Montpelier, VT – Today, the Vermont House unanimously approved Senate Bill 27, a proposal to eliminate up to $100 million in medical debt for low- and moderate-income Vermonters and remove medical debt from credit scores. The bill earned unanimous support from the Senate and now heads to the Governor’s desk for signature.
Treasurer Pieciak and Legislative leaders announced the proposal at a January press conference, highlighting medical debt relief as an important step toward protecting the health and financial security of Vermonters. The bill requires no additional taxes or fees.
“Health care costs in Vermont are among the highest nationwide, leaving too many Vermonters one medical emergency away from a lifetime of financial ruin,” said Treasurer Pieciak. “At no additional cost to taxpayers, S.27 will provide immediate, life-changing relief to tens of thousands of people across the state, especially low-income, rural, and marginalized communities who are more likely to carry medical debt.”
Pieciak continued, “I want to thank House members, specifically Speaker Krowinski and Chair Alyssa Black, for their leadership in getting this important, bipartisan bill passed.”
“Estimates show that 1 in 10 Vermonters are impacted by medical debt,” said Vermont Speaker of the House, Representative Jill Krowinski. “With the passage of S.27, we are taking a meaningful step to relieve that burden, protecting families from unfair credit penalties and showing that compassion and fiscal responsibility can go hand in hand. This bill is about dignity, economic fairness, and giving Vermonters the opportunity for a fresh start.”
“S.27 is a step toward making our health care system more fair and accessible to everyone, regardless of income,” said Chair of the House Health Care Committee, Representative Alyssa Black. “Medical debt shouldn’t stand between Vermonters and the care they need.”
Representative Woodman Page reported the bill on behalf of the House Health Care Committee, stating: “S.27 does important work by showing compassion and kindness in assisting Vermonters with medical debt.”
Medical debt is the leading cause of bankruptcy in the U.S. and burdens over 60,000 Vermonters. It can make it harder to afford basic needs, hurt credit scores, and block opportunities to achieve economic success.
Medical debt can also discourage Vermonters from seeking care. A 2021 survey by the Vermont Department of Health found that 85,000 Vermonters delayed or avoided care due to fear of medical debt. When health care services are postponed, medical conditions can worsen, leading to more expensive care in the future and added pressure on emergency rooms.
Under the Treasurer’s proposal, the State would partner with a nonprofit to purchase medical debt from providers at pennies on the dollar of its original cost. Once acquired, the debt would be forgiven and any negative impacts to the debtor’s credit report would be removed.
Vermonters would be eligible for debt relief if they (1) have debts in “terminal bad debt status” or (2) meet one of the following financial criteria:
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Belong to a household at or below 400% of the Federal Poverty Level (currently $60,240 for an individual, $124,800 for a family of four)
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Have medical debt that equals or exceeds 5% of their household income.
Vermonters would be automatically enrolled in the program—no forms, no hassle.
The program would use a portion of funds previously appropriated to the Treasurer’s Office to buy down outstanding state bonds. Using this funding source, the proposal would not increase fees or taxes for Vermonters.
States like Rhode Island have adopted similar initiatives, successfully eliminating medical debt for their most vulnerable residents.
Learn more about the medical debt relief proposal here.
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