Indiana Medical Bill Rights: New Garnishment Caps, Payment Plan Requirements, and Landmark Debt Protections (2026)

Indiana has $2.2 billion in medical debt, and roughly 1 in 5 residents carry medical bills in collections. But two new laws signed in 2026 (SB 225 and SB 85) fundamentally change the landscape for Indiana patients. Hospitals that violate pricing transparency rules can no longer pursue your debt, wage garnishment is now capped or eliminated entirely, and hospitals must offer payment plans to qualifying patients. This guide covers every protection available to you.

Indiana Patient Protections at a Glance

SB 225: Transparency Shield (2026)

Hospitals violating price transparency cannot collect your debt

SB 85: Garnishment Caps (2026)

No garnishment under 200% FPL, capped at 10% above that

Home Lien Prohibition (SB 85)

Hospitals cannot place liens on your primary residence

Required Payment Plans (SB 85)

Hospitals must offer payment plans to low/moderate-income patients

HIP 2.0 Coverage (up to 138% FPL)

Indiana's Medicaid waiver program with POWER Account contributions

10-Year Statute of Limitations

One of the longest in the US (IC 34-11-2-11). Partial payments reset it.

New 2026 Laws: SB 225 and SB 85 (Indiana's Landmark Medical Debt Protections)

SB 225: Pricing Transparency Shield (Signed March 2026)

SB 225 creates a direct connection between hospital pricing transparency and debt collection rights. If a hospital failed to comply with Indiana's pricing transparency requirements, it is prohibited from pursuing medical debt collection against you for services provided during the period of non-compliance.

What it blocks: Lawsuits, collection agency referrals, wage garnishment, credit reporting, and liens for debt from non-compliant periods
What hospitals must do: Publish machine-readable pricing files with negotiated rates for all services, per CMS and state requirements
How to use this: Before paying a large bill, check if the hospital has published its pricing data. If not, cite SB 225 in a written dispute
Key detail: A 2024 PatientRightsAdvocate.org study found that only 24.5% of hospitals nationwide fully comply with transparency rules, giving this law broad potential impact

SB 85: Garnishment Caps, Payment Plans, and Home Protection (2026)

SB 85 is a comprehensive medical debt protection law that addresses three of the most aggressive collection tactics hospitals use. It provides graduated protections based on income level.

Under 200% FPL (~$30,120/year single): Wage garnishment is completely eliminated for medical debt
Above 200% FPL: Wage garnishment capped at 10% of disposable earnings (well below the federal maximum of 25%)
Primary residence protection: Hospitals cannot place liens on your home for medical debt, regardless of income level
Mandatory payment plans: Hospitals must offer structured payment arrangements to low and moderate-income patients before any collection activity

SB 85 Garnishment Protections by Income:

Income Level	Annual Income (Single)	Garnishment Rule
Under 200% FPL	Under ~$30,120	No garnishment allowed
200% to 400% FPL	~$30,120 to ~$60,240	Capped at 10% of disposable earnings
Above 400% FPL	Above ~$60,240	Capped at 10% (vs. 25% federal max)

Indiana Hospital Financial Assistance Programs

All nonprofit hospitals in Indiana must offer financial assistance (charity care) under federal 501(r) rules. With SB 85 now requiring payment plans, patients have additional leverage. Below are the major Indiana hospital systems and what they offer.

IU Health (Indiana University Health)

Indiana's largest hospital system with 16 hospitals statewide, including Methodist, University, and Riley Children's Hospital in Indianapolis.

Free care: Available to patients with income up to 200% FPL (~$30,120/year for a single person)
Discounted care: Sliding scale discounts for patients from 200% to 400% FPL
Payment plans: Interest-free payment plans available for remaining balances
How to apply: Call IU Health Financial Assistance at 1-800-265-3220 or ask for an application at any IU Health facility

Ascension St. Vincent

Major Catholic health system operating 14 hospitals across Indiana, with the flagship St. Vincent Hospital in Indianapolis.

Free care: Patients at or below 250% FPL (~$37,650/year single) qualify for 100% charity care
Discounted care: Sliding scale discounts typically extend to 400% FPL
Application window: You can apply retroactively up to 240 days after the first billing statement
How to apply: Visit Ascension financial assistance or call the number on your bill

Franciscan Health

Catholic health system with hospitals in Indianapolis, Crown Point, Lafayette, Michigan City, Mooresville, Munster, and surrounding areas.

