Add Art 2 Title 2-G §§245 & 246, Pub Health L; amd §601, Tax L
Establishes a three-year pilot hospital medical debt relief program to provide hospital medical debt relief to eligible residents of the state utilizing a not-for-profit organization to identify, acquire and cancel medical debt of such eligible residents directly from health care providers in the state.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3580
SPONSOR: Reyes TITLE OF BILL:
An act to amend the public health law and the tax law, in relation to
establishing a pilot hospital medical debt relief program
PURPOSE OF BILL:
Establishes a pilot medical debt relief program
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 provides the short title known as the "Medical Debt Relief
Act."
Section 2 amends Article 2 of the public health law by adding a new 2-G
title to be known as the Medical Debt Relief Program. This section
creates a 3 year pilot program requiring the commissioner of health to
contract with a non profit organization to cancel hospital medical debt
owed by New York State (NYS) residents.
Section 245 of the program defines "Eligible Resident" as NYS resident
with household income at or below 400% FPL or with medical debt at or
above 5% of hoUsehold income and defines "Medical Debt," to cover any
debt arising from receipt of health care services.
Section 246 of the program sets guidelines for the program that includes
agreements with hospitals in NY to identify residents with various
patient data and other information for eligibility, and retire debt for
any eligible resident with a priority for those with medical debt 18
months or older by purchasing the debt below fair market value or
receive the debt as a donation from a participating hospital. This
section also requires the hospitals to notify the patients on data shar-
ing while also requiring the non profit organization to notify eligible
residents of their intent to acquire their debt and provide notice about
the debt cancellation. The non profit shall also report annually on the
program's progress which shall include amount of debt purchased and
discharged, number of eligible residents who received relief, and other
demographic.
Section 3 amends subsection (I) of section 601 of the tax law by relet-
tering subsection a) and adding a new subsection (i) as it relates to
medical debt relief. In accordance with this section, income received in
the form of debt cancellation shall be exempt from taxes.
Section 4 provides the effective date.
JUSTIFICATION:
Medical debt is an obscene source of stress for thousands of New Yorkers
and has been called the most common cause of bankruptcy in the United
States. In New York State, medical debt has caused financial hardship
for too many families, causing many to be put into collections, to use
up all of their savings, or to choose between basic necessities like
food or housing and resolving their debt. In the final report of the
Discharged into Debt series, issued by the Community Service Society
(CSS), a 2022 survey found that 5% of New Yorkers say they are not
confident that they can afford routine healthcare and 70% say they
aren't confident that they can afford the cost related to major illness.
Medical debt is even a concern to those with health insurance who find
the rising deductibles and out-of-pocket costs difficult to afford. Many
people who participated in the study reported they or a family member
avoided medical care, such as not filling prescriptions and skipping
tests or treatments, because they are afraid of the bills.
Communities of color and low income communities are the most impacted by
medical debt. In the past, hospitals have taken extreme measures to
collect debt from patients including reporting patients to collection
agencies, filing lawsuits, placing property liens, and garnishing their
wages. Between 2015 and 2020 there were over 50,000 medical debt cases
filed against patients, and over 4,000 liens were placed on homes in
2017. Hospitals already received millions of dollars of state funding,
the Indigent Care Pool, which are intended to compensate for patients
who are unable to pay and yet they are still taking extreme measures
against those who cannot afford it. Over the last few years, multiple
laws were passed regulating medical debt, limiting surprise fees from
hospitals, and forbidding liens on primary residences and wage garnish-
ment to collect, but more must be done to help New Yorkers who are still
burdened by this crisis.
Nobody wants to or plans to be sick. Necessary care should not cause
undue financial burden. Medical debt is obscene when healthcare should
be guaranteed and affordable. By enacting the Medical Debt Relief Act,
not-for-profit organizations will be contracted to purchase the debt of
eligible New York residents and cancel the money they owe, helping to
keep residents out of debt while resolving payments to hospitals.
This legislation was inspired by the work of an organization named RIP
Medical Debt, which uses donations from the public and has contracted
with other governments around the U.S. to purchase medical debt at a
steep discount and abolish medical debt permanently.
PRIOR LEGISLATIVE HISTORY:
2023: Amend & Recommit to Health; Referred to Health
2024: Amend & Recommit to Health; Referred to Health
FISCAL IMPLICATIONS:
Subject to appropriations.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
3580
2025-2026 Regular Sessions
IN ASSEMBLY
January 28, 2025
___________
Introduced by M. of A. REYES, DE LOS SANTOS -- read once and referred to
the Committee on Health
AN ACT to amend the public health law and the tax law, in relation to
establishing a pilot hospital medical debt relief program
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "hospital medical debt relief act".
3 § 2. Article 2 of the public health law is amended by adding a new
4 title 2-G to read as follows:
5 TITLE 2-G
6 HOSPITAL MEDICAL DEBT RELIEF PROGRAM
7 Section 245. Definitions.
8 246. Hospital medical debt relief program.
9 § 245. Definitions. As used in this article, the following terms shall
10 have the following meanings:
11 1. "Eligible resident" means an individual that meets the following
12 conditions:
13 (a) is a resident of the state;
14 (b) has a household income at or below four hundred percent of the
15 federal poverty guidelines or has hospital-based medical debt equal to
16 five percent or more of the individual's household income; and
17 (c) has had hospital medical debt relieved under this program.
