NextFin news, On Sunday, October 12, 2025, it was reported that several U.S. states, including Colorado, allow employers to garnish wages of workers to recover unpaid medical bills, significantly affecting employees’ financial stability.
According to a recent investigation by KFF Health News, Colorado courts authorized wage garnishments in roughly 14,000 cases annually related to unpaid medical debts. In Garfield County alone, 38 cases were documented between 2022 and 2024, with debts ranging from $231 to over $21,000.
The practice involves debt collectors obtaining court orders to mandate employers to withhold portions of employees’ paychecks to satisfy outstanding medical bills. Notably, some of these debts were erroneously pursued despite being covered by Medicaid, highlighting systemic issues in medical billing and debt collection.
One affected individual, Nicole Silva from Sanford, Colorado, had her wages garnished for an ambulance bill after her daughter received urgent medical care. Silva’s case exemplifies the confusion and financial strain workers face when medical billing errors lead to wage garnishment.
Patricia DeHerrera, another Colorado resident, experienced wage garnishment by her employer, Kum & Go, after receiving care at Grand River Health in Rifle in 2020. Despite having Medicaid coverage, she was subjected to wage withholding due to unpaid medical bills, underscoring the challenges Medicaid recipients face in disputing erroneous debts.
Rae Ellen Bichell, KFF’s Colorado correspondent, explained that resolving these garnishment cases is often complicated and time-consuming, requiring extensive knowledge and effort to prove non-liability. She noted that the financial impact extends beyond lost wages, affecting workers’ ability to afford basic necessities such as food and utilities.
Some employers involved in garnishment cases are also healthcare providers, such as Valley View Hospital in Glenwood Springs. In these instances, hospitals have sent employee medical debts to collectors who then seek court orders to garnish wages, effectively requiring employers to recover debts from their own staff.
The Colorado Hospital Association stated that hospital care incurs costs that must be recouped, but studies indicate that wage garnishment recovers only about 0.2% of hospital revenues, suggesting limited financial benefit from this practice.
This wage garnishment system reflects broader issues in the U.S. medical billing and debt collection framework, where errors and bureaucratic hurdles complicate debt resolution and impose financial burdens on workers.
Sources: KFF Health News investigation (https://kffhealthnews.org/news/article/colorado-wage-garnishment-health-care-medical-debt-collections-medicaid/), KSJD report (https://www.ksjd.org/2025-10-08/colorado-employers-can-garnish-wages-over-unpaid-medical-bills), MoneyWise.com, and Sun-Sentinel (https://www.sun-sentinel.com/2025/10/12/wages-garnished-medical-bills/).
Explore more exclusive insights at nextfin.ai.