Free care: Typically available to patients at or below 200% FPL
Discounted care: Partial discounts for patients up to 300% to 400% FPL based on family size and medical expenses
How to apply: Request a financial assistance application from the billing department or patient financial services

Community Health Network

Central Indiana-based nonprofit system with hospitals in Indianapolis, Anderson, and surrounding communities.

Free care: Available for patients at or below 200% FPL
Discounted care: Reduced pricing for patients up to 400% FPL
How to apply: Call 1-800-777-7775 or visit any Community Health Network patient registration desk

Parkview Health

Northeast Indiana's largest health system, based in Fort Wayne with hospitals in Allen, DeKalb, Huntington, LaGrange, Noble, Wabash, and Whitley counties.

Free care: Patients at or below 200% FPL qualify for full charity care
Discounted care: Sliding scale up to 300% to 400% FPL depending on the service
How to apply: Call Parkview Financial Counseling or request an application at any Parkview facility

Pro Tip: Every nonprofit hospital in Indiana must have a financial assistance policy, and they cannot send you to collections without first informing you of this program. If a hospital sent your bill to collections without telling you about financial assistance, this may be a violation of federal 501(r) rules. Document this and include it in your dispute.

HIP 2.0 (Healthy Indiana Plan): Indiana's Unique Medicaid Alternative

What is HIP 2.0?

Indiana did not expand traditional Medicaid under the ACA. Instead, it operates the Healthy Indiana Plan (HIP 2.0) under a federal waiver. HIP 2.0 covers adults aged 19 to 64 with income up to 138% of the Federal Poverty Level (about $20,783/year for a single person in 2026). The key difference from regular Medicaid is the POWER Account.

POWER Account: A personal health account similar to an HSA. Members contribute $1 to $27 per month based on income. The state matches contributions.
HIP Plus: Members who make monthly POWER Account contributions receive enhanced benefits including vision, dental, and lower copays
HIP Basic: Members who do not make contributions still receive coverage but with a more limited benefit package (no vision or dental) and higher copays
Income under 100% FPL: Members cannot be locked out for non-payment of POWER Account contributions
Income 100% to 138% FPL: Missing POWER Account payments can result in a 6-month lockout period. Pay these on time.

How to Apply for HIP 2.0

Online: Apply at in.gov/fssa/hip or through the federal marketplace at Healthcare.gov
By phone: Call the HIP hotline at
In person: Visit your local Division of Family Resources (DFR) office
Retroactive coverage: HIP 2.0 can cover bills up to 3 months before your application date if you were eligible during that time

HIP 2.0 POWER Account Contributions:

Income Level	Monthly Contribution	Non-Payment Consequence
Under 100% FPL	$1/month	Downgrade to HIP Basic (no lockout)
100% to 138% FPL	$1 to $27/month (varies by income)	6-month lockout from coverage

Debt Collection Protections in Indiana

Wage Garnishment Rules (Updated 2026)

Under 200% FPL: No wage garnishment for medical debt (SB 85)
Above 200% FPL: Capped at 10% of disposable earnings (SB 85), compared to the federal maximum of 25%
General Indiana garnishment (non-medical): Without SB 85, Indiana follows federal limits of 25% of disposable earnings or the amount exceeding 30x minimum wage (IC 24-4.5-5-105)

Primary Residence Lien Protection

SB 85 (2026): Hospitals are now prohibited from placing liens on your primary residence for medical debt
Hospital lien statute (IC 32-33-4): Indiana does have a hospital lien law that allows liens on personal injury settlement proceeds (e.g., car accident cases). SB 85 specifically blocks liens on your home.
Homestead exemption: Indiana's homestead exemption is $22,750 per person (IC 34-55-10-2), which protects home equity from other types of judgments

10-Year Statute of Limitations (Warning)

Indiana has one of the longest statutes of limitations in the country for medical debt. Under IC 34-11-2-11, creditors have 10 years to sue you on a written contract (which includes most hospital agreements). For oral contracts, the limit is 6 years under IC 34-11-2-7.

