Vermont passes bill for medical debt relief and credit report improvements

A recent meeting of the Vermont Senate Health and Welfare Committee highlighted significant steps toward alleviating the burden of medical debt for residents. The committee discussed a bill that aims to provide medical debt relief by excluding such debts from credit reports and appropriating funds to assist eligible individuals.

The proposed legislation includes a $1 million allocation from the general fund for fiscal year 2026. This funding will enable the state treasurer to contract with a nonprofit organization to purchase and forgive medical debts for qualifying individuals. The initiative is designed to ensure that these debts are abolished without any cost or tax consequences for the debtors, providing much-needed financial relief.

A key aspect of the bill is the requirement for the treasurer's office to inform individuals whose medical debts have been forgiven. This notification will include details about the amount of debt abolished, the healthcare providers involved, and the individual's household income in relation to the federal poverty level. This transparency aims to help residents understand their financial situation better and access available patient financial assistance policies.

The committee emphasized the importance of educating individuals about existing financial assistance programs at Vermont hospitals, which offer discounts based on income levels. For instance, individuals with household incomes at or below 250% of the federal poverty level may receive a percentage discount, while those earning between 250% and 400% can expect at least a 40% discount.

As the committee continues to refine the bill, the focus remains on ensuring that vulnerable populations receive the support they need to navigate the complexities of medical debt. The next steps will involve further discussions and potential adjustments to the legislation, with the goal of finalizing a solution that addresses the financial challenges faced by many Vermonters.