New York Governor Kathy Hochul recently signed legislation designed to prevent New York hospitals and medical providers from employing certain collection practices against patients with medical debt. This protection became effective immediately upon the Governor’s signing.

The legislation prohibits providers and hospitals from previous collection practices of garnishing up to 10% of a patient’s paycheck and placing liens on patients’ homes. “No one should face the threat of losing their home or falling into further debt after seeking medical care,” Gov. Hochul said. A report recently issued by the Community Service Society (CSS) on wage garnishment by hospitals found that more than 50,000 New Yorkers have been sued for medical debt over the past five years.

The new legislation’s protections are aimed, in part, at addressing inequities in collections. The CSS report indicated that 20 hospitals are responsible for 80% of medical debt cases, and these collection practices were most prevalent among small rural communities and communities of color.

Gov. Hochul’s 2022 State of the State Address outlined her goals to protect New York’s consumers and improve their financial health, including addressing medical debt and protecting consumers from abusive and punitive practices, as well as advancing health equity.