Wisconsin would buy and cancel medical debt for eligible residents

The Wisconsin Department of Health Services would buy and cancel eligible residents’ medical debt itself or through an experienced nonprofit. Wisconsin residents would qualify if annual household income is no more than four times the federal poverty line or medical debt equals at least 5% of annual household income. Debt collectors or health care providers would have to agree to sell the debt. Outreach would start with hospitals the department identifies as safety-net hospitals. Purchases would prioritize providers with many patients receiving Medical Assistance and providers in ZIP codes disproportionately affected by medical debt. The department or its nonprofit partner could not seek repayment from residents for purchased debt. The funding would cover fiscal years 2025–26 and 2026–27.

Wisconsin would exclude debt canceled through this program from the income used to calculate state income tax. These protections would cover medical debt purchased and canceled through the program. The department or its nonprofit partner would have to cancel purchased debt in a way that minimizes the resident’s taxes. The department or its nonprofit partner could not seek repayment of purchased debt. The tax exclusion would apply to taxable years beginning after December 31, 2025. Residents would receive notice within 60 days of debt cancellation.

The Wisconsin Department of Health Services would report each year to the governor and relevant legislative committees. Reports would cover the previous year’s canceled debt amount, the number and characteristics of residents receiving relief, and the number and characteristics of health care providers that sold debt. Annual reporting would begin on the first day of the 13th month beginning after the reporting provision’s effective date.