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2022 Guide to Medical Debt Law and Reduced-Cost Care by State

If you’re in need of high-cost medical care or dealing with overwhelming medical debts, you may be qualified for assistance from the government or hospitals in your state.

Written by: Senior Living Research Team | Published: August 18, 2022


Medical debt is a huge problem in the United States. It is one of the most common types of consumer debt, though it is often underreported since many people “pay” their medical bills through credit cards. An estimated 100 million Americans currently have medical debt according to a recent study from the Kaiser Family Foundation.

Perhaps most notably, medical debt differs from other types of debt because people do not plan to get sick or injured. Most people don’t set aside money in case of accidental injuries or surprise illnesses. Unfortunately, nearly 67 percent of U.S. bankruptcies are due to medical care costs or time lost from work due to medical reasons.

Since medical care costs are so high, especially for the uninsured or underinsured, undergoing necessary medical treatments can be stressful. But, in some cases, there are solutions. Many hospitals have financial assistance policies, but consumers often have no idea about their existence. 

Additionally, each state has unique laws and guidelines for medical billing, low-income patients, and medical debt collection. Since they can be confusing, this guide will help people decode their state's laws and the resources available to help understand their medical debt.

Essential Facts About Medical Debt and Repayment

Discovering that you or a loved one requires medical care can be frightening, especially if it requires a hospital stay. Even one night in a hospital can result in thousands of dollars in medical bills. However, depending on where you live, there may be solutions and assistance you haven’t heard of:

We want to emphasize that many hospitals go beyond state minimum requirements (if they exist). Many hospital systems also offer assistance even when there are no state requirements. Please ask the billing or financial offices at your medical provider for help.

Key Terms for Understanding Medical Debt and Financial Assistance

Before we dive into each state’s medical care guidelines and laws, let’s cover a few keywords that often come up when determining eligibility for financial assistance and medical debt relief:.

Federal poverty level (FPL)

The federal poverty level is an income level set by the government that helps to determine who is eligible for various types of assistance, including medical costs. For instance, medical assistance at some hospitals is available for those earning up to 400% FPL, which would be a maximum income of $54,360 for a one-person household and $129,880 for a five-person household.

In 2022, a household of one person is at the FPL if its income is $13,590. The level is $23,030 for a three-person household and $32,470 for a home of five. Financial assistance at some hospitals is available up to 400% FPL, which would be $54,360 for a one-person household and $129,880 for a five-person household.

2022 Federal Poverty Levels

Persons in household Federal poverty level 200% FPL 300% FPL 400% FPL
1 $13,590 $27,180 $40,770 $54,360
2 $18,310 $36,620 $54,930 $73,240
3 $23,030 $46,060 $69,090 $92,120
4 $27,750 $55,500 $83,250 $111,000
5 $32,470 $64,940 $97,410 $129,880
6 $37,190 $74,380 $111,570 $148,760
7 $41,910 $83,820 $125,730 $167,640
8* $46,630 $93,260 $139,890 $186,520

* Add $4,720 for each person if a household has more than 8 people

Note: Includes the District of Columbia but not Alaska and Hawaii, which have their own levels
Source: U.S. Department of Health and Human Services

Reduced-cost care

Charity care, indigent care, hardship assistance, and patient payment assistance are a few other words to know. These are other words for free and reduced-cost or discount care.

Statute of limitations

This is another medical debt term worth discussing. This is the time frame in which medical providers and collectors can legally pursue debts. Say you have a medical debt that is five years old, and the statute of limitations in your state is three years. You are no longer legally obligated to pay the debt. Some things to remember:

Weekly disposable earnings

They are part of a person's income eligible for wage garnishments if a medical debt isn’t being repaid on time. Basically, they are gross income minus taxes, Social Security, and other legally mandated deductions.

Homestead exemption laws

These laws offer varying levels of protection against debt collections depending on state laws. They prohibit creditors from selling a person's home to satisfy a debt. The amount of equity you have in the home plays a big role in whether such a sale is permitted.

No one can force a sale if the home equity is below the amount you owe on your medical debt. Suppose you owe $30,000 in medical debt, and your state's homestead exemption is $50,000. The debt collector cannot have a court force the sale of your home. If your equity is, say, $70,000, then a sale could occur. However, you could keep $50,000 since that is the exemption amount.

