Michigan May Soon Limit How Creditors Can Come After Unpaid Medical Debt

Michigan lawmakers are considering a bipartisan package that would sharply restrict how hospitals and debt collectors pursue unpaid medical bills, but it is not yet law and still has to clear the Legislature and governor.

What the proposal would do

Key provisions in the Senate/House “Medical Debt Protection Act” and related bills would:

• Ban “extraordinary collection actions” for medical debt, including causing someone’s arrest, garnishing wages, or foreclosing on a home to collect on medical bills.​

• Cap interest and late fees on medical debt at 3% per year and bar any interest or late fees for at least 90 days after the final bill is sent.

• Delay aggressive collection actions (such as lawsuits, liens, and negative credit reporting) until a set period after the invoice and with advance written notice to the patient.

• Prohibit medical debt from appearing on consumer credit reports in Michigan, so unpaid medical bills would not hurt credit scores or access to loans.

• Require hospitals to offer financial assistance when medical bills exceed a percentage of a patient’s income and to provide significant discounts to lower‑income or uninsured patients.

• Require refunds when a patient overpays after financial assistance is applied, within a set number of days.​

One example: a family whose medical bills exceed 30% of their yearly income would have to be offered financial assistance, and uninsured patients below a set income threshold could get up to a 100% discount on hospital bills.​

Status of the legislation

• The package includes multiple tie‑barred Senate and House bills, meaning none can become law unless all are passed.​

• The bills have bipartisan sponsors and have received committee hearings, and at least part of the package has advanced in the state Senate, but no final enactment has occurred yet.

• The Michigan House is Republican‑led, and the House speaker has signaled they will move only a limited number of bills, so the timeline and final outcome are uncertain.​

How this fits with other protections

• Michigan separately partnered with the nonprofit Undue Medical Debt to erase over 144 million dollars in existing medical debt for roughly 210,000 residents, using prior budget funds.​

• Federal regulators (the CFPB) have also finalized a rule removing medical bills from most credit reports used by lenders nationwide, reinforcing state efforts to insulate credit scores from medical debt.​

In practical terms, if these Michigan bills pass, creditors and hospitals would still be able to collect unpaid medical bills, but they would lose some of their most aggressive tools and patients would gain more time, more financial‑assistance options, and protection of their credit reports.