Indiana legislators are again turning their attention to medical debt with the introduction of Senate Bill 85: Health Care Debt and Costs, a proposal aimed at limiting aggressive collection practices while expanding consumer protections. The bill would establish mandatory payment plans for qualifying patients, restrict certain wage garnishments, and prohibit medical debt-related liens on a consumer’s primary residence.
The bipartisan legislation was introduced for the 2026 Regular Session by State Sen. Ed Charbonneau (R-District 5) and State Sen. Fady Qaddoura (D-District 30). The two lawmakers sponsored similar legislation during the previous session. Senate Bill 85 has emerged as a top priority for advocates and lobbyists representing the Indiana Collectors Association.
Key Provisions of Senate Bill 85
Limits on Wage Garnishment
Under the bill, unpaid earnings may not be garnished if a consumer’s income is at or below 200% of the federal poverty level. For consumers earning above that threshold, the legislation still places strict limits on the amount of disposable income that may be garnished to satisfy a judgment related specifically to health care debt.
Protection of Primary Residences
Senate Bill 85 would prohibit medical debt from being used as a lien against a consumer’s principal residence. In any action filed in Indiana to recover health care debt, a consumer’s primary home would be exempt from judgment, attachment, or forced sale. This provision removes home liens as a mechanism for medical debt recovery in the state.
Hospital Requirements and Payment Plans
Hospitals reporting annual gross patient revenue of $20 million or more would be required to comply with new transparency and affordability standards, including:
- Offering income-eligible patients payment plans that meet state-defined requirements
- Providing written notice of charity care programs and financial assistance eligibility on every billing statement
- Issuing written determinations to patients who request an evaluation for financial assistance or payment plan eligibility
Attorney General Oversight
The bill authorizes the Indiana Attorney General to enforce these provisions and requires the creation of a formal consumer complaint process. Violations of billing or collection requirements could result in investigations or enforcement actions by the attorney general, separate from private legal remedies.
Legislative Context and Prior Efforts
Medical debt has been an ongoing topic of debate in Indiana. In 2025, lawmakers considered several proposals addressing medical debt, though many were ultimately paused or defeated.
One comprehensive bipartisan bill introduced last year addressed health care judgments, medical debt credit reporting, interest fees, payment plans, and hospital charity care notices. After concerns were raised by stakeholders, the legislation was narrowly voted down by the Senate on February 20, 2025.
During committee hearings, Steve Hooley, president and longtime legislative committee chair of the Indiana Collectors Association and president of Business and Professional Services Inc., testified regarding potential unintended consequences of the proposal for both consumers and providers. Heather Gilb, president of Atlas Collections Inc. in New Castle, Indiana, also engaged directly with lawmakers to share industry perspectives on the legislation.
What Happens Next
Indiana’s legislative calendar moves quickly. For Senate Bill 85 to remain viable this session, it must advance to the Indiana House by the end of January 2026. The bill has already been adopted by the Senate Health and Provider Services Committee.
In addition, lawmakers are considering Senate Bill 197, a separate proposal focused on garnishment and bank levy exemptions. Introduced by State Sens. Kyle Walker (R-District 31) and Greg Walker (R-District 41), the bill would increase the exemption for “tangible personal property,” including bank accounts and cash, from $300 to $1,500.
Gilb testified on Senate Bill 197 during a January 2026 hearing, continuing industry involvement as the legislature evaluates changes to Indiana’s debt collection framework.
As the 2026 session continues, Senate Bill 85 will move through the legislative process alongside other proposals affecting debt collection and garnishment practices. Lawmakers are expected to continue evaluating the scope and potential impact of these measures as they determine whether the bills advance before key session deadlines.
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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