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Wisconsin Legislature: SB1132: Bill Text
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SB1132: Bill Text
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2025 - 2026 LEGISLATURE
LRB-6606/1
KMS&KP:ajk
2025 SENATE BILL 1132
March 19, 2026 - Introduced by Senator
Drake
, cosponsored by Representatives
Prado
,
Miresse
,
Arney
,
Bare
,
Cruz
,
Haywood
,
Hong
,
Joers
,
Johnson
,
Madison
,
Neubauer
,
Phelps
,
Sinicki
,
Stubbs
,
Subeck
,
Tenorio
and
Taylor
. Referred to Committee on Health.
SB1132,1,2
1
An Act
to create
20.435 (1) (fr), 71.05 (6) (b) 57. and 146.691 of the statutes;
2
relating to:
medical debt abolition and making an appropriation.
Analysis by the Legislative Reference Bureau
This bill provides $10,000,000 in each of fiscal years 2025-26 and 2026-27 to the Department of Health Services to purchase eligible residents’ medical debt from commercial debt collectors and health care providers and abolish the medical debt. Under the bill, DHS must abolish medical debt in a manner that minimizes the effect on the eligible resident’s tax liability and may not seek payment from an eligible resident for their medical debt. The bill also excludes from the calculation of state income tax any amount of a taxpayer’s indebtedness discharged under the bill.
Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.
For further information see the state fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
SB1132,1
1
Section
1
.
20.005 (3) (schedule) of the statutes: at the appropriate place,
2
insert the following amounts for the purposes indicated:
-
See PDF for table
SB1132,2
8
Section
2
.
20.435 (1) (fr) of the statutes is created to read:
SB1132,2,10
9
20.435
(1)
(fr)
Medical debt abolition.
The amounts in the schedule for the
10
abolition of medical debt under s. 146.691.
SB1132,3
11
Section
3
.
71.05 (6) (b) 57. of the statutes is created to read:
SB1132,2,13
12
71.05
(6)
(b) 57. For taxable years beginning after December 31, 2025, any
13
amount of indebtedness of the claimant discharged under s. 146.691.
SB1132,4
14
Section
4
.
146.691 of the statutes is created to read:
SB1132,2,15
15
146.691
Medical debt abolition.
(1)
In this section:
SB1132,2,17
16
(a) “Eligible resident” means an individual who is a resident of this state and
17
to whom one of the following applies:
SB1132,2,19
18
1. The individual has an annual household income that does not exceed 400
19
percent of the federal poverty line, as defined in
42 USC 9902
(2).
SB1132,2,21
20
2. The individual has medical debt equal to 5 percent or more of the
21
individual’s annual household income.
SB1132,2,23
22
(b) “Medical debt” means an obligation to pay money arising from the receipt
23
of health care services.
SB1132,3,2
24
(2)
The department shall do all of the following or contract with a nonprofit
1
organization that is experienced in locating, purchasing, and abolishing medical
2
debt for individuals to do all of the following:
SB1132,3,3
3
(a) Identify eligible residents.
SB1132,3,6
4
(b) Review the medical debt accounts of each commercial debt collection
5
agency or health care provider willing to sell the medical debt accounts of eligible
6
residents.
SB1132,3,10
7
(c) Conduct outreach with health care providers about the benefits of
8
abolishing medical debt under this section. The department or nonprofit
9
organization shall first conduct the outreach under this paragraph with safety-net
10
hospitals, as determined by the department.
SB1132,3,16
11
(d) Negotiate and purchase the medical debt of eligible residents from
12
commercial debt collection agencies and health care providers. The department or
13
nonprofit organization shall prioritize negotiating and purchasing medical debt
14
under this paragraph from health care providers for which a large percentage of
15
their patient population receives Medical Assistance and health care providers that
16
are located in zip codes that are disproportionately affected by medical debt.
SB1132,3,19
17
(e) Abolish the medical debt purchased under par. (d) in a manner that
18
minimizes the effect of the medical debt abolition on the eligible resident’s tax
19
liability.
SB1132,3,22
20
(f) Within 60 days of abolishing an eligible resident’s medical debt, notify the
21
eligible resident that they no longer owe that medical debt to the applicable
22
commercial debt collection agency or health care provider.
SB1132,4,2
23
(3)
The department or a nonprofit organization that contracts with the
24
department under sub. (2) may not attempt to seek payment from an eligible
1
resident for medical debt purchased by the department or nonprofit organization
2
under sub. (2) (d).
SB1132,4,6
3
(4)
Beginning on the first day of the 13th month beginning after the effective
4
date of this subsection .... [LRB inserts date], the department shall annually report
5
to the governor and the appropriate standing committees of the legislature under s.
6
13.172 (3) all of the following for the previous year:
SB1132,4,7
7
(a) The dollar amount of medical debt abolished under this section.
SB1132,4,9
8
(b) The number of eligible residents whose medical debt was abolished under
9
this section.
SB1132,4,12
10
(c) The demographic characteristics, including race, ethnicity, income level,
11
zip code, and insurance status, of the eligible residents whose medical debt was
12
abolished under this section.
SB1132,4,15
13
(d) The number and characteristics, including geography and payor mix, of
14
health care providers from whom medical debt was purchased and abolished under
15
this section.
SB1132,4,16
16
(end)
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