New York may stop hospitals from suing patients for medical debt

New York Gov. Kathy Hochul proposed halting a policy requiring state-owned hospitals to file lawsuits against patients over medical debt, according to

Ms. Hochul's proposal would prevent all hospitals from suing to collect medical debt from patients with income of under 400% of the poverty line. She has asked the New York legislature to pass a replacement policy during the state's budget process before using executive power to mandate her policy.

The proposal was part of the New York Democrats' $233 billion budget proposal presented Jan. 16, and legislators will negotiate through March for the final budget.

Medical debt has been a particular focus of Ms. Hochul's administration. She previously signed legislation that removes medical debt from consumer credit reports.

Hospitals would still be able to employ debt collectors and use other means outside of the courts to collect from patients, and Ms. Hochul's proposal extends the wait time before sending unpaid bills to collections to 180 days, according to the report.

The proposal also:

1. Bans hospitals from selling debt to third parties.

2. Allows people or organizations to purchase medical debt to forgive it.

3. Gives patients at 300% and 400% of the poverty line access to financial aid.

4. Gives uninsured patients with medical costs 10% of their gross annual income access to financial aid.

5. Requires hospitals to attest the patient's income is above 400% of the poverty line to sue them for medical debt.

6. Requires hospitals to provide anticipated medically necessary care to patients with unpaid medical bills.

7. Caps medical debt interest at 2% per year and drops monthly payment plan caps from 10% to 5% of the patient's gross monthly income.

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