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Vermont Medical Bill Rights: The Strongest Medical Debt Protections in America (Act 21 of 2025)

Vermont has enacted the most comprehensive medical debt protection law in the entire United States. Act 21 of 2025, effective January 2026, bans medical debt from credit reports, bans wage garnishment for medical bills, requires hospitals to provide free care for patients under 250% of the federal poverty level, and created a $1 million fund to buy and eliminate medical debt. Combined with a dedicated state-funded Health Care Advocate, the Green Mountain Care Board overseeing hospital budgets, and generous Medicaid expansion, Vermont patients have protections that no other state can match. This guide explains every protection available to you and exactly how to use them.

Vermont Patient Protections at a Glance

Credit Reporting BAN

Medical debt cannot appear on credit reports (Act 21)

Wage Garnishment BAN

Wages cannot be garnished for medical debt (Act 21)

Free Care Under 250% FPL

100% free hospital care, mandatory (18 VSA 9481)

Sliding Scale 250-400% FPL

40%+ discounts for middle-income patients

Catastrophic Cap to 600% FPL

Medical expense caps for higher-income patients

Mandatory FA Screening

Hospitals must screen before billing uninsured patients

$1M Debt Relief Fund

State fund to purchase and eliminate medical debt

Free Health Care Advocate

State-funded advocate: (800) 917-7787

$125,000 Homestead Exemption

Primary residence protected (27 VSA 101)

Dr. Dynasaur (Kids Coverage)

Children to 18, pregnant women to 317% FPL

IMPORTANT: What Act 21 Does NOT Do

Hospitals can still sue you for medical debt. The 6-year statute of limitations still applies.

Act 21 is the strongest medical debt law in America, but it does not eliminate your obligation to pay. Hospitals can still file lawsuits to collect medical debt within the 6-year statute of limitations. The critical difference is that even if they win a judgment, they cannot garnish your wages or damage your credit. Still, a court judgment can result in liens on non-exempt property and bank levies on non-exempt funds.

Key limitations to understand:

  • Hospitals CAN still sue you within 6 years (but must first certify they offered financial assistance)
  • Court judgments can still result in liens on non-homestead property
  • Bank accounts (beyond exempt funds) could still be levied after a judgment
  • A partial payment restarts the 6-year statute of limitations clock
  • The $125,000 homestead exemption is modest compared to some states

Bottom line: Act 21 removes the two worst consequences of medical debt (credit damage and wage garnishment) and makes free or reduced care widely available. But you should still actively engage with your bills, apply for financial assistance, and use every protection outlined in this guide.

Act 21 of 2025: The Gold Standard for Medical Debt Protection

Vermont Act 21, signed into law in 2025 and effective January 2026, is the most comprehensive medical debt protection law enacted by any state. It addresses every major way medical debt harms patients: credit scores, wage garnishment, lack of financial assistance, and the burden of existing debt. Here is a detailed breakdown of each protection.

1. Credit Reporting Ban

Medical debt is completely banned from appearing on credit reports for Vermont residents. No hospital, collection agency, or debt buyer can report medical debt to Equifax, Experian, TransUnion, or any other consumer reporting agency. This applies to all medical debt, regardless of amount or age.

Why this matters: Medical debt on credit reports can lower your credit score by 100+ points, making it harder to rent an apartment, get a car loan, or qualify for a mortgage. Vermont eliminated this entirely.

2. Wage Garnishment Ban

Even if a hospital or collector obtains a court judgment against you for medical debt, they cannot garnish your wages. This is a dramatic departure from most states, where judgment creditors can take up to 25% of your disposable income. In Vermont, your paycheck is fully protected from medical debt collectors.

Note: For non-medical debts, standard Vermont garnishment rules still apply (the lesser of 25% of disposable earnings or the amount exceeding 30 times minimum wage per week).

3. Mandatory Free Care (Under 250% FPL)

Vermont hospitals must provide 100% free care to patients with household incomes below 250% of the federal poverty level. This is not optional and not left to individual hospital discretion. It is state law. For 2026, approximate income thresholds are:

  • Single person: under approximately $37,650/year
  • Family of 2: under approximately $50,950/year
  • Family of 4: under approximately $77,250/year

4. Sliding-Scale Discounts (250-400% FPL)

Patients with incomes between 250% and 400% FPL qualify for mandatory sliding-scale discounts of 40% or more off hospital charges. The exact discount depends on your income level within this range. For a single person, 400% FPL is approximately $60,240/year. For a family of four, it is approximately $123,600/year. Even solidly middle-income families qualify for significant reductions.