Florida, Texas, Iowa, Kansas, South Dakota, Oklahoma, Nevada, Minnesota, and Montana have unlimited or generous exemptions. Pennsylvania and New Jersey are among the states with no homestead exemptions but extend some protections for spouses. Meanwhile, some states allow married couples to double their exemption amounts.

Liens

These are another way for debt collectors to stake real and personal property claims. The specifics depend on the state. For example, debt collectors can sometimes file liens on your home. The creditor gets a certain amount of money if you sell your property. The lien is registered on the title of the property, and only in a few states can lienholders force a sale of the property. Still, having a property lien can make life very difficult for homeowners.

There is also something called hospital liens. These occur with emergency treatment, such as injuries from a car accident. Providers can file liens on any potential personal injury lawsuit settlements, and their claims often take priority over patients getting the money. In 32 states, hospital liens also precede attorney's liens/fees.

Calculate Your Odds of Receiving a Medical Debt Waiver: The nonprofit group Dollar For created a tool that estimates whether or not your hospital might forgive your medical bill. Give yourself about three minutes to fill it out and have the hospital name, bill amount, and date of the most recent bill on hand. You also need to provide your household size and annual income. Dollar For can also help you apply for financial assistance. Its services are free.

Medical Care Cost and Debt Collection Laws by State

States that do not require hospitals to provide free or reduced-cost care

Twenty-three states have no laws requiring hospitals to offer free or lower-cost care to eligible patients. However, many individual hospitals and health care systems do so, anyway. These states also have rules regarding medical debt collections that help to protect patients. When possible, ask your hospitals or medical providers about any free and discount programs they offer before you seek treatment.

State State policies Statute of limitation on medical debt Homestead exemption limits during debt collection Wage garnishment limits during debt collection
Alabama A hospital with financial assistance policies must post them in a conspicuous place on its website and in its admissions area.

Hospitals must also give patients written information on financial assistance criteria along with each hospital bill.

6 years $15,000 ($30,000 for married couples and joint owners) Up to 25% of weekly disposable income
Alaska People not eligible for Medicaid may get some relief from two programs: Chronic and Acute Medical Assistance (CAMA) and Catastrophic Illness Assistance. Check with hospitals about filing a Catastrophic Illness Assistance application.

Eligibility and medical services covered varies, and the programs depend on state funding.

CAMA allows consumers to repay balances over three years using a payment schedule.

3 years $72,900 N/a
Arizona The rate of medical debt in Arizona is high, and much of it is reported as credit card debt.

On paper, 16 percent of Arizona residents have medical debts in collections, but the true percentage is higher since many paid off debts with credit cards.

6 years $150,000 Up to 25% of weekly disposable income
Arkansas Special or reduced-cost billing is available to some patients of the University of Arkansas Medical Center. The center charges counties in Arkansas for the care given to lower-income residents.

Contact customer service if you cannot make minimum payments or pay your balance in full (see “Billing Questions” on link)

6 years unlimited Up to 25% of weekly disposable income
Delaware Hospitals that apply for a Certificate of Need to expand or build a facility must show they have financial assistance policies for patients who need them.

Under the certificate, the state requires assistance for patients with family incomes at or below 350% of the FPL.

To apply for assistance, patients should check with the facility where they were treated.

3 years $125,000 Up to 15% of weekly disposable income
Georgia Georgia offers an optional Hospital Care for the Indigent Program. Hospitals may provide:

  • free care with family income below 125% FPL
  • discount care for family income 125% to 200% FPL

To apply, check with your hospital or health care system.

Georgia also has the Indigent Care Trust Fund that hospitals can use to seek reimbursement.

4 years $12,500 ($43,000 for joint owners) Up to 25% of weekly disposable income
Kentucky Kentucky law does not require free care, but medically indigent residents earning up to 100% FPL may qualify for the Disproportionate Share Hospital Program (DSH).

Acute care hospitals, private psychiatric hospitals, and university hospitals in the Kentucky Medicaid Program must offer this type of care. Interested patients can fill out an application.

To qualify, they must be Kentucky residents and cannot be eligible for Medicaid nor have private insurance or medical insurance coverage.

10 years $5,000 Up to 25% of weekly disposable income
Missouri Hospitals generally set their own charity care policies. On average, they get 89 percent reimbursement for care given to uninsured patients.

Check with individual hospitals and facilities about their free and reduced-cost care policies.

10 years $15,000 Up to 25% of weekly disposable income
Montana Counties can decide to establish indigent care programs but are not required to.

