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Bill

SB 414

CONSUMERS: Provides for the Louisiana Medical Debt Protection Act. (gov sig)

2026 Regular Session Introduced by Kim Carver and 11 co-sponsors

Limits medical debt for medically necessary care: 2% annual interest, bans garnishment, liens, or foreclosures on primary home/vehicle, with private remedies.

Effective date 6/9/2026.
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Bill Summary · SB 414

Bill Summary: SB 414 (2026) – Louisiana Medical Debt Protection Act

Jurisdiction: Louisiana
Session: 2026
Sponsor: Senator Talbot (co-sponsor: Kirk Talbot)

1) Purpose and Intent

  • Establishes the Louisiana Medical Debt Protection Act to regulate medical debt arising from medically necessary care.
  • Creates uniform protections limiting interest, restricting garnishment and liens, and outlining enforcement mechanisms to protect consumers from aggressive medical debt collection practices.

2) Key Provisions and Changes

A. Definitions (Chapter 15, new R.S. 51:1501–1507)

  • Federal Poverty Level (FPL): Uses annual guidelines published by the U.S. Department of Health and Human Services.
  • Medical Creditor: Any entity providing healthcare services to which the consumer owes money, including debt buyers.
  • Medical Debt: Debt from healthcare services, products, devices, equipment, prescriptions, and related transportation; excludes standard revolving credit charged to a general credit card.
  • Medical Debt Collector: Any person who regularly collects or attempts to collect medical debts; debt buyers are included (as medical debt collectors).
  • Medically Necessary Care: Care determined by a licensed provider to be necessary to prevent, diagnose, or treat illness or injuries, meeting accepted standards of care.

B. Interest Rate Limitation

  • Cap: Interest on medical debt arising from medically necessary care cannot exceed 2% per annum.
  • Voidable provision: Any contract imposing a higher rate is void.

C. Garnishment Restrictions

  • Prohibition on garnishing wages or bank accounts for medical debt tied to medically necessary care, unless:
    • Debtor's income exceeds 400% of the FPL; and
    • Garnishment does not reduce post-garnishment income below 400% of the FPL.

D. Liens and Foreclosures

  • Prohibits liens or foreclosures on a debtor’s primary residence or primary vehicle for collection of medical debt arising from medically necessary care.

E. Contractual Requirements for Medical Debt Collectors

  • Healthcare providers or medical creditors that engage third-party debt collectors must include in their contracts a provision prohibiting wage garnishments and the placement of liens or foreclosures as described above.
  • Failure to include this provision constitutes a violation of the Act.

F. Enforcement and Remedies

  • Enforcement Authority: Louisiana Attorney General may enforce the Act and seek civil penalties.
  • Complaint Process: The AG will establish a complaint process for aggrieved consumers; complaints are public records under general public records law, with exceptions for personal identifying information.
  • Private Right of Action: Individuals harmed by violations may sue to recover actual damages, statutory damages up to $2,000 per violation, attorney fees, and injunctive relief.

G. Effective Date

  • Effective upon signature by the governor (or as otherwise provided if there is gubernatorial action timing).

3) Who/What Is Affected

  • Medical debt creditors (including debt buyers) and medical debt collectors involved with medical debt arising from medically necessary care.
  • Healthcare providers and medical creditors that contract with third-party debt collectors.
  • Debtors and consumers who owe medical debt for medically necessary care.
  • The Louisiana Attorney General’s Office (enforcement, complaint intake).
  • Private individuals who are financially harmed by violations (standing to sue).

4) Procedural and Timeline Aspects

  • Legislative status: Read second time and referred to Committee on Commerce, Consumer Protection and International Affairs (as of March 24, 2026).
  • Effective date: Upon the governor’s signature, or per constitutional timing if no signature and alternative action occurs.
  • Enforcement timeline: Authorized civil penalties and a formal complaint process established by the AG; private rights of action created for aggrieved parties.

5) Practical Impact

  • Provides a clear cap on interest (2% annually) for medical debt tied to medically necessary care.
  • Shields most medical debt from garnishment, with exceptions only for very high-income earners (≥400% FPL) where post-garnishment income remains above 400% FPL.
  • Prohibits liens/foreclosures on primary residences or primary vehicles for medically necessary care debt.
  • Shifts some enforcement and remediation to the AG, while enabling private lawsuits by consumers.
  • Encourages transparency in contracts between medical providers/creditors and debt collectors regarding these protections.

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

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