5. Catastrophic Medical Expense Cap (Up to 600% FPL)

For patients with incomes up to 600% FPL, Act 21 establishes a catastrophic medical expense cap. This prevents a single medical event from creating financial ruin for families earning up to roughly $90,360 (single) or $185,400 (family of four). The cap limits total out-of-pocket medical expenses to a percentage of household income.

6. Mandatory Financial Assistance Screening

Hospitals must screen all uninsured and underinsured patients for financial assistance eligibility BEFORE sending bills. This shifts the burden from patients (who often do not know assistance exists) to hospitals. If a hospital sends you a bill without first screening you for assistance, this is a violation of state law and grounds for a complaint to the Green Mountain Care Board.

7. Pre-Lawsuit Certification Requirement

Before a hospital can file a lawsuit against a patient for medical debt, it must first certify to the court that it offered the patient financial assistance and completed the screening process. If a hospital sues you without this certification, you have a strong defense. Ask your attorney (or Vermont Legal Aid) to challenge the lawsuit on these grounds.

8. $1 Million Medical Debt Relief Fund

Act 21 established a $1 million state fund dedicated to purchasing and eliminating medical debt. Medical debt is typically sold for pennies on the dollar, so this fund is expected to eliminate over $100 million in medical debt for Vermont residents. The state purchases portfolios of medical debt from collectors and then forgives the debt entirely. If you receive a notice that your medical debt has been forgiven through this program, the debt is gone permanently with no tax consequences under current IRS rules for forgiven medical debt.

The 6-Year Statute of Limitations

Under 12 VSA 511, Vermont has a 6-year statute of limitations on medical debt. This means a creditor must file suit within 6 years of your last payment or the date the debt became due. After that, the claim is time-barred and cannot be enforced in court.

While 6 years is longer than some states, remember that Act 21 dramatically limits what a creditor can do even within that window. They cannot garnish wages or report to credit bureaus. And they must certify they offered financial assistance before filing suit.

Key Points About the 6-Year Rule:

  • The clock starts from either your last payment or the original due date (whichever is later)
  • Any payment, even $1, restarts the full 6-year clock. Be cautious with old debts.
  • If a collector sues you on time-barred debt, you MUST raise the defense in your answer. It is not automatic.
  • The debt does not disappear after 6 years. Collectors can still contact you, but they cannot win in court.
  • Under Act 21, even time-barred medical debt cannot appear on your credit report

Warning: Do Not Restart the Clock

If you have old medical debt approaching or past the 6-year mark, do NOT make any payment without first consulting Vermont Legal Aid at (800) 889-2047. Even a small "good faith" payment gives the creditor a fresh 6 years to file a lawsuit. Debt collectors sometimes pressure small payments specifically to revive time-barred debts.

Hospital Financial Assistance: The Most Generous in America

Vermont had strong charity care requirements even before Act 21. Under 18 VSA 9481, hospitals have long been required to provide charity care. Act 21 dramatically expanded these requirements, creating the most generous hospital financial assistance framework in any state.

Under 250% FPL

100% Free

  • Single: ~$37,650/year
  • Family of 4: ~$77,250/year
  • All hospital care covered
  • Mandatory, not discretionary

250-400% FPL

40%+ Off

  • Single: ~$37,650-$60,240/year
  • Family of 4: ~$77,250-$123,600/year
  • Sliding-scale discounts
  • Discount increases as income decreases

400-600% FPL

Catastrophic Cap

  • Single: ~$60,240-$90,360/year
  • Family of 4: ~$123,600-$185,400/year
  • Limits total out-of-pocket costs
  • Prevents financial devastation

How to Apply for Financial Assistance:

  1. Hospitals MUST screen you before billing if you are uninsured or underinsured. If they did not, ask immediately.
  2. Request the Financial Assistance Policy (FAP) and application from the hospital billing department
  3. Gather proof of income: pay stubs, tax returns, benefit letters, unemployment documentation
  4. Include documentation of hardship: bank statements, monthly expenses, other medical bills
  5. Submit the application within the hospital's deadline
  6. If denied, appeal and contact the Vermont Health Care Advocate at (800) 917-7787 for free help

Remember: The hospital is legally required to screen you for assistance BEFORE billing. If you received a bill without being offered a financial assistance screening, file a complaint with the Green Mountain Care Board at (802) 828-2900.

The Vermont Health Care Advocate: Your Free Ally

Vermont is one of very few states with a dedicated, state-funded Health Care Advocate whose sole job is to represent consumers in insurance and billing disputes. This is not a call center or a complaint form. It is a real advocate who works for you, at no cost.

