Vermont Governor Phil Scott signed Vermont S.27 into law on May 15, 2025. The bill will appropriate $1 million in funds to the Treasurer’s Office to erase $100 million in medical debt for Vermont residents and would also prohibit credit reporting agencies (CRAs) from taking medical debt into account when determining credit scores.
Vermont S.27, which passed the House and Senate unanimously, was introduced in late January before being approved in late April. The bill will allow the use of $1 million to purchase about $100 million of debt through a partnership with Undue Medical Debt. The $1 million will be taken from the $20 million in general funds appropriated to the Treasurer’s Office to pay off bonds before their maturation date.
Vermont S.27 prioritizes debt that is more than 18 months old and must be considered uncollectible by healthcare providers. Individuals must fulfill one of the following criteria to qualify for the relief:
- The debt must be at least five percent of a household’s annual income, or
- The individuals or households must have an income at or below 400 percent of the federal poverty level.
Vermont S.27 also prohibits credit reporting agencies from including consumer information relating to a medical debt on a consumer’s credit file.
When Governor Scott signed Vermont S.27 into law, it added Vermont to the list of roughly 20 states and cities that have used public funds to eliminate residents’ medical debts. The bill will take effect on July 1st, 2025.
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