Lawmakers in at least eight states this year are aiming to reel in wage garnishment for unpaid medical bills.<\/p>\n
The legislation introduced in Colorado<\/a>, Florida<\/a>, Hawaii<\/a>, Indiana<\/a>, Maine<\/a>, Michigan<\/a>, Ohio<\/a>, and Washington<\/a> builds on efforts made in other states in past years. This latest push for patient protections comes as the Trump administration has backed away<\/a> from federal debt protections, health care has become more costly<\/a>, and more people are expected to go without medical coverage or choose cheaper<\/a> but riskier high-deductible insurance plans that could lead them into debt.<\/p>\n \u201cIn the wealthiest country on Earth, people are going bankrupt, suffering wage garnishment, just because they get sick,\u201d said Colorado state Rep. Javier Mabrey<\/a>, a Democrat who introduced legislation on Feb. 19 that would, among other measures, ban wage garnishment for medical debt.<\/p>\n That legislation is under consideration after a KFF Health News investigation<\/a> found that courts approved wage garnishment requests in an estimated 14,000 medical debt cases a year in Colorado. The investigation also showed that it isn\u2019t just urban hospitals or big health care chains allowing their patients\u2019 wages to be garnished. It\u2019s also small rural hospitals, physician groups, and public ambulance services, among other medical care providers. And the reporting showed that wage garnishment can erroneously target patients. For example, one family lost wages \u2014 and subsequently power to their home, because they couldn\u2019t pay their electric bill \u2014 after an ambulance company incorrectly billed the family instead of Medicaid.<\/p>\n Wage garnishment is one tool creditors can use in most states to recoup money from people with unpaid bills. In many states, they can garnish someone\u2019s bank account or put a lien on their home, too. To garnish a person\u2019s wages, a creditor must typically get permission from a court to make the person\u2019s employer hand over a piece of the debtor\u2019s earnings.<\/p>\n \u201cThe creditor is taking the money directly out of somebody\u2019s paycheck, and so it doesn\u2019t leave people with any choice to say, \u2018I need to prioritize food for my children,\u2019\u201d said Lauren Jones<\/a>, legal and policy director for the National Center for Access to Justice. The center, based at Fordham Law School, scores states<\/a> and the District of Columbia on how fair their laws are to consumers who get sued over debt.<\/p>\n It is legal to garnish patients\u2019 wages for medical debt in all but a few states<\/a>, according to the Commonwealth Fund, a nonprofit foundation based in New York focused on health care.<\/p>\n Now, lawmakers in additional states seek to ban the practice entirely. Others want to limit it by exempting debtors whose household income falls under a certain threshold or by upping the amount of earnings immune from garnishment.<\/p>\n Such policies on wage garnishment fit into a larger push<\/a> around the country to address the effect of medical debt on people\u2019s lives and finances. Those efforts include barring medical debt from credit reports<\/a>, prohibiting liens on people\u2019s homes, capping interest rates, and limiting the ability to file lawsuits against people with low incomes over unpaid medical bills.<\/p>\n Debt collectors have fought against such measures, arguing they don\u2019t solve the problem of health care affordability and hurt the ability of medical providers to continue to provide care.<\/p>\n \u201cThe wage garnishment process is already highly regulated at the federal and state level and includes many consumer protection measures,\u201d said Scott Purcell, chief executive of ACA International<\/a><\/a>, an association of credit and collection professionals.<\/p>\n Even before the Colorado legislation was introduced, BC Services sent a letter<\/a> warning its clients that the legislation \u201cposes an existential threat,\u201d especially to rural health providers. And Bridget Frazier, a spokesperson for the Colorado Hospital Association<\/a>, said Feb. 20 that the bill \u201ccould drive up costs and financial risk for health care providers, making it harder to keep hospitals sustainable and ensuring Coloradans have access to care when they need it most.