Can Your Bank Account or Salary Be Garnished for Hospital Bills?

A hospital stay can be a stressful event for you and your family -- you may need to take time off work not only for your time in the hospital, but also for recovery after you return home. It can also create stress when you receive bills for hospital expenses not covered by your health insurance policy. Even worse, if you do not pay your hospital bills, you may be subject to collection activity such as bank and wage garnishments.

Unlike government entities, hospitals typically cannot pursue wage garnishment without legal authorization. The hospital must file and win a lawsuit against you for your unpaid hospital bills, usually in a county magistrate or municipal court. When a hospital wins a lawsuit for unpaid bills, the court issues a judgment against you for the debt. The hospital may then obtain a writ of garnishment, allowing it to order your employer or bank to forward funds to the court for repayment of the debt.

Both federal and state law limit the amount of money a hospital can take from your earnings as a judgment creditor. All states must provide exemptions at least equal to those provided under federal law, which limits garnishment to a maximum of 25 percent of your disposable income. As of the time of publication, federal law also provides a complete exemption if you earn less than $217.50 per week. Only statutory deductions such as federal and state taxes reduce your earnings for the purpose of determining disposable income -- health insurance and 401k contributions do not count. Some states provide larger exemptions than federal law. For example, Delaware allows a judgment creditor to take a maximum of 15 percent of your disposable income.

Federal law does not provide specific exemptions for bank account garnishments. However, your state's laws may protect a certain amount of funds in your account from garnishment. For example, Ohio allows a $400 exemption of bank account funds, which prevents a judgment creditor from completely draining your bank account.

Communicating with the hospital's accounts receivable department can help you avoid a judgment that can lead to wage and bank account garnishment. Although the hospital prefers that you pay your bills all at once, the accounts receivable department can typically set up a payment plan to help you pay off your hospital expenses over time. As long as you make your payments as agreed, the hospital typically will not pursue garnishment of your bank accounts or earnings.