LUGPA Policy Update: State Advocacy Efforts to Limit Wage Garnishment for Medical Debt

March 2026

At-a-Glance Essentials

What’s Changing

• Multiple states are advancing legislation in 2026 to restrict or eliminate wage garnishment for medical debt.
• Proposals include full bans (e.g., Colorado and Ohio), income-based caps (e.g., Indiana), and expanded wage protections (e.g., Washington).
• Additional reforms include limits on interest rates, shorter statutes of limitations, prohibitions on credit reporting, and requirements to screen patients for financial assistance before initiating collections.

Why It Matters

• Wage garnishment can significantly reduce take-home pay, limiting patients’ ability to afford housing, food, and utilities.
• Rising deductibles and cost-sharing have increased medical debt exposure, even among insured patients.
• Aggressive collection practices can deter patients from seeking medically necessary care, undermining long-term health outcomes and provider-patient trust.

Where Things Stand (February 2026)

• Most bills are in committee review.
• Indiana’s legislation has advanced the furthest, passing the Senate and moving to the House.
• Opposition from collection groups and some providers centers on revenue cycle impact, particularly for rural and safety-net facilities.

Action Points for LUGPA Members

• Monitor legislation in affected states.
• Review revenue cycle policies and charity care protocols.
• Engage in advocacy to ensure patient protections are balanced with practice sustainability.

Overview of Key State Proposals

In 2026, lawmakers in Florida, Hawaii, Maine, Michigan, and other states joined Colorado, Indiana, Ohio, and Washington in introducing reforms targeting medical debt collection practices.

Selected Examples

• Colorado (HB 26-1267)
  Would fully prohibit wage garnishment for medical debt, cap payment plans at 4% of weekly net income, limit bank account seizures, require insurance eligibility verification, and impose a three-year statute of limitations.
• Florida (SB 1489)
  Prohibits garnishment in certain circumstances, including for low-income individuals or those compliant with payment plans, and requires financial assistance screening before collections.
• Hawaii (SB 2165)
  Expands income exemptions for low-wage earners but does not impose a full ban.
• Indiana (SB 85)
  Caps garnishment at 10% of wages and eliminates it for individuals earning up to 200% of the federal poverty level. Also limits interest rates and includes housing protections tied to medically necessary care.
• Maine (LD 2129)
  Limits garnishment through income thresholds and bars medical debt from credit reports, building on reforms enacted in 2025.
• Michigan (SB 0702)
  Proposes exemptions for low-wage earners but largely mirrors federal standards without a full medical-debt-specific ban.
• Ohio (HB 257)
  Would ban wage garnishment for medical debt, cap interest at 3%, and prohibit credit reporting.
• Washington (SB 6105)
  Expands protected earnings for low-wage workers and prohibits medical debt from credit reporting under prior reforms.

Broader Context

These efforts reflect a national shift toward mitigating the financial toxicity of healthcare. Policymakers are increasingly focused on:

• Excluding medical debt from credit reports
• Capping interest rates
• Limiting liens and home foreclosures
• Requiring charity care screening before collections

As federal oversight of debt practices has fluctuated, states have stepped in to establish additional guardrails.

Potential Impact on LUGPA Members

For large urology group practices, these reforms may:

Operational Impacts

• Restrict traditional collection tools, potentially reducing recovery rates.
• Increase administrative requirements, including insurance eligibility verification and income-based payment plan structuring.
• Require updates to compliance and documentation workflows.

Strategic Considerations

• Align with LUGPA’s broader commitment to reducing financial toxicity and preserving patient access to timely care.
• May strengthen patient trust, retention, and earlier presentation for urologic evaluation.
• Create opportunities for proactive advocacy to ensure balanced reforms that preserve independent practice sustainability.

Bottom Line

State-level medical debt reforms are accelerating. While intended to protect vulnerable patients from severe financial consequences, these proposals could meaningfully alter revenue cycle practices for physician groups. LUGPA members should remain engaged to help shape policies that promote both equitable patient protections and sustainable independent specialty care.