\u201d<\/p>\n The pending Colorado measure would ban wage garnishment for all patients. It also would limit bank garnishments, in which a patient\u2019s financial institution must hand over a chunk of the money in the person\u2019s account. Additionally, among other things, it would prevent payment plans from exceeding 4% of weekly net income, require creditors to check whether uninsured patients are eligible for public health insurance before collecting, bar creditors from collecting on bills that are more than three years old, and leave medical care providers liable to the patient for at least $3,000 if collectors don\u2019t comply.<\/p>\n \u201cNo one is saying, \u2018Don\u2019t get paid for your services.\u2019 We\u2019re saying getting health care should not lead to financial ruin for people,\u201d said Dana Kennedy, co-executive director at the Denver-based Center for Health Progress<\/a>, a health advocacy group that has been working with lawmakers on the Colorado measure.<\/p>\n Kennedy said that KFF Health News\u2019 investigation drove home how many kinds of Colorado health care facilities are willing to let this collection practice happen to their patients, and that the people whose wages are being garnished are often working at Family Dollar, Walmart, Amazon, or gas stations and restaurants.<\/p>\n \u201cMedical debt is typically different from other forms of indebtedness,\u201d said Colorado state Sen. Mike Weissman<\/a>, a Democrat co-sponsoring the legislation. \u201cYou could choose to keep driving your old car or buy a new one and take on debt for that. You could upgrade your home. You could buy consumer appliances. There\u2019s not usually that voluntary element in a health care context.\u201d<\/p>\n Carolyn Carter<\/a>, a senior attorney with the National Consumer Law Center, said broad laws that don\u2019t require patients to jump through hoops to access protections are the most likely to be effective. Because of that, she and other consumer advocates prefer state policies that get rid of wage garnishment for all debtors and all types of debt.<\/p>\n \u201cIt can be hard to identify medical debt as medical debt,\u201d Carter said. \u201cFor example, if you have a medical debt and you put it on your credit card, it\u2019s not going to be easy for a court system to identify that debt as medical debt.\u201d<\/p>\n She said another reason is that complexity is the enemy of effectiveness. Carter pointed to a report about Hamilton County, Tennessee,<\/a> showing that even though people in the state can keep $10,000 in their bank accounts safe from garnishment, few consumers take advantage of the protection. They must know the protection exists, know where to find the relevant form, get the form notarized, file it, and mail copies to creditors. The same report found that garnishments can also be burdensome for employers, who must process garnishments and can find themselves in court if they make an error.<\/p>\n Jones, at the National Center for Access to Justice, said outlawing wage garnishment fully, rather than limiting it, has other benefits. \u201cIt\u2019s also to protect people\u2019s jobs, because in most states, if somebody has two or more orders of garnishment, they can lose their job for it,\u201d she said.<\/p>\n Still, some lawmakers are pushing for the intermediate route. In Washington state, Democratic state Sen. Marko Liias<\/a> is spearheading legislation to rope off a larger portion of low-wage earnings from garnishment. So, for example, a person making $1,000 a week would be able to keep their whole paycheck, as opposed to the $800 that the law would currently protect.<\/p>\n Mindy Chumbley, owner of a Washington-based collections company and an ACA International board member, testified against the bill on Feb. 2. \u201cWashington has made sweeping changes to medical debt policy year after year without pausing to study the cumulative impact,\u201d she told lawmakers. \u201cOur clients are reporting clinic closures, urgent care centers shutting down, staffing shortages, and rural facilities struggling to stay open.\u201d<\/p>\n The Washington State Hospital Association said it is neutral on the legislation. The American Hospital Association said it does not take positions on state policies.<\/p>\n Liias told KFF Health News that lawmakers need to ensure health care providers can recoup their costs while also protecting patients. \u201cWe don\u2019t want families either to be driven into bankruptcy or to be driven into under-the-table work to avoid these garnishment thresholds,\u201d he said.<\/p>\n Liias said his measure follows the lead of Arizona, which passed similar consumer protections in 2022. \u201cObviously, the health care system is still functioning in Arizona, and folks are able to make it work.\u201d<\/p>\n\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/p>\nUSE OUR CONTENT<\/h3>\n