A 2022 ballot measure rewrote how medical debt works in Arizona, and the protections are strong enough that every Mesa resident dealing with a hospital bill should know them. Arizona’s medical debt protections under Proposition 209 go well beyond a simple rate cap.
Quick answer: Arizona's Proposition 209, approved by 72% of voters in 2022, caps medical debt interest at a rate tied to Treasury yields (commonly cited near 3%), raised the homestead exemption, protects up to $5,000 in a bank account from garnishment, and caps wage garnishment on medical debt at 10% of disposable earnings. It applies only to medical debt from after December 5, 2022.
What Proposition 209 did
Formally the Arizona Predatory Debt Collection Protection Act, Proposition 209 passed with 72% voter approval in November 2022 and took effect December 5, 2022. It specifically targets medical debt, defined broadly as any loan, debt, or obligation arising directly from health care services, and it layers several protections on top of Arizona’s ordinary debt collection rules.
The interest rate cap
Under Arizona Revised Statutes § 44-1201, medical debt interest is capped at the lesser of two figures tied to the weekly average one-year constant maturity Treasury yield, a formula commonly summarized in practice as capping around 3% a year, dramatically below the 10% general default rate that applies to other debts without a written agreement.
Bigger exemptions from collection
Prop 209 raised Arizona’s homestead exemption substantially, into the hundreds of thousands of dollars and adjusted periodically, meaning far more home equity is protected from a medical debt judgment than before. It also shields up to $5,000 in a bank account from garnishment specifically tied to medical debt collection, and caps wage garnishment on medical debt at 10% of disposable earnings, well below what other debts can reach.
Only for debt incurred after the effective date
The Arizona Court of Appeals confirmed in a 2024 ruling, Arizona Creditors Bar Association v. State of Arizona, that Prop 209’s protections apply prospectively only, meaning they cover medical debt incurred on or after December 5, 2022. A late-2024 clarification reaffirmed this “Saving Clause,” so a medical bill from before that date follows the older rules, while anything billed after it gets the new protections.
Statute of limitations and collector licensing
Arizona’s statute of limitations on medical debt is six years, after which a creditor generally cannot sue you to collect. A small payment on an old medical debt typically does not restart that clock. Debt collectors pursuing medical debt in Arizona must be licensed and bonded through DIFI under the Arizona Collection Agency Act.
What to do with a Mesa hospital bill
Confirm when the underlying care was provided, since that date determines which set of protections applies. Ask the billing office or collector directly what interest rate is being charged, and compare it against the 3%-style cap if your bill falls under Prop 209. If a collector is charging more, or isn’t properly licensed, report it to DIFI or the Arizona Attorney General’s Consumer Protection Division.
How this compares to other states
Arizona’s Proposition 209 protections are considered among the strongest state-level medical debt protections in the country, going well beyond what federal law requires on its own. For a Mesa patient dealing with a hospital bill, this means the state itself, not just your individual negotiating position, is working in your favor in a way it wouldn’t in many other states.
A reminder about the interest rate formula
The exact medical debt rate isn’t a flat 3% by statute; it’s tied to a Treasury-yield formula that can shift slightly from year to year. Commonly cited as landing near 3%, the precise figure is worth confirming with your billing office or DIFI if the exact rate materially affects a large balance.
FAQ
What interest rate applies to Arizona medical debt now?
A rate tied to Treasury yields, commonly described as capping near 3% a year, for medical debt incurred on or after December 5, 2022.
Does Prop 209 cover older medical bills?
No. Arizona courts have confirmed it applies prospectively only, to debt incurred after the law’s effective date.
How much of my bank account is protected from medical debt garnishment?
Up to $5,000 is shielded specifically from medical debt collection under Prop 209.
Where do I report a medical debt collector overcharging interest?
The Arizona Department of Insurance and Financial Institutions (DIFI), which licenses collection agencies.
This article is for educational purposes only and is not financial advice. Loan amounts, fees, and laws can change, so verify current rules with the Arizona Department of Insurance and Financial Institutions (DIFI) at difi.az.gov/complaints and confirm any lender is licensed before you borrow.