A Senate committee in the Indiana legislature held a hearing yesterday to discuss a bipartisan bill related to how medical debts are collected in the Hoosier State, and a vote on the bill could come as soon as next week, according to its sponsor.
Driving the news: Senate Bill 317, introduced by Sen. Fady Qaddoura, a Democrat, and co-sponsored by two Republicans, Sen. Ed Charbonneau and Sen. Tyler Johnson, aims to limit the impact of medical debt on Indiana residents by restricting certain collection practices and imposing new requirements on hospitals.
Key provisions in the original bill:
- Requires hospitals to offer payment plans for charges incurred after June 30, 2025.
- Prohibits garnishment of wages for medical debt.
- Bars hospitals from reporting medical debt to credit agencies for individuals with household incomes below 500% of the federal poverty level.
- Caps interest on unpaid medical debt at 3% annually.
- Prohibits placing liens on consumers’ primary residences or certain personal property to collect medical debt.
- Mandates that hospitals with revenue over $20 million assess a patient’s eligibility for charity care before billing them and provide an estimate of out-of-pocket costs.
Amendments introduced in committee:
- Increases the maximum percentage of a person’s gross monthly household income that can be allocated to a payment plan from 5% to 10%.
- Moves the due date for the first payment on a payment plan from 90 days to 30 days after service.
- Removes provisions related to emergency or medically necessary healthcare services and hospital billing requirements.
- Eliminates language prohibiting liens on certain personal property and restricting court jurisdiction over medical debt recovery cases.
The big picture: Indiana ranks 11th in the nation for the percentage of its population with medical debt in collections, according to the Urban Institute. In some rural counties, nearly 28% of families have medical debt in collections. The bill’s supporters argue that the legislation would provide crucial financial protections, while critics — including representatives from the Indiana Collectors Association who appeared at the hearing yesterday — contend that treating medical debt differently from other types of debt could create legal challenges.
What’s next: The Senate Health and Provider Services Committee has yet to vote on SB 317, but a decision could come as early as next week.
