Committee reviews S.27: $1 million appropriation to contract with nonprofit to buy down medical debt; state tax offices say debt abolition likely non‑taxable

At a Ways & Means committee meeting, office and committee staff outlined S.27, which would appropriate $1,000,000 from the general fund to the State Treasurer to contract with a tax‑exempt nonprofit to purchase and abolish qualifying medical debt for Vermont residents.

Jen Carby, legislative counsel with the Office of Legislative Council, summarized the bill’s principal mechanics: the treasurer would contract with a 501(c)(3) that would purchase medical accounts from health‑care providers at fair market value and abolish the indebtedness, notify affected individuals of the amount forgiven and the provider from whom the debt was purchased, and coordinate with providers to remove adverse information from consumer credit reports. The bill also adds a prohibition on credit reporting of medical debt and creates narrow exceptions to permit a tax‑exempt nonprofit to pull credit for eligibility screening.

Becky Wasserman of the Office of the State Treasurer described the operational model: “It is asking that the treasurer's office has appropriated $1,000,000 to contract with a third party, a nonprofit that will then enter into arrangements with hospitals and providers around the state, to use to buy down medical debt. And so, typically that is about, you know, a penny on the dollar for the medical debt.” She said the nonprofit would receive patient files from participating providers, determine eligibility under the bill’s criteria, buy eligible accounts from the…