18 2. "General hospital medical debt" means an obligation or an alleged
19 obligation of an eligible resident to pay any amount whatsoever related
20 to the receipt of health care services, products, or devices provided to
21 a person by a general hospital licensed under article twenty-eight of
22 this chapter or a health care professional authorized under title eight
23 of the education law who practices within a hospital, whether or not
24 such obligation has been reduced to judgment.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03442-01-5
A. 3580 2
1 § 246. Hospital medical debt relief program. 1. The commissioner,
2 subject to general fund appropriations for this purpose, shall establish
3 a three-year pilot program to provide hospital medical debt relief to
4 eligible residents in the state.
5 2. Pursuant to sections one hundred twelve and one hundred sixty-three
6 of the state finance law, the commissioner shall contract with a not-
7 for-profit organization to identify and cancel the hospital medical debt
8 owed by eligible residents to hospitals and their contracted providers
9 located within the state, to the extent possible. Such not-for-profit
10 organization shall enter into agreements with general hospitals in the
11 state to identify eligible residents utilizing patient data provided by
12 such participating hospitals including, demographic information, resi-
13 dents' zip codes, insurance status and payer, dates of service,
14 balances still owed, and other information necessary to identify an
15 eligible resident. The not-for-profit organization shall retire such
16 eligible residents' hospital medical debt by acquiring such debt through
17 purchase or receipt as a donation from a participating general hospital
18 and then cancelling such debt. Any such purchase of hospital medical
19 debt shall be for an amount at or below the fair market value of such
20 debt. All data sharing shall comply with the provisions of the federal
21 health insurance portability and accountability act and any other
22 applicable state or federal law.
23 3. To the extent possible, for general hospitals that have entered
24 into an agreement under the program, priority shall be given: (a) to
25 eligible residents whose debt is eighteen months or older; and/or (b)
26 who resides in the lowest-income zip codes.
27 4. The not-for-profit organization shall also notify each eligible
28 resident who has had a debt cancelled pursuant to the provisions of this
29 section that their specific hospital medical debt has been cancelled
30 and that the debt cancelation does not lead to income tax liabilities
31 for program recipients. Such notice shall include a copy of the hospi-
32 tal's financial assistance application and policy pursuant to section
33 twenty-eight hundred of this chapter.
34 5. Once a hospital medical debt has been cancelled, the participating
35 general hospital or their third party agent, that reported the hospital
36 medical debt to the credit reporting agencies, shall inform the credit
37 reporting agencies of such cancellation to ensure that the debt has been
38 removed from an eligible recipient's credit report.
39 6. The not-for-profit organization shall conduct an outreach program
40 to have discussions with general hospitals about the benefits of the
41 hospital medical debt relief program to patients, communities and to the
42 hospitals themselves. Such outreach shall first be initiated with
43 enhanced safety net hospitals as defined in section twenty-eight hundred
44 seven-c of this chapter.
45 7. The not-for-profit organization shall, in consultation with the
46 department report annually on the progress and success of the hospital
47 medical debt relief program established pursuant to this section to the
48 governor and the temporary president of the senate, the speaker of the
49 assembly, the department, and the chair of the senate committee on
50 health and the chair of the assembly committee on health. Such report
51 shall be published and publicly available on the department's website.
52 Such report shall include but not be limited to:
53 (a) the amount of hospital medical debt purchased and discharged under
54 the program;
55 (b) the number of eligible residents who received relief under the
56 program;
A. 3580 3
1 (c) to the extent practicable the characteristics of the eligible
2 residents;
3 (d) the number of individual debts purchased;
4 (e) total number of eligible residents by zip code;
5 (f) the number of individual debts purchased by zip code;
6 (g) the number of individual debts canceled by county separated by the
7 federal poverty line as defined and annually revised by the United
8 States department of health and human services for a household of the
9 same size, as follows: (i) two hundred percent and below, (ii) above two
10 hundred percent up to three hundred percent, (iii) above three hundred
11 percent up to four hundred percent, (iv) above four hundred percent; and
12 (h) any other data or information requested by the department and that
13 can be included pursuant to applicable laws and regulations and within
14 budgeted resources.
15 8. The commissioner shall promulgate any rules and regulations neces-
16 sary for the implementation of this section.
17 § 3. Subsection (i) of section 601 of the tax law is relettered
18 subsection (j) and a new subsection (i) is added to read as follows:
19 (i) Hospital medical debt relief. Notwithstanding the provisions of
20 subsections (a), (b), (c) and (d) of this section and any other
21 provision of this article, for taxable years beginning after the effec-
22 tive date of this subsection, the income of an individual received
23 pursuant to the provisions of section two hundred forty-six of the
24 public health law in the form of debt cancelation shall be exempt from
25 tax under this article regardless of whether such income is subject to
26 federal income taxation.
27 § 4. This act shall take effect on the one hundred eightieth day after
28 it shall have become a law. Effective immediately, the addition, amend-
29 ment and/or repeal of any rule or regulation necessary for the implemen-
30 tation of this act on its effective date are authorized to be made and
31 completed on or before such effective date.