Montana has 11 nonprofit hospitals, and most of their charity care policies are listed on their websites.

8 years $250,000 Up to 25% of weekly disposable income
Nebraska State laws do not mandate free care but do require counties to take some responsibility in indigent care. The level depends on the county’s financial status.

Check with individual hospitals and facilities about their free and reduced-cost care policies.

5 years $60,000 Up to 25% of weekly disposable income
New Hampshire The state requires some free care for facilities applying for a certificate of need to add a service.

Also, hospitals are required to report on their free care programs and community benefits. In order to report free care, hospitals must have free care policies accessible to the public.

3 years $100,000 Up to 25% of weekly disposable income
New Mexico No laws mandate free care, but New Mexico mandates hospitals seeking indigent care reimbursements to provide assistance for patients who earn less than 1.5X times the average per capita personal income.

Check with hospital systems about their free or reduced-care programs. For example, some residents of Bernalillo County can qualify to get as much as 45% of their charges reduced in a self-pay discount program.

6 years $60,000 Up to 25% of weekly disposable income for patients with incomes above 200% FPL
North Carolina Hospitals wanting a Certificate of Need must offer some form indigent care.

Check with systems such as UNC Health Care about eligibility and applications. For example, UNC Health Care offers a 40 percent uninsured discount and charity care for those with family incomes at or below 250% FPL.

3 years $35,000 Up to 25% of weekly disposable income
North Dakota Hospitals and providers have limits on what they can charge for medical bill interest rates and finance charges.

Many systems have their own financial assistance policies.

6 years $100,000 Up to 25% of weekly disposable income
Pennsylvania The Uncompensated Care Program reimburses hospitals for some of the indigent care they provide.

Many systems have their own financial assistance policies

4 years None (jointly owned property can be exempted from debts owed by one spouse) Up to 10% of weekly disposable income
South Carolina The Medically Indigent Assistance Program provides free and reduced-cost care for residents with household incomes not exceeding 200% FPL.

Check with hospitals and providers for applications and eligibility (they may offer more on top of what the program covers).

3 years $58,255 ($116,510 for joint owners) Up to 25% of weekly disposable income
South Dakota Counties can set indigent care programs, with eligibility and funding depending on the county.

Check with systems such as Monument Health about applying.

6 years Unlimited Up to 20% of weekly disposable income
Tennessee The Indigent Health Care Fund helps hospitals get reimbursement for some charity care costs.

Family income must be at or below 100% FPL and patients must have no resources to pay. Hospitals cannot bill uninsured patients more than 175% of the cost of services.

Patients should check with hospitals about details and applications. Providers can add their own criteria, and you may still qualify with income above 100% FPL.

6 years $5,000 ($7,500 for joint owners or married couples, $20,000 married and one spouse 62+, $25,000 married and both spouses 62+) Up to 25% of weekly disposable income
Utah Utah has free care requirements which are not laws. Rather, the state’s Property Tax Exemption Standards of Practice call for nonprofit hospitals to maintain formal free or reduced-cost policies if they want to be exempt from the state's property tax.

Hospitals also have to be proactive about letting patients know of their indigent care policies.

Check with individual hospitals and systems about eligibility and applications.

6 years $20,000 ($40,000 for joint owners) Up to 25% of weekly disposable income
Vermont No law requires free or discount medical care, but all Vermont hospitals have financial assistance policies.

To qualify, you must meet residency requirements and have family income at or below 200% FPL.

Check with medical providers about eligibility and applications. You may be able to get help above 200% FPL at some places.

6 years $125,000 ($250,000 for joint owners) Up to 25% of weekly disposable income
Virginia Most Virginia hospitals offer charity care to some extent but no laws mandate it.

The law does require that if a hospital offers charity care, information about the policy must be visible in public areas. When patients without insurance are admitted, discharged, billed, or otherwise at a point of service, hospitals must also provide them with eligibility criteria.

The Virginia Hospital and Healthcare Association lists many Virginia hospitals and links to their financial assistance policies.

5 years $5,000 homestead exemption plus $500 per dependent, $10,000 homestead exemption if 65 or older (otherwise, $10,000 for joint owners or married couples) Up to 25% of weekly disposable income
Wisconsin Wisconsin does not require free care by law, but mandates hospitals to create “uncompensated health care service plans.”

The plans cover areas such as charity care application procedures and eligibility determination.

