Hospitals banned from seizing homes over medical debt; $100M fund to forgive bills

What it does

This bill requires hospitals participating in Medicare to establish charity care policies, screen patients for financial assistance before billing, and prohibit aggressive debt collection practices (home liens, wage garnishment) for low-income patients. It also creates a $100 million federal grant program to fund nonprofit organizations that buy and forgive medical debt for individuals whose medical bills exceed 5% of their income or whose household income is under 400% of the poverty line.

Why we flagged it

The bill's core mechanism is twofold: (1) imposing new Medicare participation standards that restrict hospitals' debt collection practices and require financial assistance screening, and (2) establishing a federal grant program to fund nonprofit acquisition and discharge of medical debt. Both mechanisms directly target medical debt relief and consumer protection.

What the text implies

• Hospitals may respond to debt collection restrictions by raising prices on insured patients or reducing charity care budgets, shifting costs to those with insurance rather than absorbing losses.
• The $100M grant program is capped at 'not more than 1 eligible nonprofit organization,' creating a single-entity monopoly on federal medical debt relief funding, which may limit competition and innovation in debt relief approaches.
• Debt collection restrictions apply only to hospitals; physician practices, ambulatory surgery centers, and other non-hospital providers remain unregulated, creating a patchwork of protections.
• The 250% poverty-line threshold for interest-free debt and non-sale protections is significantly lower than the 400% threshold for grant-funded relief eligibility, leaving a gap of patients (250–400% poverty) who receive some protections but not full relief.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary citizens with medical debt gain concrete protections: hospitals cannot place liens on homes or garnish wages, must offer affordable repayment plans (capped at 4% of gross monthly income), and must screen for financial assistance before aggressive collection. Low-income patients (under 250% of poverty line) receive interest-free debt and cannot have debt sold to collectors. Additionally, $100M in federal grants directly funds nonprofit debt relief for individuals whose medical debt excee

Who stands to gain

• nonprofit medical debt relief organizations
• low-income individuals with medical debt
• individuals earning under 400% of poverty line

Named in the bill

Medicare, Social Security Act, Public Health Service Act, Secretary of Health and Human Services, hospitals, nonprofit organizations, debt collectors, Fair Debt Collection Practices Act

Where it stands

18 cosponsors: 18 Democrats.

• Feb 10, 2026 — Introduced · Congress.gov: “Introduced in House”
• Feb 10, 2026 — Referred to House Committee on Ways and Means and House Committee on Energy and Commerce · Congress.gov: “Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a…”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.