Wage Garnishments for Medical Debts Persist Despite Consumer Protections

In Colorado, many workers are unexpectedly facing wage garnishment orders linked to medical bills, even when they have valid protections or coverage. Stacey Knoll, for instance, thought a court summons was a scam after receiving no prior bills from Montrose Regional Health following a 2020 emergency room visit. Shockingly, three years later, her employer was ordered to deduct a portion of her wages to settle an $881 medical debt that had ballooned to over $1,150 due to interest and court fees. This situation highlights a broader problem: thousands of Colorado residents, and potentially many more nationwide, are subjected to wage garnishments for unpaid medical bills—some under the false impression they are protected or that such garnishments are illegal.

A review of 1,200 cases in Colorado between 2022 and 2024 reveals that at least 30% of garnished wages stem from medical debt, often even when bills should have been covered by Medicaid. These cases involve debts ranging from less than $30 to over $30,000, with many debts increasing by 25% or more over time. Patients often face legal pursuit years after receiving care, with some cases dragging on for over a decade.

Medical providers responsible for these bills include large hospital chains, small rural hospitals, physician groups, and ambulance services. Notably, hospitals sometimes garnish wages of their own employees to recover unpaid bills, illustrating the widespread nature of this practice. Colorado is among 45 states that permit wage garnishment for medical debt, though five states have banned it.

The practice of garnishing wages over medical bills often occurs without the debtor’s knowledge, and many cases are resolved through default judgments due to missed court notices or misunderstanding. Researchers and advocates warn that this creates a shadow system where many individuals are unaware of their rights or the possibility to contest such actions.

While Colorado has implemented some protections—such as limits on payment plans and restrictions on garnishing more than 20% of disposable income—lawmakers and advocates are uncertain how effectively these rules are enforced. Letters from court filings reveal that many individuals are pushed further into financial distress, struggling to pay utilities, rent, and other essentials.

The complexity of medical billing, combined with errors and miscommunications—particularly regarding Medicaid coverage—exacerbates the problem. Patients like Nicole Silva have found themselves garnished for bills they were eligible for but failed to contest, often due to bureaucratic hurdles or a lack of understanding.

Experts emphasize that the system favors creditors—debt collectors and providers—over patients, especially since many garnishments happen without patients actively defending themselves in court. The current data collection on these practices is limited, leaving policymakers without a clear scope of the issue.

Colorado's laws have some safeguards, including a prohibition on debt collectors foreclosing on homes, and limits on garnishment percentages, but enforcement remains a challenge. Advocates argue that many patients are unfairly targeted, especially those in low-wage jobs or reliant on public insurance programs.

Ultimately, the widespread use of wage garnishments for medical debt reveals systemic flaws in the healthcare and debt collection industries. Patients often face financial devastation from bills they cannot afford or misunderstand. Experts call for more transparency, stronger protections, and better enforcement to prevent wrongful garnishments and support consumers in managing medical debt effectively.

Source: https://medicalxpress.com/news/2025-10-workers-wages-siphoned-pay-medical.html