A new year means new legislatures that are in session in state capitols across the country. A bill has been introduced this week in the Florida Senate that seeks to set definitions for a number of terms, such as medical debt collector and “extraordinary collection action.” Senate Bill 1222 would make a series of changes to how medical debt is defined, transferred, and collected in Florida, signaling continued state-level interest in regulating medical debt practices more aggressively.
At the center of the proposal is a revised and expanded definition of what constitutes an extraordinary collection action. Under the bill, actions such as selling medical debt to a third party, filing a debt collection lawsuit, or initiating other legal processes would fall under this definition unless specific conditions are met. Those conditions include written agreements limiting interest, prohibiting certain collection practices, and requiring debts to be recalled if a consumer is later found eligible for financial assistance.
The bill also formally defines two new categories that would be relevant to many industry participants. A medical debt creditor is defined as the party owed money for medical services, while a medical debt collector is defined as a third party hired to collect or that purchases unpaid medical bills. These definitions matter because the bill applies restrictions to both groups, not just third-party collectors.
SB 1222 would prohibit medical debt creditors and collectors from engaging in a wide range of activities to collect medical debt. These include threatening arrest, placing or threatening liens on real property, garnishing wages or tax refunds, seizing bank accounts, and furnishing adverse information about medical debt to consumer reporting agencies. The bill also restricts collection activity while insurance claims, grievances, appeals, financial assistance determinations, or good-faith payment negotiations are ongoing.
Another provision likely to draw attention from creditors and debt buyers is the proposed cap on interest. Unless a debtor is eligible for financial assistance, interest on medical debt would be capped at 2% per year. Debtors who qualify for financial assistance could not be charged any interest or late fees. These limits would also apply to judgments related to medical debt.
If enacted, the bill would take effect July 1, 2026. While it is early in the legislative process, SB 1222 reflects a broader trend of states seeking to reshape how medical debt is treated, collected, and monetized. Industry participants operating in Florida will want to monitor the bill closely as it moves through committee and consider how its provisions could impact compliance, account valuation, and collection strategies.
