Members of the Indiana Collectors Association address the topic of medical debt in the Indiana Senate on Monday, Aug 18. Photo from Niki Kelly, Indiana Capital Chronicle.

By Niki Kelly
Indiana Capital Chronicle

INDIANAPOLIS — Recent testimony set the stage for an interim committee to find a balance between growing medical debt weighing down Hoosiers and allowing hospitals and other health care providers to collect what’s owed.

Organizations representing Hoosier consumers, as well as those handling collections, came to the Indiana Statehouse to have their say before the Interim Study Committee on Courts and the Judiciary.

The group of legislators, the chief justice and several lay members used Senate Bill 317 as a general guide for discussion, which narrowly died earlier this year. It would have limited some medical liens on a primary residence and wage garnishment.

Sam Snideman, of the United Way of Central Indiana, said Indiana is the No. 11 highest in the country for residents with medical debt in collections.

“We need coordinated solutions that address the high costs of health care and patients’ ability to pay, while also protecting patients who do have medical debt from burdens like adverse credit events, wage garnishment and liens that make it challenging for them to break out of the cycle of financial instability,” he said.

Erin Macey, director of the Indiana Community Action Poverty Institute, said both the insured and uninsured grapple with medical bills they can’t afford.

She said Indiana law protects about $217 a week from wage garnishment, which hasn’t been increased since 2009. Since then, though, costs for rent, food and car payments have risen steeply.

Sen. Greg Taylor, middle, listens to a witness during a hearing on medical debt in the Indiana Senate on Monday, Aug. 18. Photo by Niki Kelly, Indiana Capital Chronicle.

“This isn’t just dollars and cents. It’s human impact,” Macey said. “Improving our exemption laws will help the unfortunate many who are taken to court over medical debt keep their heads above water while they’re paying off their bills.”

But several Hoosiers pushed back, noting many protections already exist in state and federal law for consumers.

Joseph Walterman, an attorney from Greenwood, said limiting garnishments and liens could impact local governments, which pay for ambulance services in many communities. And he said changes could hurt rural areas with few providers.

“There is no question that medical debt is an issue,” he said. “The issue though also is if the bill were passed as proposed, you are demanding that certain facilities give treatment without the real prospects of payment.”

Walterman agrees with attempts to push more Hoosiers to payment plans, but said if you take away the enforcement mechanism at the end, then payment plans won’t work.

Heather Gilb, a debt collector from New Castle, said Hoosiers have 240 days to apply for assistance, set up payment plans or pay off the bill. And medical debt doesn’t hit a person’s credit rating until at least one year after date of service.

Also, medical debt under $500 is not reported to credit agencies at all.

She said in three decades, she has never seen someone lose their home over medical debt.

“Most respectfully, the narrative of families being put out of their homes for hospital bills is simply not reality,” Gilb said.

She stressed that the existing process is deliberate and filled with safeguards, and litigation is the exception to the rule.

“At some point personal responsibility must come into play,” Gilb said. “Consumers have to open the letters, they have to answer the calls, they have to fill out the applications, they need to engage in the process. When individuals ignore repeated outreach, decline to apply for available assistance or refuse reasonable payment plans — even when they have the ability to pay — it forces providers and agencies to consider litigation as a last resort.”

The committee will meet again Saturday, Sept. 9. They can issue recommendations for the 2026 session, or they can simply disseminate information gathered during the meetings to the full General Assembly.