospital took any ECA without FAP screening, file a complaint with the IRS and demand retraction of the collection action.
CFPB 2025 Federal Medical-Debt Rule
The Consumer Financial Protection Bureau's 2025 rule removes most medical debt from consumer credit reports nationwide, including in New York. The rule specifically:
- Prohibits creditors from using medical information in most credit decisions.
- Removes medical-debt collection tradelines under $500 after 1 year.
- Prohibits consumer reporting agencies from furnishing medical-debt information for non-medical credit decisions.
The rule is separate from state-law bans and works in parallel. Where New York has its own state-law ban, the stricter rule controls.
Pre-Litigation Notice in New York
5-day pre-suit notice + hospital financial assistance offer (GBL 519)
Many states now require hospitals to send a pre-suit notice offering a payment plan, FAP application, or charity-care screening before filing a collection lawsuit. In New York, the key pre-suit protections are captured in the rule above.
If the New York hospital skipped the notice or payment-plan offer, you may have:
- A state-law claim to dismiss the lawsuit
- An FDCPA claim against the collector (for attempting to collect on a defective claim)
- A state unfair-trade-practices claim against the hospital
Medical Bill vs Medical Debt -- Why the Distinction Matters in New York
This site focuses on medical bills: pre-discharge invoices from hospitals, providers, and specialists before they are sold to debt buyers. Bills have:
- A direct provider relationship (you can negotiate, apply for FAP, set up payment plans)
- Stronger legal protections (501(r), state HFA laws, pre-suit notice)
- Higher negotiation leverage (providers will often accept 30-50% of billed)
Medical debt (covered at medicaldebtbankruptcy.com) is what the bill becomes after it is sold, charged off, or litigated:
- Held by debt buyers, not providers
- Subject to FDCPA and debt-validation rules
- Often bought for 2-5 cents on the dollar, so settlements possible at steep discount
Strategy on the bill stage (this site) focuses on preventing the debt. Strategy on the debt stage focuses on resolving it.
New York Federal Bankruptcy Data
When hospital medical bills exceed income-based payment plans, bankruptcy discharges the debt and protects future wages and accounts. These FJC numbers show how New York debtors use the bankruptcy remedy for unpayable medical bills.
Numbers below come from the Federal Judicial Center Integrated Database covering 1,231 consumer bankruptcy cases from New York's federal bankruptcy courts.
| Chapter | Cases Filed | Discharge Rate | Dismissal Rate |
|---|---|---|---|
| Chapter 7 | 1,145 | 98.7% | 1.2% |
| Chapter 13 | 86 | 28.2% | 71.8% |
Rates computed on resolved cases only. Source: FJC Integrated Database.
Bankruptcy as a Medical-Bill Discharge Tool in New York
When medical bills exceed your ability to pay through FAP, payment plans, and negotiation, bankruptcy discharges them. Medical debt is typically a general unsecured claim with no special treatment -- it discharges in Chapter 7 within 90 days and is paid pro rata (often at cents on the dollar) through a Chapter 13 plan.
Key bankruptcy tools for New York medical debtors:
- Chapter 7 discharge within 90-120 days
- 11 U.S.C. 362 automatic stay halts collection, garnishment, and lawsuit within 24 hours
- 11 U.S.C. 522(f) judicial lien avoidance against medical judgments impairing exemptions
- Chapter 13 hardship discharge if medical condition prevents plan completion
Check 1328(f) refiling screener and the New York means test.