Assembly Bill 1168 aims to address medical debt in Wisconsin by allocating $10 million for each of the fiscal years 2025-26 and 2026-27 to the Department of Health Services (DHS). The bill mandates DHS to purchase and abolish medical debt for eligible residents, defined as individuals with an annual household income not exceeding 400% of the federal poverty line or those whose medical debt is 5% or more of their income. The bill also stipulates that DHS must minimize the impact of this debt abolition on the residents' tax liabilities and prohibits seeking payment from these residents for the purchased medical debt.

Additionally, the bill creates new statutory provisions, including Section 20.435 (1) (fr) for medical debt abolition and Section 71.05 (6) (b) 57, which exempts discharged medical debt from state income tax calculations for taxable years beginning after December 31, 2025. The DHS is tasked with identifying eligible residents, negotiating with debt collectors and healthcare providers, and notifying residents once their debt has been abolished. Furthermore, the department is required to report annually on the amount of medical debt abolished, the number of residents affected, and demographic information related to those residents.