New Maryland Law Cuts Hospital Bills And Cracks Down On Aggressive Debt Collection

Maryland has enacted sweeping new protections for patients struggling with hospital bills.

Under House Bill 268 and its companion Senate Bill 981, which take effect in 2025, hospitals will be required to provide broader financial assistance, reduce out-of-pocket costs for many middle- and lower-income families and follow stricter rules before pursuing unpaid medical debt.

Reduced-Cost Assistance for More Patients

The law creates a sliding scale of financial help for patients whose family income falls between 200 percent and 500 percent of the Federal Poverty Level. Patients in this range will see their hospital bills reduced by specific percentages, depending on income.

For example, families earning just above 200 percent of the poverty level may qualify for a 75 percent reduction in costs, while those closer to 500 percent of the poverty level can receive a 35 percent reduction.

This ensures that many moderate-income patients, who previously received little or no automatic relief, will now be entitled to mandated discounts on medically necessary hospital care.

A Broader Definition of Medical Debt

The law also redefines what counts as “medical debt.”

Until now, the term often referred only to direct hospital charges.

Going forward, it will also include co-payments, deductibles, and coinsurance.

This expanded definition means that patients burdened with high out-of-pocket costs through insurance plans will now be eligible for the same protections and assistance as those with traditional hospital billing debts.

More Time and Notice for Patients

Patients will now have up to 240 days from the time they receive their first bill to apply for financial assistance, doubling the time window that many had in practice before.

Hospitals are required to provide clear notice about these rights and must document that patients have been informed before they leave the hospital.

During that 240-day period, hospitals must also take into account any changes in a patient’s financial circumstances that could affect their eligibility for reduced-cost or free care.

Stricter Limits on Debt Collection

The law also places tighter restrictions on how and when hospitals can pursue debt collection. No civil lawsuits can be filed for debts of $500 or less, protecting patients with smaller outstanding balances from being dragged into court.

Hospitals must now wait at least 240 days after issuing a bill before filing a lawsuit, extending the current waiting period by two months.

Patients who later qualify for free care within that timeframe must receive a refund of any overpayment greater than $25.

In addition, hospitals are prohibited from reporting adverse information such as negative credit entries during the 240-day period or while they are reconsidering a patient’s application for assistance.

Perhaps most significantly, hospitals will no longer be allowed to pursue extreme collection tactics such as foreclosing on, placing liens against, or forcing the sale of a patient’s primary home in order to recover medical debt.

What It Means for Patients

Taken together, these reforms significantly expand protections for Maryland residents facing the financial stress of hospital care.

Lower- and middle-income patients will benefit from new, legally required discounts, while insured patients with high deductibles and coinsurance will gain broader eligibility for assistance.

The longer window to apply for relief, combined with limits on lawsuits and credit reporting, will give patients both breathing room and leverage when dealing with medical bills.

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