Can Hospital Bills Be Garnished From a Tax Return?

Even a short stay in the hospital can be extremely expensive. A person may go in with a scrape on the knee and come out with several thousand dollars worth of hospital bills. However, as with any other outstanding debt, these bills must be paid. In order to receive payment of bills, hospitals may attempt a number of different methods. However, garnishing wages from a tax return may be tricky.

Hospital Bills

When a person checks into the hospital, he becomes liable for all medical expenses that are not covered by his insurance. In such a case, the hospital becomes like any other creditor seeking payment. Although the specific state laws that apply to garnishment may prohibit it in some cases, in others a creditor --- including a hospital --- may use this as a method of making sure that a debtor pays what he owes.

Private Creditors

Private creditors are generally allowed to use garnishment to seize funds from a debtor, but only after winning a civil judgment in civil court. The judge will then determine what income stream the creditor can seize. However, in few cases can a private creditor garnish income from a government agency. This means that a creditor will generally be forbidden from garnishing wages from a tax refund issued by a state or federal government.

State Debts

If the hospital into which the person checked in was managed by the state, then an exception could theoretically apply. Generally, it is only possible for a state agency to garnish a tax return. If a judge ruled that a public hospital counted as a state agency --- say, as an adjunct of the state's department of health --- then garnishment of the patient's tax return might be possible.

Michigan

The only state that allows private creditors to garnish a person's state tax return is Michigan. In Michigan, creditors are allowed to apply to the state treasury to have a debtor's tax returns seized before they are issued to him. This must be done well in advance. The debtor will have a chance to respond to the request. Some creditors will be allowed to pursue this garnishment, while others will not.