Check with your individual providers to see about policies, eligibility, and applications. For example, Western Wisconsin Health offers hospital discounts up to 300% FPL.

6 years $75,000 ($150,000 for joint owners) Up to 20% of weekly disposable income
Wyoming No free care mandate exists, but county memorial hospitals must provide free services if patients do not have the ability to pay. However, if someone lives in a county with a working department of public assistance, they are considered to have the means to pay.

Check with your individual providers to see about policies, eligibility, and applications. For example, Memorial Hospital of Converse County and its affiliate clinics offer hospital discounts up to 350% FPL

10 years $20,000 ($40,000 for joint owners) Up to 25% of weekly disposable income

States Requiring Hospitals to Provide Some Free or Reduced-Cost Care

The following 27 states have laws requiring hospitals to provide free or reduced cost care to patients in financial need. We’ll break down the details below, but be sure to check with your local hospital systems to find out the exact ways to apply and qualify for reduced-cost care. In many cases, there are hospitals that go above and beyond their state’s laws and provide even more financial assistance than required.

State Reduced-cost care policies Statute of limitation on medical debt Homestead exemption limits during debt collection Wage garnishment limits during debt collection
California California requires general and acute care hospitals to provide free or reduced-cost billing for uninsured patients with incomes at or below 400% of the federal poverty line (up from 350%).

Patients with insurance can qualify if their medical expenses exceed 10% of their income in the past 12 months.

Hospitals must list their charity care guidelines and application procedures online.

Hospitals must wait 180 days to report debt to credit agencies or to file for collection. Patients must be notified before collections and they must receive applications for charity care or financial assistance.

4 years $300,000 to $600,000 homestead exemption depending on median home sale prices in the county Up to 25% of weekly disposable income
Connecticut Connecticut’s laws are very limited and narrow. They affect hospitals with bed funds (private donations) and only mandate reduced-cost care for patients with income at or below 250% of the FPL, if they do not have insurance and do not qualify for Medicaid, Medicare, or other types of coverage.

Hospitals must screen patients for assistance eligibility under the hospital’s charity care policy or bed fund.

6 years $75,000 ($150,000 for joint owners Up to 25% of weekly disposable income
District of Columbia Hospitals with a certificate of need must offer “uncompensated” care for patients up to 200% FPL.

Check with individual hospitals and systems for their criteria, which may go beyond 200% FPL.

3 years Unlimited Up to 25% of weekly disposable income
Florida Florida mandates that nonprofit hospitals must offer charity care. However, no specific standards are laid out.

Patients should check with their individual facilities or healthcare systems about eligibility and applications.

Hospitals can qualify for partial reimbursement from the state through any of three programs: Health Care Responsibility for Indigents Program, Medicaid, and Florida’s Low-Income Pool.

5 years Unlimited Up to 25% of weekly disposable income
Hawaii The law for free care is very narrow. It covers only patients at Hawaii State Hospital, a mental hospital. It is the only acute care hospital in Hawaii serving adults with severe mental illness.

Otherwise, no free care mandates apply. Many hospital systems such as Hawaii Pacific Health hospitals and clinics do offer financial assistance. Check with your individual providers to see about policies, eligibility, and applications.

6 years $20,000 ($30,000 for head of household older than age 65) Up to 25% of weekly disposable income
Idaho Patients can submit applications for as much as $11,000 in financial assistance from their county. Above that amount, the Catastrophic Health Care Costs Program may cover costs.

If you receive financial assistance, hospitals automatically place a lien on your property until you pay off your medical bills.

5 years $100,000 Up to 25% of weekly disposable income
Illinois Illinois requires all hospitals to provide reduced-cost care for uninsured patients with income and assets at or below 600% FPL (300% FPL for rural or critical access hospitals).

The state mandates free care at hospitals for most patients with family income at or below 200% FPL but patients must cover the first $300 of care. At rural or critical access hospitals, patients at or below 125% FPL can receive free care.

Under the Hospital Uninsured Patient Discount Act, hospitals are capped at what they can charge patients.

llinois limits the ability of hospitals to send bills to collections or credit reporting agencies while patients are applying for financial assistance, appealing an insurance decision, following a payment plan, or negotiating a bill.

10 years $15,000 ($30,000 for joint owners) Up to 15% of weekly disposable income
Indiana The Hospital Care for the Indigent Program applies to patients who get emergency care and meet certain criteria to qualify: household income at or below 125% FPL and uninsured. Patients get no-cost care.

