Senate Bill 1132 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 allows DHS to purchase medical debt from commercial debt collectors and health care providers 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 mandates that DHS abolish this medical debt without seeking payment from the eligible residents and ensures that any discharged debt will not affect their state income tax calculations.

The legislation introduces new sections to the statutes, including provisions for the identification of eligible residents, outreach to health care providers, and the negotiation and purchase of medical debt. It also requires DHS or contracted nonprofit organizations to notify residents within 60 days of debt abolition and to report annually on the amount of debt abolished, the number of residents affected, and demographic information. This initiative is designed to alleviate the financial burden of medical debt while minimizing its impact on residents' tax liabilities.