The Patient Debt Relief Act establishes new rules for hospitals participating in Medicare to handle patient financial assistance and medical debt collection, effective January 1, 2026. Hospitals must adopt charity care policies, screen patients for eligibility within 30 days, and notify them of their options before collecting payment. The law restricts aggressive collection tactics by prohibiting hospitals from placing liens on homes or garnishing wages, and prevents them from selling debt to collection agencies unless more than a year has passed and the patient has refused a repayment plan capped at 4 percent of monthly income. For patients with household incomes below 250 percent of the poverty line, hospitals cannot charge interest or sell the debt at all. Hospitals that fail to comply face civil penalties up to $1 million, with compliance monitored through annual audits and a public reporting portal. Additionally, the bill creates a $100 million grant program to fund nonprofit organizations to acquire and discharge medical debt for individuals whose debt exceeds 5 percent of their income or whose household income is below 400 percent of the poverty line.
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