Indiana legislators are moving forward with multiple proposals aimed at reshaping how medical debt is handled, with a focus on consumer protections, payment flexibility, and garnishment limits. Two key bills—Senate Bill 85 and Senate Bill 197—have drawn attention from policymakers, industry representatives, and consumer advocates as they progress through the 2026 legislative session.
Senate Bill 85 Moves to the House
Senate Bill 85, titled Health Care Debt and Costs, recently passed the Indiana Senate by a 33–15 vote and has advanced to the House for further consideration. The bipartisan measure seeks to establish new requirements for hospitals and strengthen consumer safeguards related to medical debt collection.
Under the proposal, hospitals would be required to offer structured payment plans to eligible patients based on income guidelines. Facilities would also need to provide clear written notices outlining available charity care programs, include financial assistance information on billing statements, and supply additional written guidance to patients seeking eligibility determinations when annual gross patient revenue exceeds $20 million.
The legislation would authorize the Indiana attorney general to enforce provisions governing wage garnishment restrictions and limits on liens related to medical debt. It would also establish a formal complaint process for consumers.
In addition, the bill proposes several restrictions on debt collection practices. Medical debt would not be allowed to become a lien against a consumer’s primary residence, and principal residences would be protected from attachment or sale in actions related to medical debt judgments. The measure would also require disclosure when a debt being collected is related to health care services.
For consumers earning at or below 200% of the federal poverty level, the bill would restrict or prohibit wage garnishment related to medical debt and place limits on how much of a person’s disposable income could be collected.
Advocacy groups and industry stakeholders continue meeting with legislators and testifying before committees as the measure moves forward in the House. Amendments or additional study committee review are expected as lawmakers refine the proposal.
Senate Bill 197 Addresses Garnishment Exemptions
A second proposal, Senate Bill 197, focuses on broader changes to garnishment protections. Sponsored by Sen. Greg Walker, the measure would increase the amount of weekly income shielded from garnishment to $600 and raise the protected savings threshold to $1,500. Current law allows garnishment of weekly income above $217.50 and savings exceeding $450.
The bill has prompted discussion among creditors, lenders, debt collectors, and consumer advocates, many of whom have participated in meetings to review proposed revisions to the language. Supporters argue the changes would provide greater financial stability for individuals facing debt, while some industry representatives have raised concerns about how increased exemptions could affect the enforcement of court judgments.
During legislative discussions, stakeholders noted that judges currently have discretion to consider individual circumstances when determining garnishment amounts. Proponents and opponents alike continue to debate how best to balance consumer protections with existing legal processes.
A companion version of Senate Bill 197 has also been introduced in the Indiana House and received a first reading in the Judiciary Committee in late January 2026.
Ongoing Legislative Activity
Both bills remain a focus of legislative attention as they move through the House. Lawmakers, industry groups, and consumer advocates are closely monitoring developments, and further amendments are likely as the proposals advance.
If enacted, the measures could significantly alter the landscape of medical debt collection in Indiana, particularly in areas such as payment plan access, wage garnishment limits, financial assistance transparency, and protections for primary residences. The coming weeks are expected to bring additional debate as legislators weigh the impact on consumers, health care providers, and the broader financial services industry.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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