CRITICAL: Making any payment (even $1) on old medical debt can reset the entire 10-year clock. This means a 9-year-old debt that was about to expire becomes fully enforceable for another 10 years.
Collector tactic: Debt collectors may pressure you into making a small "good faith" payment. Do not pay anything on old debt without consulting an attorney first.
Credit reporting limit: Medical debt under $500 cannot appear on credit reports (federal rule). Medical debt from paid-off collections is also removed.

Surprise Billing Protections in Indiana

Federal No Surprises Act (NSA) Coverage

Indiana does not have its own state-level surprise billing law. Indiana patients rely on the federal No Surprises Act (effective January 2022) for protection against unexpected out-of-network charges.

Emergency services: You cannot be balance-billed for emergency care, regardless of whether the facility or providers are in-network
In-network facility, out-of-network provider: If you go to an in-network hospital but are treated by an out-of-network anesthesiologist, radiologist, or other specialist, you pay only in-network rates
Air ambulance: Protected under the NSA. You pay only in-network cost-sharing for air ambulance services
Ground ambulance: NOT covered by the NSA, and Indiana has no state law filling this gap. Verify network status before non-emergency ground ambulance transport when possible.
Good Faith Estimate: Uninsured and self-pay patients must receive a written cost estimate before scheduled services. If the final bill exceeds the estimate by $400 or more, you can dispute it.

Indiana-Specific Gap: Because Indiana lacks a state surprise billing law, patients on state-regulated plans (like some small employer plans and individual market plans) rely entirely on the federal NSA. If you receive a surprise bill, file a complaint with the federal No Surprises Help Desk at 1-800-985-3059 or at cms.gov/nosurprises.

How to Fight a Medical Bill in Indiana (Step by Step)

1
Request an Itemized Bill
Ask for a detailed itemized statement showing every charge, CPT/HCPCS code, service date, and provider. Compare line by line with your Explanation of Benefits (EOB) if insured. Medical billing errors are found in an estimated 80% of hospital bills.
2
Check Hospital Pricing Transparency (SB 225 Defense)
Visit the hospital's website and look for its machine-readable pricing file. If you cannot find it, the hospital may not be compliant with transparency rules. Under SB 225, a non-compliant hospital cannot pursue collection on your debt. Document the absence of pricing data with screenshots and dates.
3
Apply for HIP 2.0 or Financial Assistance
If your income is under 138% FPL, apply for HIP 2.0 immediately (it can cover bills retroactively up to 3 months). If above 138% FPL, apply for the hospital's financial assistance program. Under SB 85, the hospital must offer you a payment plan if you are low or moderate-income.
4
Review for Common Billing Errors
Look for duplicate charges, upcoding (billing for a more expensive service than provided), unbundling (splitting one procedure into multiple charges), charges for services not received, and incorrect diagnosis or procedure codes.
5
Send a Written Dispute (Certified Mail)
Send a certified letter to the hospital billing department identifying specific errors, referencing SB 225 (if applicable), and requesting a billing hold during review. Keep copies of everything. Use our free letter templates to get started.
6
Negotiate or Get Professional Help
If the hospital will not budge, consider negotiating directly (offer a lump-sum payment for 40% to 60% of the balance) or get professional help. Expert medical bill advocates know which levers to pull and often achieve larger reductions than patients can on their own.

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Key Contacts and Resources

Indiana Attorney General - Consumer Protection Division

For: Medical billing disputes, deceptive collection practices, hospital compliance complaints

File a complaint online →

Indiana Family and Social Services Administration (FSSA)

For: HIP 2.0 enrollment, Medicaid questions, benefit eligibility

in.gov/fssa/hip →

Indiana Department of Insurance

For: Insurance claim disputes, surprise billing on state-regulated plans, coverage denials

File a complaint online →

Indiana Legal Services (Free Legal Aid)

For: Free legal help for low-income Hoosiers facing medical debt lawsuits, garnishment, or collections

indianalegalservices.org →

Federal No Surprises Help Desk

For: Surprise bills on self-funded employer plans, good faith estimate disputes

File complaint online →

Pro Tip: When calling, write down the date, time, representative name, reference number, and what was promised. Keep copies of all written correspondence. Send important letters by certified mail with return receipt requested.

Frequently Asked Questions

What does Indiana SB 225 do for patients with medical debt?