The Health Care Advocate Can Help You:

  • Fight insurance claim denials and appeals
  • Navigate the hospital financial assistance application process
  • Intervene with hospitals on your behalf regarding billing disputes
  • File formal complaints against hospitals that violate Act 21
  • Help you understand your rights under Vermont law
  • Represent consumer interests before the Green Mountain Care Board
  • Connect you with additional resources like Vermont Legal Aid

Contact the Vermont Health Care Advocate

Phone: (800) 917-7787 (toll-free)

This service is completely free. You do not need to qualify based on income. Every Vermont resident can use the Health Care Advocate regardless of how much they earn.

Green Mountain Care Board: Hospital Budget Oversight

Vermont is unique in having the Green Mountain Care Board, an independent state body that regulates hospital budgets and can reject excessive charge increases. This means Vermont hospitals cannot simply raise prices without oversight, providing a systemic check on the kinds of runaway hospital pricing seen in other states.

What the Green Mountain Care Board Does:

  • Reviews and approves hospital budgets annually
  • Can reject hospital rate increases deemed excessive or unjustified
  • Monitors hospital compliance with financial assistance requirements
  • Oversees health insurance rate reviews
  • Publishes hospital financial data for public transparency

If you believe a hospital is overcharging you, violating its financial assistance obligations, or failing to comply with Act 21 requirements, you can file a complaint directly with the Green Mountain Care Board at (802) 828-2900.

Homestead Exemption and Asset Protection

While Act 21's wage garnishment ban is your primary protection, Vermont also provides a homestead exemption and other asset protections that matter if a creditor obtains a court judgment.

Homestead Exemption

  • $125,000 in equity (27 VSA 101)
  • Must be your primary residence
  • Protects against judgment liens up to that amount
  • Applies to house, condo, or mobile home

Personal Property Exemptions

  • $2,500 general personal property (12 VSA 2740)
  • Motor vehicle: $2,500 equity
  • Tools of trade: $5,000
  • Bank deposits: $700
  • Social Security and retirement: fully exempt

Vermont Uses State Exemptions Only

Unlike some states, Vermont does not allow debtors to choose federal bankruptcy exemptions. You must use the state exemption amounts listed above. The $125,000 homestead exemption is moderate, so if you have significant home equity above that amount, consult with a Vermont attorney about additional protection strategies.

Hospital Liens in Vermont

Under 18 VSA 2251, hospital liens in Vermont are narrow. They only attach to personal injury claims (such as car accident settlements or lawsuit proceeds). A hospital cannot place a lien on your home for routine medical bills. If you received treatment related to a personal injury, be aware that the hospital may have a lien on any settlement or judgment you receive from the responsible party.

Vermont Medicaid and Dr. Dynasaur: Generous Coverage

Vermont expanded Medicaid in 2014 and offers some of the most generous public health coverage in the country. If you qualify, Medicaid can cover both future care and (in some cases) retroactive bills.

Vermont Medicaid (Adults)

  • Ages 19-64
  • Income up to 138% FPL (~$20,783/year single)
  • Comprehensive coverage including hospital, doctor, prescription, mental health
  • 3-month retroactive coverage for qualifying expenses
  • No premiums for most enrollees

Dr. Dynasaur (Children and Pregnant Women)

  • Children from birth through age 18
  • Pregnant women covered regardless of immigration status
  • Income up to 317% FPL for children and pregnant women
  • One of the most generous children's programs in the nation
  • Dental, vision, and well-child care included
  • Minimal or no cost-sharing

Retroactive Coverage Is Critical

If you qualify for Vermont Medicaid, coverage can be applied retroactively for up to 3 months before your application date. This means that if you received expensive medical care and then apply for Medicaid within 3 months, those bills may be covered retroactively. Apply as soon as possible after receiving care, even if you are not certain you qualify.

Apply: Contact the Department of Vermont Health Access at (800) 250-8427 or apply online through Vermont Health Connect.

Vermont Consumer Protection Act

Under 9 VSA 2453 (Vermont Consumer Protection Act), deceptive and unfair billing practices by hospitals and collectors may give you additional legal recourse. Vermont's consumer protection enforcement is strong, and the Attorney General's office actively pursues healthcare billing complaints.