Nonresidents can qualify with income less than 75% FPL.

Indiana also has a community benefits law requiring nonprofit hospitals to notify patients about the hospitals' free care policies. The hospitals must also create and follow charity care plans and government sponsored indigent health care offerings.

6-10 years $19,300 ($38,600 for joint owners) Up to 25% of weekly disposable income
Iowa Hospitals must give free charity care to indigent patients. Patients without insurance can also get free medications through a prescription drug program.

Eligibility varies depending on the criteria set by a county hospital's board of trustees.

10 years Unlimited Up to 25% of weekly disposable income
Kansas Major hospitals in certain counties (between 175,000 to 250,000 residents) seeking matching funds for care must offer healthcare to patients with incomes up to 200% FPL.

Patients must have lived in Kansas for at least two years and in the county for at least one year.

The University of Kansas Health System is one of many that go beyond minimum requirements offering assistance up to 300% FPL or if medical bills equal or exceed 50% of gross family income. Providers must explain their charity care policies and whether bills are with discounts or free care applied.

3 years for unwritten express or implied contracts, obligations, and liabilities; 5 years for written contracts Unlimited Up to 25% of weekly disposable income
Louisiana The law requires state-owned hospitals (about 27% of Louisiana hospitals) to financially assist consumers whose family incomes are at or below 200% FPL if they are uninsured, or if their medical expenses are more than 20% of their family income in the past 12 months. 3 years Up to 25% of weekly disposable income
Maine All hospitals must offer medically necessary inpatient and outpatient free care to residents with income less than 150% FPL, whether the consumers are insured or not.

The law requires reasonable measures for patients unable to pay.

Hospitals must post notices about free care in visible locations such as waiting rooms, admitting areas, and outpatient reception lobbies. For inpatients, hospitals must offer written notices about the free care policy upon admission.

Hospitals are limited in sending bills to collections while patients are appealing to insurance, applying for assistance, in payment plans, or negotiating bills.

6 years $47,500 ($95,000 if any residents are under 18, over 60, or mentally or physically disabled)
Maryland Patients with family income at or below 200% of the FPL are eligible for free, medically necessary care. Patients may also qualify if their families participate in programs such as free or reduced lunch, SNAP, or  WIC.

For reduced-cost care, patients may qualify if they are 200% to 300% below the FPL or if they are 500% below with a financial hardship.

The application for financial assistance  is the same for all hospitals in the state.

The Medical Debt Protection Act, signed into law in 2021, protects patients' homes from medical debt lawsuits and eliminates wage garnishment and adverse credit reporting for patients who are eligible for free or reduced-cost care.

3 years $22,975 Up to 25% of weekly disposable income
Massachusetts Under Health Safety Net, all community health centers and acute care hospitals must offer free care to consumers with household incomes at or below 150% FPL.

Reduced-cost care is available for consumers with family incomes at 150% to 300% FPL.

To qualify, patients must be state residents and uninsured or underinsured and experiencing medical hardship. You can apply online for this assistance.

6 years $500,000 (additional $500,000 for each person with a disability or older than 62) 15% of wages can be garnished if person can afford the debt
Michigan Public hospitals’ boards of trustees decide if patients qualify for free care. The state also has more than 40 free care clinics for people without insurance.

Check with your hospital or facility about eligibility and applications.  Hospitals must offer a reasonable payment plan before sending medical bills to collectors.

6 years $30,000 ($45,000 if older than 65 or have a disability) Up to 25% of weekly disposable income
Minnesota Virtually all hospitals in the state must offer some kind of free care. The state does not set out specific guidelines for eligibility but does mandate that hospitals and facilities have specific guidelines. 6 years $450,000 ($1,125,000 if used mostly for agricultural purposes) Up to 25% of weekly disposable income
Mississippi Hospitals cannot charge indigent patients (those previously determined to be indigent).

Hospitals are not mandated to retroactively give benefits and protections, but hospital boards of trustees can set up free and reduced-cost care programs.

Legal provisions are fairly vague. For example, acute care hospitals seeking a certificate of need must provide reasonable amounts of indigent care. “Reasonable” is not defined.

Some hospital systems offer additional financial assistance for uninsured and underinsured consumers.

