Hawaii Enacts Medical Debt Relief Program

With the signing of SB 3025, Hawaii joins a growing roster of 27 cities and states utilizing nonprofit partnerships to purchase and forgive health care debt portfolios while expanding local charity care standards.

News Release from ACA International -- The Association of Credit and Collection Professionals, 7/15/2026 

Hawaii Gov. Josh Green has signed Senate Bill 3025, officially establishing the Medical Debt Acquisition and Forgiveness Program.

Administered by the Office of Wellness and Resilience under the Department of Human Services, the initiative introduces an optimized mechanism to eliminate medical debt for qualifying Hawaiian residents.

As part of the program, the state’s contracted nonprofit partner, Undue Medical Debt, purchases portfolios directly from health care creditors and collection agencies. Eligible individuals are identified algorithmically behind the scenes and will receive a letter notifying them that their debt has been cleared.

Relief is restricted to residents who meet at least one of two financial criteria:

A household income at or below 400% of the Federal Poverty Level (FPL) for Hawaii (e.g., equivalent to approximately $140,000 for a family of four).
An adjusted gross income under $100,000 with qualifying medical debt representing 5% or more of their annual household income.

As many as 50,000 residents may qualify, with relief totals reaching as high as $91 million.

The law, now in effect with the governor’s signature, acts as an extension of preexisting consumer safety nets. In Hawaii, nonprofit hospitals and clinics are legally mandated to maintain charity care programs, which can reduce or fully forgive costs for low-income patients before accounts ever reach collection agencies.

ACA’s Take

Hawaii joins a growing roster of 27 cities and states nationwide using this specific public-private architecture to provide medical debt relief.

Pennsylvania, Connecticut and New Jersey also have medical debt relief programs in place.

These programs shed light on debt forgiveness processes for qualifying patients and how providers can tailor their own policies.

The Affordable Care Act requires that nonprofit hospitals establish charity care — essentially financial assistance policies — for patients unable to cover their expenses. IRS Regulation 501(r) addresses extraordinary collection activities, such as credit reporting and legal remedies.

For providers in many states, ACA International members have seen the threshold at 200% or 300% of the FPL as the starting point before any copays or deductibles need to be paid to a non-profit provider. Consistent with the Connecticut program, for example, patients who earn 400% or more of the FPL would be expected to pay their co-pays and deductibles in full while providers continue to offer charity care options for patients making less than that amount.

Oregon was the first state in the nation to mandate required charity care discounts for nonprofit providers. In Oregon, health care is free from nonprofit providers for patients living at 200% or below of the FPL, there are significant discounts for those living between 200% and 400% of the FPL, and there are no discounts required for patients living above 400% of the FPL.

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July, 2026: Act 220: State to buy up Medical Debt