305 ILCS 85/ Medical Debt Relief Act.

(305 ILCS 85/1)

(Section scheduled to be repealed on July 1, 2029)

Sec. 1. Short title. This Act may be cited as the Medical Debt Relief Act.

(Source: P.A. 103-647, eff. 7-1-24.)

(305 ILCS 85/5)

(Section scheduled to be repealed on July 1, 2029)

Sec. 5. Findings. The General Assembly finds that:

(a) People with medical debt often forgo needed medical care, have difficulty meeting basic needs, and face an increased risk of bankruptcy.

(b) Of the estimated 1,900,000 Illinois residents with medical debt in collections, 1,700,000 live at or below 400% of the federal poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services. The average medical debt per individual is approximately $2,300, and of the total estimated $4,370,000,000 in medical debt that is in collections in Illinois, roughly $4,000,000,000 is acquirable, erasable medical debt carried by low-income Americans.

(c) Medical debt impacts communities throughout the State. There are at least 12 counties in Illinois in which 20% to 30% of residents are living with medical debt in collections: Alexander, Coles, Grundy, Jefferson, Macon, Marion, Massac, Randolph, Schuyler, Shelby, Vermilion, and Warren counties. These 12 counties have approximately 475,000 residents, about 112,000 of whom have medical debt in collections. 13% of Cook County residents have medical debt in collections, and their medical debts comprise more than a quarter of the statewide total.

(d) While any person can accumulate medical debt, people of color are disproportionately affected. Nationally, 13% of the population has medical debt in collections, but 15% of people in communities of color have medical debt in collections. In Illinois, 14% of the population has medical debt in collections, but 20% of the population in communities of color have medical debt in collections.

(e) The medical debt disparity reinforces racial inequity and exacerbates disparities in health outcomes. Structural barriers, including housing, credit, and employment opportunities, further increase financial vulnerability for communities of color, making it more difficult to pay medical bills on time.

(f) Since medical debt can be difficult for hospital systems to collect, they will often settle debt obligations for a fraction of the total amount owed.

(g) Cook County launched a successful effort to erase medical debt obligations for Cook County residents in partnership with a national nonprofit organization. Accounting for Cook County's investment, an additional commitment of approximately $24,500,000 would eliminate all current medical debt for Illinois residents living at or below 400% of the federal poverty guidelines.

(h) Illinois can accelerate health equity for residents across the State by establishing a Medical Debt Relief Pilot Program to provide grant funding to a nonprofit medical debt relief coordinator to relieve thousands of families from the crushing burden of medical debt.

(Source: P.A. 103-647, eff. 7-1-24.)

(305 ILCS 85/10)

(Section scheduled to be repealed on July 1, 2029)

Sec. 10. Definitions. As used in this Act:

"Eligible resident" means an individual who:

(1) is a resident of the State of Illinois; and

(2) has a household income at or below 400% of the federal poverty guidelines or who has medical debt equal to 5% or more of the individual's household income.

"Department" means the Department of Healthcare and Family Services.

"Medical debt" means an obligation to pay money arising from the receipt of health care services.

"Medical debt relief" means the discharge of a patient's medical debt, including debt that is not in collections.

"Nonprofit medical debt relief coordinator" means a nonprofit organization that is experienced in locating, acquiring, and relieving medical debt for individuals and that is able to discharge medical debt of an eligible resident in a manner that does not result in a taxable event for the resident.

"Pilot program" means the Medical Debt Relief Pilot Program.

(Source: P.A. 103-647, eff. 7-1-24.)

(305 ILCS 85/15)

(Section scheduled to be repealed on July 1, 2029)

Sec. 15. Medical Debt Relief Pilot Program.

(a) Subject to appropriation, the Department of Healthcare and Family Services shall establish a Medical Debt Relief Pilot Program to discharge the medical debt of eligible residents.

(b) Under the pilot program, the Department shall provide grant funding to a nonprofit medical debt relief coordinator to use the grant funds and any other private funds available to negotiate and settle, to the extent possible, the medical debt of eligible residents owed to hospitals and other health care providers and entities. The hospitals and other health care providers and entities may be located outside of the State of Illinois, so long as the negotiation and settlement of medical debt is on behalf of an eligible resident.

(c) The Department shall establish the pilot program no later than January 1, 2025. The Department shall administer the pilot program consistent with the requirements of the Grant Accountability and Transparency Act to determine which nonprofit medical debt relief coordinator to use, unless the Department and the State's Grant Accountability and Transparency Unit determine that only a single nonprofit medical debt relief coordinator has the capacity and willingness to carry out the duties specified in this Act. The Department shall publish on its website any agreement, including amendments and attachments, entered into with a debt relief coordinator within 5 business days after the agreement or amendment was entered into by the Department.

(d) The nonprofit medical debt relief coordinator shall:

(1) Identify eligible residents who qualify for the pilot program.

(2) Review the medical debt accounts of each commercial debt collection agency or health care provider willing to sell medical debt accounts of eligible residents.

(3) Conduct an outreach pilot program with hospitals, hospital systems, and other providers and entities about the benefits of the Medical Debt Relief Pilot Program. Such outreach shall first be initiated with safety-net hospitals.

(4) Negotiate and acquire medical debt of eligible residents from health care providers and medical debt collection agencies.

(5) Within 60 days of the acquisition of an eligible resident's medical debt, notify all eligible residents whose medical debt has been discharged under the pilot program, in a manner approved by the Department, that they no longer have specified medical debt owed to the relevant health care provider or commercial debt collection agency.

(6) Not attempt to seek payment from an eligible resident for medical debt purchased by the nonprofit medical debt relief coordinator.

(7) To the extent possible, give priority to hospitals and providers who serve a high percentage of volume of Medicaid customers and providers located in disproportionately impacted area zip codes.

(e) The Department shall provide an annual report to the Governor and General Assembly that includes, but is not limited to:

(1) The amount of medical debt purchased and discharged under the pilot program.

(2) The number of eligible residents who received medical debt relief under the pilot program.

(3) The demographic characteristics of the eligible residents, including, but not limited to, race, ethnicity, income level, zip code, and insurance status.

(4) The number and characteristics of health care providers from whom medical debt was purchased and discharged, including, but not limited to, geography and payor mix.

(f) The Department shall adopt any rules necessary to implement this Act.

(Source: P.A. 103-647, eff. 7-1-24.)

(305 ILCS 85/20)

(Section scheduled to be repealed on July 1, 2029)

Sec. 20. Repealer. The Act is repealed on July 1, 2029.

(Source: P.A. 103-647, eff. 7-1-24.)

(305 ILCS 85/100)

Sec. 100. (Amendatory provisions; text omitted).

(Source: P.A. 103-647, eff. 7-1-24; text omitted.)

(305 ILCS 85/105)

Sec. 105. (Amendatory provisions; text omitted).

(Source: P.A. 103-647, eff. 7-1-24; text omitted.)

(305 ILCS 85/999)

(Section scheduled to be repealed on July 1, 2029)

Sec. 999. Effective date. This Act takes effect upon becoming law.

(Source: P.A. 103-647, eff. 7-1-24.)