3 years $75,000 ($30,000 personal property exemption if it is a mobile home on land the debtor does not own) Up to 25% of weekly disposable income
Nevada Hospitals with a minimum of 100 beds and in a county with at least 2 licensed hospitals must use 0.6% of yearly net revenue in free care

After hospitals meet this level, patients' county of residence reimburses them for indigent care

Major hospitals must reduce uninsured consumers' bills by at least 30% if they are Medicare-eligible.

Patients do not apply for assistance under the Care of Indigent Persons program. Rather, hospitals give the county board of commissioners the discharge form. The county verifies the indigent status of the consumer and the amount the hospital is billed for.

The law defines indigent as someone who does not have insurance and who is not eligible for Medicare, Medicaid, and other types of public assistance, and who meets certain income and asset requirements.

6 years $550,000
New Jersey Under the New Jersey Hospital Care Payment Assistance Program, care is 100% free for residents with incomes at or below 200% FPL and care is discounted for people at 200% to 300% FPL.

Individual assets easily convertible to cash cannot exceed $7,000 and family assets cannot exceed $15,000.

Uninsured consumers with family incomes below the 500% FPL can't be billed more than 15% above Medicare rates.

6 years No homestead exemption but a spouse's survivorship interest in property held as tenancy is exempt from the other spouse's creditors) Up to 25% of weekly disposable income
New York Nonprofit hospitals and all hospitals seeking reimbursement from the Indigent Care Pool must provide free and reduced-cost care.

The care is for residents with incomes below 300% FPL. The amount a hospital can charge is capped for consumers at 100% FPL or lower. For 100% to 300%, a sliding scale applies.

However, research and investigations have uncovered that hospitals often create unnecessary barriers to financial assistance (and violate the law and don't follow guidelines).

3 years $82,775 to $165,550 depending on location in the state ($165,500 to $331,100 for joint owners) Up to 25% of weekly disposable income
Ohio Hospitals receiving Hospital Care Assurance Program funds must offer charity care to consumers at or below 100% FPL who do not qualify for Medicaid.

Patients can apply for HCAP assistance up to three years after a hospital sends the first follow-up notice. Hospitals have different rules and processes, so ask each about their financial assistance options.

Many hospitals offer assistance beyond the 100% FPL. For example, OhioHealth guidelines offer free care for patients with 200% FPL family income and sliding scale fees for 200% to 400% FPL.

8 years (recently down from 15 years; accounts in default before Sept. 28, 2012, still carry the 15-year limit) $136,925 Up to 25% of weekly disposable income
Oklahoma The Indigent Health Care Act created a pool to reimburse hospitals for providing indigent care at discounted, not free, rates. 5 years Unlimited Up to 25% of weekly disposable income
Oregon Nonprofit hospitals and clinics must offer free care to patients with family incomes up to 200% FPL and sliding scale assistance from 200% to 400% FPL.

The Oregon Association of Hospitals and Health Systems says that all hospitals in the state offer robust financial aid policies.

6 years $40,000 ($50,000 for joint owners) Up to 25% of weekly disposable income
Rhode Island All hospitals must offer free and reduced-cost care as a requirement for licensing.

Free care: Patients with incomes up to 200% FPL (with some hospitals adding an assets test)

Reduced-cost/discount care: Incomes between 200% and 300% FPL

10 years $500,000 Up to 25% of weekly disposable income
Texas Nonprofit hospitals (fewer than half of the hospitals in Texas) must financially assist patients with income between 21% to 200% FPL.

The law mandates that hospitals inform patients about its charity care program and how to apply.

Further, Texas requires public hospitals and counties to financially assist qualifying county residents.

4 years Unlimited Wage garnishment is not allowed on medical debt
Washington Hospitals must offer free care for patients at or below 100% FPL who do not have insurance.

Discounts are available for patients with incomes between 100% and 200% FPL.

6 years $125,000 homestead exemption or the county’s median home value the previous year, whichever is greater Generally, up to 20% of wages
West Virginia Nonprofit hospitals must provide free care if they seek exemption from state taxes and base the exemption on free care. These hospitals develop their own plans and must make visible the information that they offer free and discount care. 10 years $25,000 ($50,000 for joint owners) Up to 20% of weekly disposable income

Sources: National Consumer Law Center, Community Catalyst Free Care Compendium, Medical Debt Policy Scorecard, Asset Protection Planners Homestead Exemptions by State and Territory, and Upsolve. This resource offers further information on hospital lien laws.

