The National Consumer Law Center (NCLC) published the third edition of a Model Medical Debt Protection Act in March 2024, establishing a template for states to strengthen protections for patients struggling with hospital bills. The model act sets mandatory charity care thresholds and bans debt collection tactics—wage garnishment, home liens, and credit reporting—that go beyond current federal requirements for nonprofit hospitals.
The model act has already influenced state legislation. Virginia passed a version taking effect July 1, 2026, and six states enacted medical debt credit reporting restrictions in 2025. However, adoption remains voluntary; patients in non-adopting states still lack these protections.
Table of Contents
- What Charity Care the Model Act Requires
- Debt Collection and Credit Protections
- State Action in 2025 and 2026
- Who These Protections Apply To
- The Critical Gap: Adoption Is Voluntary
- Frequently Asked Questions
What Charity Care the Model Act Requires
The model act requires nonprofit hospitals and for-profit facilities to provide free care to patients below 300% of the federal poverty level, and to charge patients at 300–400% of poverty no more than 25% of the Medicare rate (capped at $2,300). This applies across multiple settings—not just inpatient stays but also ambulatory surgical centers and outpatient clinics. For reference, 300% of the federal poverty level is roughly $40,000 for a single person as of 2026. The model act's affordability standard means a patient earning $35,000 annually would owe nothing; one earning $45,000 would pay a capped share of the Medicare rate, typically far lower than hospitals' standard charges or insurance copays.
Debt Collection and Credit Protections
The act prohibits interest charges, late fees, and prepayment penalties for eligible patients, and bans credit reporting of medical debt—protections that exceed federal IRS 501(r) requirements for tax-exempt hospitals. Federal rules currently allow hospitals to charge interest and report unpaid bills to credit agencies. The model act also eliminates wage garnishment, home liens, foreclosure on primary residences, and automatic debt transfer between spouses, closing enforcement mechanisms that leave low-income patients unable to escape medical debt. These provisions target the collection practices that most damage household stability.
State Action in 2025 and 2026
Virginia enacted HB 1725 (Medical Debt Protection Act) in 2025, capping interest at 3% annually and banning wage garnishment and foreclosure; it takes effect July 1, 2026. This represents the most comprehensive state adoption of the model act's framework to date. Six states—Delaware, Maine, Maryland, Oregon, Vermont, and Washington—enacted medical debt credit reporting restrictions in 2025. New York, Maryland, and Illinois have incorporated NCLC model act provisions into state medical debt reform legislation. These states show how the template translates into enforceable law, though each state version differs in detail.
Who These Protections Apply To
The model act covers hospitals, ambulatory surgical centers, and outpatient clinics—a broader scope than many existing charity care policies that focus only on inpatient hospital stays. This matters because much medical debt arises from surgery, imaging, lab work, and emergency care delivered outside a traditional hospital bed. Coverage depends on where you receive care. If your state has not adopted the model act or a similar rule, these protections do not apply, and your hospital may still charge interest, report debt to credit agencies, and pursue wage garnishment.
The Critical Gap: Adoption Is Voluntary
Adoption remains voluntary at the state level; no federal mandate exists, leaving patients in non-adopting states without these protections. While Virginia and several others have moved forward, the majority of states have not enacted comparable rules. A patient in a state without medical debt reform still faces the full force of collection lawsuits, wage garnishment, and credit damage for unpaid medical bills.
Check whether your state has adopted medical debt protections by searching your state legislature's website for "medical debt" or "charity care" bills enacted in 2024, 2025, or 2026. If no state law exists, ask your hospital's billing department whether it follows any of the model act's standards voluntarily—some systems do—and whether a hardship application is available.
Frequently Asked Questions
Does the federal government require hospitals to follow the model act?
No. The model act is a template for states. Only states that have passed it—or similar legislation—enforce these protections. Federal law requires nonprofit hospitals to offer some charity care under IRS rules, but does not ban credit reporting or wage garnishment.
I live in Virginia. When does HB 1725 start protecting me?
July 1, 2026. If you have medical debt now, the law will not retroactively erase it, but it will apply to new bills and collection attempts going forward.
If my state hasn't adopted the model act, what can I do?
Contact your state legislators to ask them to introduce or support medical debt protection bills. Review your hospital's financial assistance policy directly—some hospitals offer protections that exceed state law. If you are sued for medical debt, you have the right to respond in court and may be eligible for hardship defenses or repayment plans.