CFED Assets & Opportunity Scorecard
As health care costs continue to rise, more individuals and families are forced to take on medical debt in order to get care for a sudden illness, medical emergency or chronic disease. Even those with insurance increasingly find themselves in financial peril. As many as one-quarter of insured Americans are saddled with medical debt or have problems paying their medical bills. More than 60% of personal bankruptcies are partly the result of medical debt, even though three-quarters of the bankruptcy filers had health insurance. With the cost of a day in the hospital averaging $4,293, according to the International Federation of Health Plans’ 2013 Comparative Price Report, hospital charges can be responsible for a patient’s medical debt. Aggressive hospital billing and collections procedures can also put a patient in financial distress.
States can help minimize medical debt for their residents by enacting laws that limit hospital charges, billing and collections. For example, states can limit charges based on a patient’s income; restrict charges for the uninsured to no more than the cost of service; require hospitals to offer patients a reasonable payment plan; prohibit the seizure of a patient’s home for medical debt; and require hospitals to assess a patient’s ability to pay prior to entering into collection procedures.
Strength of State Policies: Limitations on Hospital Charges, Billing & Collections
|Does state limit hospital charges, billing or collections? 1|
|State||Limits charges, billing|
|California||Limits charges to patients with incomes not exceeding 350%
of the FPL; Prohibits reporting to a credit agency until
150 days after initial billing for certain patients
|Colorado||Limits charges against persons eligible for financial
assistance; Requires hospitals to offer payment plan before
|Connecticut||Prohibits collections until hospital determines income exceeds
250% of the FPL; Limits collections from uninsured patients
to no more than cost of service
|District of Columbia||—|
|Illinois||Limits payment to no more than 25% of family income for
uninsured; Requires option to request a payment plan within
30 days of bill before reporting to collections
|Kansas||Prohibits garnishment of wages for debt until 2 months after
recovery from illnesses that prevented work for more than 2
|Louisiana||Prohibits seizure and sale of a homestead for debts due to
"catastrophic or terminal illness or injury"
|Maine||Requires hospitals and other health care providers to notify
consumers of the availability of any payment arrangements
|Maryland||Prohibits charging interest from self-pay patients without a court
judgment, forcing the sale or foreclosure of a patient's
primary residence, and selling patient debt
|Massachusetts||Prohibits legal execution against a low-income patient's
personal residence or motor vehicle without the express
approval of the hospital's Board of Trustees
|Mississippi||Prohibits charging indigent patients for any additional payment
for hospital services
|Nevada||Requires certain hospitals to limit charges by at least 30% of
total amount for services for uninsured
|New Jersey||Limits charges to individuals with family gross income of less
than 500% of the FPL; Prohibits collection against patients
eligible for charity care
|New York||Limits charges to uninsured patients with family incomes below
300% of the federal poverty level; Requires offering monthly
|North Carolina||Prohibits collections while a decision on patient's charity care application is pending;
Prohibits attaching a lien to a patient's principal residence
|North Dakota||Prohibits medical providers from charging, receiving or
collecting a late payment on expenses until 90 days after
|Ohio||Exempts a person's residence from execution, garnishment,
attachment, or sale for money owed for health care
|Oklahoma||Limits charges to no more than the amount Medicare would
pay or cost of service for those who qualify for financial
|Rhode Island||Prohibits forcing a foreclosure of primary residence due to
non-payment of medical debt
|Tennessee||Prohibits hospitals from requiring an uninsured patient
to pay an amount greater than 175% of cost of
|Texas||Limits some charges for claims billed in violation of
|Utah||Limits what nonprofit hospitals may charge indigents in
accordance with their ability to pay
|Washington||Prohibits collection until determing whether responsible
party is indigent and eligible for free or
Notes on the Data
1. "Community Benefit State Law Profiles Comparison, as of December 31, 2014," The Hilltop Institute. Accessed July 7, 2015.
2. This column provides examples of how the state limits charges, billing or collections. For a comprehensive analysis of a state's limitations on charges, billing or collections, see the Hilltop Institute's Community Benefit State Law Profiles Comparison.
3. Although the Hilltop Institute's Community Benefit State Law Profiles give Vermont credit for limiting charges, billings and collections by requiring "hospitals to provide patients with an itemized, detailed and understandable explanation of charges," CFED has determined that an itemized explanation of charges does not constitute limitations on those charges.
How States Are Assessed
States receive credit if they have laws that can be interpreted as limiting hospital charges, billing or collections. This may include limiting charges based on a patient’s income; restricting charges for the uninsured to no more than the cost of service; requiring hospitals to offer patients a reasonable payment plan; prohibiting the seizure of a patient’s home for medical debt; or requiring hospitals to assess a patient’s ability to pay prior to entering into collection procedures.
What States Have Done
Twenty-two states have adopted laws that limit hospital charges, billing or collections.
Organizations and Experts:
CFED thanks Jessica Curtis and Phillip Gonzalez of Community Catalyst and Martha Somerville, formerly with the Hilltop Institute, for their input and expertise on this policy issue.