New Delaware Law Will Erase Hospital Bills for Some Patients

A new Delaware law will eliminate hospital bills for some low-income patients and provide new protections against medical debt collection.

Signed July 20 by Gov. Matt Meyer, the law establishes statewide hospital financial assistance standards and limits the collection actions that can be taken against patients who qualify or are likely to qualify for assistance.

Once these provisions take effect, creditors and debt collectors that know or should know a patient’s application or appeal is pending must stop collection communications, lawsuits, debt referrals, debt sales, and reports to consumer reporting agencies.

Delaware residents with household incomes at or below 300% of the federal poverty level will receive full financial assistance for their portion of covered hospital services.

Residents with incomes above 300% and at or below 350% of the federal poverty level will receive a 75% discount, while those with incomes above 350% and at or below 400% will receive a 50% discount.

Each hospital covered by the new standards also must maintain a medical hardship policy.

The minimum financial assistance standards take effect Jan. 1, 2027. The other provisions take effect July 1, 2027, or when the Diamond State Hospital Cost Review Board adopts final regulations, whichever comes first.

Patient Protections Against Debt Collectors

The law gives patients a strong defense if a hospital takes them to court over medical debt.

A patient can defeat a lawsuit if the hospital failed to follow the new financial assistance requirements or the patient qualified for assistance.

The law also makes it harder for hospitals to win automatically when a patient does not respond to a lawsuit. Before entering a default judgment, a court must receive a sworn statement from a responsible hospital officer confirming that the patient was offered financial assistance screening before the case began.

If a hospital failed to screen a patient or incorrectly found the patient ineligible, it must refund amounts paid and waive amounts owed that are covered by the patient’s financial assistance eligibility. If the hospital sold the debt or authorized a collection agency to collect it, the hospital must tell the agency that the debt is invalid.

The Numbers Behind Medical Debt

Delaware’s law addresses a problem affecting households nationwide.

In nationally representative 2024 surveys, 36% of U.S. households reported having medical debt, while 21% had a past-due medical bill, according to a study published in Health Affairs Scholar.

Twenty-three percent of households were paying a medical bill over time.

Nearly 12% had a medical collection on their credit records, while 15% had been contacted by someone other than a medical provider trying to collect medical debt.

Among people with active medical debt collections, the mean most recent collection was $2,456. Researchers estimated that their mean total active collections ranged from $2,456 to $7,931, with an intermediate estimate of $5,069.

More States Target Medical Debt

Sixteen states prohibit or restrict medical debt from appearing in consumer credit reports, according to The Commonwealth Fund.

Like Delaware, other states are requiring hospitals to offer free or discounted care to patients who meet certain income requirements.

Maine, for example, requires hospitals to provide free care to patients with incomes below 200% of the federal poverty level.

The state also requires hospitals to offer payment plans that limit monthly payments to 4% of income for patients with incomes below 400% of the federal poverty level.

Maryland, Rhode Island, and Virginia have limited interest rates on unpaid medical bills. Maryland also prohibits lawsuits over medical bills of $500 or less.