  • Charging uninsured patients dramatically more than insurance-negotiated rates
  • Billing for services not rendered or upcoding procedures
  • Failing to provide required financial assistance screening before billing (Act 21 violation)
  • Misrepresenting the legal consequences of non-payment
  • Threatening wage garnishment for medical debt (now illegal under Act 21)
  • Reporting medical debt to credit bureaus (now illegal under Act 21)
  • Suing without first certifying that financial assistance was offered (Act 21 violation)

Reporting Violations

If a hospital, collector, or debt buyer violates Act 21 (for example, by reporting medical debt to a credit bureau or threatening wage garnishment), report it immediately to the Vermont Attorney General Consumer Assistance Program at (800) 649-2424 and the Green Mountain Care Board at (802) 828-2900. These violations are taken seriously and can result in enforcement action.

Post-Judgment Interest and Collection Limits

If a hospital does file suit and obtain a judgment against you (within the 6-year statute of limitations and after properly certifying that financial assistance was offered), here is what they can and cannot do under Vermont law:

They CANNOT:

  • Garnish your wages (Act 21)
  • Report the debt to credit bureaus (Act 21)
  • Lien your home for routine medical bills
  • Take Social Security or retirement funds
  • Seize exempt personal property

They CAN:

  • Place a lien on real property above the $125,000 homestead exemption
  • Levy non-exempt bank funds (above the $700 exemption)
  • Accrue 12% post-judgment interest (12 VSA 2903)
  • Renew the judgment periodically

12% Post-Judgment Interest

Under 12 VSA 2903, Vermont judgments accrue interest at 12% per year. This is higher than most states. A $10,000 judgment grows by $1,200 every year. However, this is much less impactful than in other states because Act 21 prevents the two most common collection methods (wage garnishment and credit reporting). For patients with limited non-exempt assets, the practical impact of a judgment may be minimal.

Your Vermont Medical Bill Action Plan

  1. 1.

    Confirm You Were Screened for Financial Assistance

    Under Act 21, hospitals must screen uninsured and underinsured patients for financial assistance BEFORE billing. If you received a bill without this screening, contact the hospital immediately and reference Act 21. File a complaint with the Green Mountain Care Board if they refuse.

  2. 2.

    Request an Itemized Bill

    Get line-by-line charges with CPT and ICD-10 codes. Check for duplicates, upcoding, and services not received. Billing errors are common and can significantly reduce what you owe. See our guide to lowering ER bills for specific line items to watch for.

  3. 3.

    Apply for Financial Assistance

    If your income is under 250% FPL, you qualify for 100% free care. Between 250-400% FPL, you qualify for 40%+ discounts. Up to 600% FPL, you qualify for catastrophic caps. Apply immediately.

  4. 4.

    Apply for Vermont Medicaid or Dr. Dynasaur

    If your income is under 138% FPL (adults) or 317% FPL (children/pregnant women), apply immediately. Remember the 3-month retroactive coverage window. Call (800) 250-8427.

  5. 5.

    Call the Vermont Health Care Advocate

    This free service at (800) 917-7787 can help you fight denied claims, navigate financial assistance, and resolve billing disputes. Use them. They exist for exactly this purpose.

  6. 6.

    Check the Statute of Limitations

    When was the service? When was your last payment? If more than 6 years ago, the debt is time-barred under 12 VSA 511. Do NOT make any payment on old debt without first confirming the timeline.

  7. 7.

    Know Your Act 21 Rights If Contacted by Collectors

    If a collector threatens wage garnishment or credit reporting for medical debt, they are violating Vermont law. Document the threat and report it to the Attorney General at (800) 649-2424.

  8. 8.

    If Sued, Respond Immediately

    You have 21 days to answer a lawsuit in Vermont. Verify that the hospital certified it offered financial assistance before suing (required by Act 21). Raise the statute of limitations defense if applicable. Contact Vermont Legal Aid at (800) 889-2047 for free legal help.

Vermont Resources and Complaint Contacts

Vermont Health Care Advocate

Free help with insurance and billing disputes

Free for all Vermont residents, no income requirement

Vermont Legal Aid

Free legal help for low-income residents

Help with debt defense, exemptions, and collections

Vermont Attorney General

Consumer protection, Act 21 violations, deceptive billing

Report collectors threatening garnishment or credit damage

Green Mountain Care Board

Hospital budget oversight, financial assistance compliance

Report hospitals that fail to screen for financial assistance

Vermont Medicaid / DVHA

Medicaid enrollment, Dr. Dynasaur, eligibility questions

Apply online through Vermont Health Connect

Federal Resources

  • No Surprises Act Help Desk: (800) 985-3059
  • CFPB (debt collection complaints): consumerfinance.gov/complaint
  • CMS Hospital Price Transparency: cms.gov/hospital-price-transparency
  • IRS 501(r) violations: Report to IRS Form 13909

Frequently Asked Questions

If medical debt cannot go on my credit report, does it matter if I do not pay?

