Hawaii’s Medical Debt Plan Could Bring $91 Million in Relief
Hawaii has launched a new medical debt relief program that is expected to eliminate about $91 million in medical debt for nearly 50,000 residents across the state.
Governor Josh Green signed the legislation creating the Medical Debt Acquisition and Forgiveness Program, which sets aside $500,000 in state funding to purchase qualifying medical debt and forgive it.
How the Medical Debt Relief Program Works
The program will not pay medical bills directly. Instead, the funding will be used to buy eligible medical debt from the secondary market, where debt is often sold for much less than its original value. Because these accounts can be purchased at a steep discount, the state expects the $500,000 investment to help erase approximately $91 million in medical debt.
Who Qualifies for Debt Relief?
The program is expected to benefit residents who meet certain income and debt-related requirements. According to the legislation, eligible individuals include those earning up to 400% of the federal poverty level or those whose medical debt equals at least 5% of their annual household income.
Residents do not need to apply for the program. Eligible accounts will be identified as debt portfolios are purchased, and people whose medical debt is forgiven will receive a notification.
State officials said the program is intended to reduce the financial burden of medical debt for thousands of Hawaii families. Medical debt can make it difficult for people to keep up with other household expenses, and the new program aims to provide relief by eliminating qualifying balances.
What the Program Means for the Receivables Industry
The initiative works through the secondary debt market rather than direct payments to healthcare providers. Medical debt is often bought and sold after it has been charged off or transferred by the original healthcare provider. Under the new program, qualifying debt will be purchased and then forgiven, ending the collection process for those accounts.
The legislation also has implications for the accounts receivable industry. Debt owners and collection firms holding eligible medical debt may have the opportunity to sell qualifying portfolios through the program instead of continuing collection activity on those accounts.
The Medical Debt Acquisition and Forgiveness Program will now move into implementation, with qualifying medical debt purchased through the program and forgiven. Residents whose qualifying medical debt is forgiven will receive notification once the process is complete.