SB 225, signed into law in March 2026, prohibits Indiana hospitals from pursuing medical debt collection if the hospital violated state pricing transparency laws. This means if a hospital failed to publish its prices as required, it cannot sue you, send you to collections, or garnish your wages for that debt. This creates a powerful defense for patients and incentivizes hospitals to comply with transparency requirements. A 2024 study found only about 24.5% of hospitals nationwide fully comply with these rules, so this law has broad potential impact in Indiana.

How does Indiana SB 85 protect patients from wage garnishment?

SB 85 (2026) eliminates wage garnishment entirely for patients with income under 200% of the Federal Poverty Level (about $30,120/year for a single person). For patients above 200% FPL, garnishment is capped at 10% of disposable earnings, which is well below the federal maximum of 25%. The law also requires hospitals to offer payment plans to low and moderate-income patients and prohibits liens on primary residences for medical debt.

What is HIP 2.0 (Healthy Indiana Plan) and who qualifies?

HIP 2.0 is Indiana's alternative to traditional Medicaid expansion. It covers adults aged 19 to 64 with income up to 138% of the Federal Poverty Level (about $20,783/year for a single person). Unlike regular Medicaid, HIP 2.0 requires monthly POWER Account contributions ranging from $1 to $27 per month. HIP Plus members who make their contributions get enhanced benefits including vision and dental. HIP Basic is available for those who do not make contributions but covers fewer services. Apply at in.gov/fssa or call 1-877-438-4479. Coverage can be retroactive up to 3 months.

What is the statute of limitations on medical debt in Indiana?

Indiana has a 10-year statute of limitations on written contracts under IC 34-11-2-11, which is one of the longest in the United States. For oral agreements, the limit is 6 years under IC 34-11-2-7. Critical warning: making any payment on old medical debt can reset the entire 10-year statute of limitations clock. This means a 9-year-old debt that was about to expire becomes fully enforceable for another 10 years. Never make a partial payment on old debt without consulting an attorney first.

Can Indiana hospitals place a lien on my home for medical debt?

Under the new SB 85 (2026), hospitals are prohibited from placing liens on your primary residence for medical debt. This is a significant new protection. Previously, hospitals could obtain a judgment and potentially place a lien on your home. Indiana does have a hospital lien statute (IC 32-33-4) that allows liens on personal injury settlement proceeds (for example, from car accident cases), but SB 85 now specifically shields your home from medical debt liens. Indiana's general homestead exemption of $22,750 per person (IC 34-55-10-2) also protects some home equity from other types of judgments.

Does Indiana have a surprise billing law?

Indiana does not have its own state-level surprise billing law beyond the federal No Surprises Act (NSA). The federal NSA protects patients from surprise out-of-network bills for emergency services, air ambulance services, and non-emergency services at in-network facilities. However, the federal law does NOT cover ground ambulance services, and Indiana has not passed a state law to fill this gap. For non-emergency ground ambulance transport, verify that your provider is in-network before transport when possible.

How much medical debt does Indiana have?

Indiana has approximately $2.2 billion in medical debt, with roughly 1 in 5 residents carrying medical debt in collections. This is among the higher rates in the United States and was a major driver behind the passage of SB 225 and SB 85 in 2026. The problem is particularly acute in rural areas where fewer hospitals offer robust financial assistance programs and where residents may have longer travel distances to reach in-network providers.

Are Indiana hospitals required to offer payment plans?

Yes, under SB 85 (2026), Indiana hospitals are now required to offer payment plans to low and moderate-income patients. Previously, payment plans were at the hospital's discretion. The law ensures that patients who qualify are offered structured, affordable payment arrangements before any collection activity begins. Additionally, all nonprofit hospitals must offer financial assistance programs under federal 501(r) rules. If a hospital is trying to collect from you without having offered a payment plan, cite SB 85 in your dispute.

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Related Resources:

Ascension Financial Assistance•How to Negotiate a Hospital Bill•Medical Bills in Collections•Free Letter Templates•Ohio Medical Bill Rights•Illinois Medical Bill Rights•Michigan Medical Bill Rights•Bill Defense Service

Disclaimer: This information is for educational purposes only and is not legal advice. Laws and regulations may change. Always verify current requirements with official sources or consult with a qualified attorney for specific legal guidance. CareRoute does not provide legal services.