The medical billing landscape in Vermont has been completely overhauled by a wave of legislation between 2024 and early 2026. While the new protections are significant, foundational laws like the Statute of Limitations and the No Surprises Act remain critical.
Here is the definitive 10-point guide to Vermont’s healthcare laws, merging these historic new reforms with essential existing protections.
1. Total Ban on Medical Debt Credit Reporting (Act 21)
Effective July 1, 2025, Vermont law prohibits credit reporting agencies from including medical or dental debt on a consumer’s credit report. This is a “hard ban,” meaning even if the debt is legitimate and unpaid, it cannot be used to lower your credit score or impact your ability to secure a loan.
2. Mandatory Charity Care Standards (Act 119)
Large healthcare facilities are no longer allowed to set their own arbitrary rules for financial assistance. The law now mandates:
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100% Free Care: For patients with household incomes at or below 250% of the Federal Poverty Level (FPL).
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40% Minimum Discount: For patients between 251% and 400% FPL.
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No Debt Sales: Facilities meeting these criteria cannot sell your debt to third-party collectors.
3. The $100 Million State Relief Program
The Vermont State Treasurer, in partnership with nonprofit organizations, has launched a massive debt relief initiative. Using state funds, the program purchases “terminal” medical debt (debt that providers have stopped trying to collect) for pennies on the dollar and forgives it entirely for eligible residents earning up to 400% FPL.
4. Wage Garnishment & Property Attachment Ban
As of July 1, 2025, Vermont courts are prohibited from ordering the garnishment of a patient’s wages or the attachment of their property (such as their home) to satisfy a medical debt. This ensures that even in the case of a lawsuit, a patient’s essential assets and income remain protected.
5. Strict Interest Rate Caps
For any medical debt incurred on or after July 1, 2025, interest is strictly limited to a floating rate based on the one-year Treasury yield, currently capped between 1.5% and 4% per annum. Furthermore, if you qualify for any level of financial assistance (charity care), providers are legally barred from charging any interest or late fees whatsoever.
6. Specialty Drug Price Caps (Act 55)
To combat soaring pharmacy costs, as of January 1, 2026, hospital charges for outpatient specialty drugs are capped at 120% of the Average Sales Price (ASP). Hospitals are also prohibited from adding “facility fees” to these specific prescriptions, which previously inflated bills by thousands of dollars.
7. Reference-Based Pricing & Balance Billing (Act 68)
Vermont is moving toward a Medicare-benchmarked system. For contracts starting October 1, 2026, hospitals and insurers must align their rates with a percentage of Medicare prices. Additionally, “balance billing”—where a provider bills you for the difference between their list price and what insurance paid—is strictly prohibited for these services.
8. Ground Ambulance Protections
While the federal No Surprises Act famously left out ground ambulances, Vermont state law closed this gap. Vermont patients are protected from “surprise” balance bills for emergency ground ambulance transport. You are only responsible for your in-network cost-sharing amount (copay/deductible).
9. The 6-Year Statute of Limitations
A foundational protection that remains in effect is the 6-year statute of limitations (12 V.S.A. § 511). A provider or collector generally has six years from the date of the service or the last payment to sue you for a debt. Once this window closes, the debt is “time-barred,” and while they may still ask for payment, they cannot legally win a court judgment against you.
10. Mandatory Patient Notifications
Transparency is now a legal requirement. Before any collection action can begin, providers must:
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Directly notify patients of their eligibility for the state-led debt relief program.
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Provide a clear, paper copy of their Financial Assistance Policy in the patient’s primary language.
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Screen the patient for Medicaid or charity care eligibility before sending the account to a billing partner.
Understanding and complying with these laws is crucial for healthcare providers in Vermont. The state’s approach reflects a balance between ensuring high-quality healthcare, protecting patient rights, and addressing public health concerns. The costs associated with these regulations vary, but they are designed to improve the overall quality and accessibility of healthcare in Vermont.