Senate Bill 1598, known as the "Freedom from Medical Debt Act," aims to alleviate medical debt for eligible residents of Tennessee. The bill mandates the state treasurer to contract with a nonprofit entity to facilitate the repayment of medical debts for individuals who meet specific criteria, such as having a gross annual household income at or below 400% of the federal poverty level or owing medical debt that exceeds 5% of their income. The nonprofit is required to purchase medical debt at fair market value and ensure that any adverse information related to the debt is removed from the debtor's consumer report after repayment. Additionally, the bill stipulates that any payment obligations under these contracts are solely the responsibility of the nonprofit and do not constitute a debt of the state.

Furthermore, the bill introduces provisions that prohibit healthcare providers from reporting a patient's medical debt to consumer reporting agencies starting July 1, 2026, while still allowing reporting to debt collections agencies. It also establishes that violations of these provisions will be treated as violations of the Tennessee Consumer Protection Act, granting the attorney general enforcement authority. The bill allows hospitals and ambulatory surgical treatment centers to transfer medical debt to a nonprofit for the purpose of debt elimination and expresses legislative intent for the state treasurer to recognize interest earnings of $1 million in the fiscal year 2026-2027 to support this initiative. The act is set to take effect on July 1, 2026.