 

Medical Debt Best Practices

No one wants medical debt, but many Americans end up with it at some point in their lives. Generally, there are “good” and “bad” ways to handle it. For instance, you should probably wait to pay your debt in cash after applying for assistance or negotiating the amount rather than charge it to your credit card. Here’s a look at a few other best practices.

Some providers go out of their way to let you know about free or low-cost care, but many do not.

To see if your hospital offers financial assistance and how you can apply for it, ask one of the supervisors in the patient accounts billing office or request to speak with a hospital financial counselor. Document the names, times, and dates of everyone you speak with.

      • Let other medical providers know if you qualify for financial assistance at a hospital. X-rays, surgeon fees, and other services are not always included in hospital bills and are sometimes billed separately. However, if you qualify for hospital financial assistance, the other providers usually follow suit to waive or reduce bills. Providers would rather get some money than none at all.
      • Get all agreements in writing, particularly agreements involving payment plans or forgiving your debt or a part of it.
      • Negotiate lower costs and fees, for example, offering installment payment plans over time.
      • Tell other providers that you got installment payments, partial debt writeoff, or whatever it is you received from the hospital or one of your service providers. That often makes the others more flexible about working with you.
      • If you are uninsured, check to see if your hospital or provider charges uninsured consumers more for services. The uninsured often pay more because insurers pre-negotiate lower rates with providers. You can ask to be charged the same rate as an insured consumer.
      • Be transparent if you truly cannot pay (whether in full or partially). For example, even if you get partial debt forgiveness, the hospital may still send the remaining debt to a collector. Ask the hospital to hold off sending your bill to collection agencies while you try to figure out payment.
      • DO NOT sign payment plans with acceleration clauses. They basically say that you have to pay the full amount remaining right away if you miss one payment.

If this approach does not prove successful, try to find assistance from local nonprofits or state legal aid offices.

Many people are tempted to use credit cards to pay medical bills. After all, you can make minimum credit card payments per month instead of the full amount. However, do not pay medical bills with credit cards. Here’s why:

      • There will be less flexibility working out repayment with medical providers (or total loss of ability to do it)
      • You will have less legal protection in some states
      • You will likely have to pay high interest rates on credit card balances
      • You may be hit with draconian penalties and fees for late payments

Even the “medical credit cards” available with some providers carry the same problems. They can be even more deceptive, actually, since they are marketed to sound like they are good for you and better than regular credit cards. In reality, they can be worse.

For example, a bait-and-switch variation is common: the promise of interest-free payments seems attractive to consumers, but high interest rates kick in after just one late or missed payment.

If you wait to pay the medical provider or hospital with cash or checks, the odds are good you can negotiate a payment plan without the typical fees and high interest associated with credit cards.

Medical debt is unsecured debt. That means your assets are not collateral for the debt. In other words, you don’t have to promise to give the hospital your home if you cannot pay a bill (although down the road, your home could be at risk in some states).

Secured debt is secured by collateral such as a home, car, stocks, cash, future paychecks, bonds, and insurance policies. The interest rates for secured debt tend to be lower, which can tantalize consumers into exploring this option for medical debt. Do not do it. Do not put your assets up as collateral for medical debt. You could lose your home, car, or cash much more easily than you expect.

Obtain an itemized copy of your medical bill if you do not have one already. Review each item to ensure you actually received these services. Consumers are sometimes billed multiple times for the same service or procedure or are mistakenly billed for services they never received. Your medical records can clarify which services and procedures you got, so get a copy of them too.

If you use Medicaid and a hospital or provider is billing you for more than your copayment, contact your state Medicaid agency for assistance.

Otherwise, check that the hospital sent your insurance company (or Medicaid or Medicare) bills with your correct policy numbers. Also, check the “Explanation of Benefits” notice from your insurer. It should explain the reason for refusing payment but may be in small print and hard to find. If the reason is not there or makes no sense, contact the insurer to get your explanation. It may be possible to appeal the insurer’s decision.

The “Explanation of Benefits” from your insurer should tell you about your appeal rights. If you have a denied claim, you can ask the insurer to review its determination not to pay, or you might be able to do an external appeal to someone who is not part of the insurance company. Check with your state insurance department for details on whether you can get an external appeal.

If you are uninsured because you recently lost your job, COBRA might still cover you even if you have not signed up for it. You would have to pay the backlog of premiums to the date when you lost insurance from your employer, though. Check the paperwork you have gotten from your insurance company or employer to see what the deadlines for COBRA signups are.

