This Act establishes new financial assistance and debt collection standards for Medicare hospitals while creating a federal grant program for nonprofits to purchase and eliminate eligible medical debt.
Gabriel (Gabe) Vasquez
Representative
NM-2
The Patient Debt Relief Act establishes new standards for hospitals participating in Medicare regarding financial assistance and medical debt collection practices, including limits on liens and wage garnishment. It also creates a grant program for eligible nonprofits to purchase and eliminate the medical debt of low-income individuals. These provisions aim to protect patients from aggressive debt collection and provide avenues for debt relief.
Patient Debt Relief Act Sets New Hospital Rules: No More Wage Garnishment or Home Liens for Medical Bills Starting in 2028.
If you’ve ever opened a hospital bill and felt your stomach drop, you know that medical debt isn't just a number—it’s a weight that follows you home. The Patient Debt Relief Act is designed to change the rules of the game for hospitals that take Medicare. Starting January 1, 2028, hospitals won't be able to just send you to collections or threaten your home. They will be required to screen you for financial assistance before they even ask for a check. If you apply for help, the hospital has to pause all collection efforts and give you an answer at least 30 days before any payment is actually due. It’s about making sure the 'charity care' policies hospitals already have on paper actually get used by the people who need them.
Protecting Your Paycheck and Property
The most significant changes in this bill are the hard boundaries it sets on debt collection. Under Section 2, hospitals are flat-out banned from placing liens on your home or garnishing your wages to satisfy a medical debt. For anyone working a 9-to-5 or trying to keep a roof over their family, this removes the 'nuclear option' debt collectors often use. Furthermore, if your household income is at or below 250 percent of the federal poverty level (for a family of four in 2024, that’s about $78,000), the hospital is prohibited from charging you interest or selling your debt to a third-party collector at all. Even for those above that income bracket, a hospital can’t sell your debt unless it’s been overdue for a year and they’ve offered you a payment plan first.
The $100 Million Reset Button
Beyond just changing the rules for future bills, the legislation looks to wipe the slate clean for people currently drowning in debt. Section 3 authorizes $100 million for a grant program that kicks off in 2027. This money goes to a specialized nonprofit whose sole job is to buy up medical debt and forgive it. You’d qualify for this 'debt jubilee' if your medical bills eat up more than 5 percent of your annual income or if your household makes less than 400 percent of the federal poverty line. If the nonprofit buys your debt, they have 60 days to let you know it’s gone, effectively clearing that hurdle from your credit report and your mind.
Keeping the System Honest
To make sure hospitals don’t just ignore these new rules, the bill includes some teeth. By 2028, the government has to set up a secure online portal where you can report a hospital if they try to garnish your wages or fail to tell you about financial aid. Starting in 2029, the Department of Health and Human Services will run annual audits on random hospitals to check their math and their methods. While hospitals might complain about the extra paperwork and debt collectors will certainly see a dip in their business model, the bill prioritizes the financial stability of the patient. It’s a shift toward treating medical debt as a manageable hurdle rather than a life-altering catastrophe.