Yes, it still matters. While Act 21 prevents credit reporting and wage garnishment, hospitals can still sue you within the 6-year statute of limitations. A court judgment allows them to place liens on non-exempt property and levy non-exempt bank funds. The judgment also accrues 12% interest annually. However, Act 21 does remove the two most harmful consequences of medical debt, and for many patients with limited non-exempt assets, the practical risk of a judgment is modest.

I already have medical debt on my credit report from before Act 21 took effect. Can I get it removed?

Act 21 applies to all medical debt reporting going forward from its January 2026 effective date. If medical debt still appears on your credit report after January 2026, dispute it with the credit bureaus and reference Act 21. If the bureaus do not remove it, file a complaint with the Vermont Attorney General at (800) 649-2424 and the CFPB at consumerfinance.gov/complaint. Note that as of 2023, the three major credit bureaus voluntarily removed most medical debt under $500, and effective 2025, they further limited medical debt reporting nationally.

I earn too much for free care but still cannot afford my bill. What can I do?

Even above the 250% FPL free-care threshold, you have options. Between 250-400% FPL, you qualify for mandatory sliding-scale discounts of 40% or more. Between 400-600% FPL, you qualify for catastrophic expense caps. Above 600% FPL, you can still negotiate directly with the hospital for self-pay discounts (many offer 30-50% off), request an interest-free payment plan, or contact the Vermont Health Care Advocate at (800) 917-7787 for help negotiating. Always request an itemized bill and check for errors first. Our hospital bill reduction guide walks through the full negotiation process step by step.

What is Dr. Dynasaur and does my child qualify?

Dr. Dynasaur is Vermont's children's health insurance program, one of the most generous in the country. It covers children from birth through age 18 and pregnant women with household incomes up to 317% of the federal poverty level. Coverage includes doctor visits, hospital care, dental, vision, mental health, and prescriptions with minimal or no cost-sharing. For a family of four, 317% FPL is approximately $97,654/year. Apply through the Department of Vermont Health Access at (800) 250-8427.

A collector is threatening to garnish my wages for a medical bill. Is this legal?

No. Under Act 21 of 2025, wage garnishment for medical debt is illegal in Vermont. If a collector threatens wage garnishment for a medical bill, they are violating state law. Document the threat (date, time, what was said, the collector's name and company). Report it immediately to the Vermont Attorney General Consumer Assistance Program at (800) 649-2424, file a CFPB complaint, and contact Vermont Legal Aid at (800) 889-2047. You may have grounds for damages under both state consumer protection law and the federal Fair Debt Collection Practices Act.

Can the $1 million debt relief fund help me with my specific bill?

The debt relief fund works by purchasing portfolios of medical debt from collectors at pennies on the dollar and then forgiving the debt entirely. You cannot apply to have a specific bill covered. However, if your debt has been sold to a third-party collector, it may be part of a portfolio that the fund purchases. If your debt is forgiven through this program, you will receive a notice. The fund is expected to eliminate over $100 million in total medical debt for Vermont residents. Under current IRS rules, forgiven medical debt is not taxable income.

Does Act 21 apply to all healthcare providers or just hospitals?

The credit reporting ban and wage garnishment ban apply broadly to all medical debt in Vermont. The specific financial assistance requirements (free care under 250% FPL, sliding scale, catastrophic caps, and mandatory screening) primarily apply to hospitals. Physician practices, outpatient facilities, and other non-hospital providers may have different obligations. However, many non-hospital providers are affiliated with hospital systems and may be covered. Contact the Vermont Health Care Advocate at (800) 917-7787 to determine how Act 21 applies to your specific provider.

Need Help With a Vermont Medical Bill?

CareRoute can help you understand your Act 21 protections, check whether you qualify for free or reduced-cost care, verify the statute of limitations on older debts, and create a personalized action plan using every Vermont protection available to you.

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Related Resources

Disclaimer: This page provides general information about Vermont medical bill rights and is not legal advice. Laws change, and individual situations vary. The information here is current as of 2026 but may not reflect recent legislative changes or regulatory interpretations. Act 21 of 2025 took effect in January 2026, and enforcement details may evolve. For specific legal questions about your medical debt situation, consult with a qualified Vermont attorney or contact Vermont Legal Aid at (800) 889-2047. CareRoute is a patient advocacy tool, not a law firm. Nothing on this page creates an attorney-client relationship.