In some states, it is possible to get Medicaid to pay medical bills even if you were not covered by Medicaid when you incurred them. Do move quickly as there are time limits, usually three months. Check with your state to see if this is possible and to get the steps to apply for coverage. You must be low-income to qualify but the definition of “low income” in your state may be more liberal than you expect.

Organizations That Can Assist With Medical Debts

Medical debt is an extremely serious problem in the United States. Even if your hospital has charity care policies, they are sometimes abused or ignored. Apply for financial help as soon as possible, and contact free or low-cost legal aid resources if you need clarification or feel you are being preyed upon.

In every state, there are organizations that may be able to help you understand, navigate, and resolve medical debts from a legal standpoint. Some states also have organizations to help you access low-cost medical care.

State Local resources for legal medical debt assistance or reduced-cost care
Alabama Alabama Association of Free and Charitable Clinics (AAFCC)

Legal Services Alabama

Get Legal Help

Alaska Anchorage Project Access

Alaska Legal Services Corporation

Pro Bono Legal Service Providers

Arizona Healthcare Rising Arizona

Legal Aid Resources

Southern Arizona Legal Aid

Arkansas Arkansas Access to Justice

Arkansas Legal Aid

Center for Arkansas Legal Services

California California Medical Billing Advocates

Free Legal Help

Connecticut Connecticut Legal Aid Services

Connecticut Health I-Team

Delaware Delaware Legal Help

Community Legal Aid Society

District of Columbia Legal Aid Society of the District of Columbia
Florida Directory of Legal Services & Resources

Community Legal Services

Florida Bar Pro Bono and Legal Aid

Georgia Georgia Legal Aid

Georgia Legal Services Program

Legal Aid Atlanta

Legal Assistance Resources

Hawaii Legal Aid Society of Hawaii
Idaho Idaho Legal Aid Services
Illinois Illinois Bar Association List of Resources

Illinois Legal Aid Online

Indiana Low-Income Legal Resources

Indianapolis Legal Aid Society

Self-Service Legal Center

Iowa Legal Assistance Resources

Iowa Legal Aid

Kansas Kansas Legal Services
Kentucky Legal Aid Programs in Kentucky

Kentucky Legal Aid

Louisiana Southeast Louisiana Legal Services

Legal Aid & Pro Bono Organizations

Maine Consumers for Affordable Health Care and hospital bill help

Legal Resources Directory

Legal Aid Resources in Maine

Maryland Medical Debt Freedom Fund

Legal Services Directory

Maryland Legal Aid

Massachusetts Massachusetts Legal Resource Finder
Michigan Legal & Law Related Programs by County

Free & Charitable Clinics of Michigan

Free or Low Cost Primary Care from a Doctor or Nurse

Minnesota Find a Lawyer

Mid-Minnesota Legal Aid

Central Minnesota Legal Services

Mississippi Pro Bono Resources
Missouri Missouri Legal Services

Legal Aid of Western Missouri

Pro Bono Programs in Missouri

Montana Montana Legal Services Association
Nebraska Legal Aid of Nebraska
Nevada Find Legal Help
New Hampshire New Hampshire Legal Assistance

Legal Assistance Resources

New Jersey Legal Services of New Jersey
New Mexico New Mexico Legal Aid

New Mexico Center on Law and Poverty

New York Community Health Advocates

The Legal Aid Society

North Carolina Legal Aid of North Carolina
North Dakota Legal Services of North Dakota
Ohio Ohio Legal Help
Oklahoma Legal Aid Services of Oklahoma

Free and Low-Cost Resources

Oregon Oregon Association of Hospitals and Health Systems

Legal Aid Services of Oregon

Pennsylvania Legal Services in Pennsylvania
Rhode Island Rhode Island Legal Services
South Carolina Pro Bono Resources
South Dakota Legal Assistance Resources
Tennessee Project Access

Tennessee Legal Aid Services

Texas Helpful Legal Resources

2021-2022 Referral Directory

Utah Request Pro Bono Help
Vermont Vermont Legal Aid
Virginia Virginia Health Care Foundation

Virginia Hospital & Healthcare Association

Find Your Closest Legal Aid Program

Washington Northwest Justice Project

WashingtonLawHelp

Find Legal Help

West Virginia Legal Aid of West Virginia
Wisconsin Advocacy & Benefits Counseling for Health

Judicare Legal Aid Free Legal Services

Legal Aid Society of Milwaukee

Wyoming Legal Aid of Wyoming