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HB 5255

Civil procedure: foreclosure; foreclosure or garnishment of wages for medical debt; prohibit. Creates new act. TIE BAR WITH: HB 5254'25

2025-2026 Regular Session Introduced by Kelly Breen and 15 co-sponsors

HB 5255 caps medical debt interest at 3% APR, bans aggressive collection actions for 90 days after final invoice, restricts debt sales, and requires clear financial-assistance disclosures.

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Bill Summary · HB 5255

Summary — HB 5255 (Medical Debt Protection Act)

Bill number: HB 5255
Short title: Medical Debt Protection Act
Introduced: November 12, 2025 (electronically reproduced 11/12/2025) — introduced by Rep. Laurie Pohutsky
Tie bar: HB 5254'25
Status: Referred to Committee on Health Policy (first reading 11/12/2025). Earlier filing/readings in 2025 also appear in the legislative actions record.

Purpose

To limit interest, fees, and certain collection practices for medical debt; to restrict sales and third‑party collections of medical debt unless consumer protections are contractually imposed; to require information/disclosures about medical debt and financial assistance; and to provide remedies for violations. The act is captioned the “medical debt protection act.”

Key definitions (selected)

  • Medical debt: debt arising from receipt of healthcare services, products (including durable medical equipment and prescription drugs), or transport to care. Excludes credit‑card debt but includes credit specifically extended for healthcare.
  • Large healthcare facility: a hospital or any person providing healthcare services with annual revenue ≥ $20,000,000.
  • Medical creditor: the provider that furnished the services or products giving rise to the debt (or, if sold, the original creditor).
  • Medical debt buyer/collector: businesses that purchase or regularly collect medical debt.
  • Extraordinary collection action: broadly includes selling debt, reporting adverse information to credit agencies, deferring/denying emergency or urgent care for nonpayment, liens, foreclosure, seizure, civil actions, arrest, and wage garnishment.

Major provisions

  • Interest and fees
    • No interest or late fees may be charged by a large healthcare facility or medical debt buyer until 90 days after the final invoice due date.
    • Interest/late fees on medical debt are capped at 3% per annum.
  • Limits on collection practices
    • Medical creditors and collectors are prohibited from using certain extraordinary collection actions to collect medical debt, including (explicitly) causing an arrest, foreclosing on real property, placing a lien on personal property, and garnishing wages of individuals who qualify for financial assistance under the creditor’s financial assistance policy.
    • The bill’s definition of “extraordinary collection action” also identifies reporting to consumer reporting agencies and denying/refusing emergency or urgent care as prohibited practices.
  • Sale and assignment restrictions
    • A medical creditor may sell medical debt only if it first enters a written agreement with the medical debt buyer containing protective terms, including:
    • Prohibition on extraordinary collection actions by the buyer;
    • Buyer interest rate capped at 3% per annum;
    • A return/recall mechanism if the buyer determines the individual is eligible for financial assistance; and
    • Procedures to ensure the individual is not charged more than permitted under the Act.
    • The selling medical creditor is made liable for actions taken by the buyer (text truncated in provided version but indicates seller liability).
  • Financial assistance and disclosures
    • The bill references financial assistance policies (including those under federal tax rules) and requires certain information to be provided regarding medical debt; specific disclosure requirements and remedies are indicated but the provided text is truncated.

Who is affected

  • Patients/consumers with medical debt (including those receiving emergency or urgent services).
  • Large healthcare facilities and other medical creditors.
  • Medical debt buyers and collectors.
  • Consumer reporting agencies (insofar as reporting of covered medical debt is restricted).

Procedural/timeline notes

  • Introduced and reproduced 11/12/2025; referred to the House Committee on Health Policy after first reading on 11/12/2025.
  • The public text available here is truncated; additional substantive provisions, enforcement mechanisms, and specific remedies may appear in later sections of the bill.

Potential impact

  • Would reduce the cost of medical debt over time (90‑day no‑interest window; 3% cap).
  • Would limit aggressive collection tactics and protect access to emergency and urgent care.
  • Would increase contractual and compliance obligations on sellers of medical debt and create potential liability for original creditors that sell debt without required protections.
  • Could shift collection practices toward in‑house resolution, charity/financial assistance screening, or settlement mechanisms.

(For full application and enforcement details consult the complete bill text; portions of the provided version were truncated.)

Compiled from official sources — confirm details with the bill’s official record.

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