Hawaii has created a Medical Debt Acquisition and Forgiveness Program through state law, signed by Governor Josh Green on July 9, 2026, that will purchase outstanding medical debt from hospitals and providers and cancel it for qualifying residents. The program targets up to $91 million in debt owed by as many as 50,000 Hawaii residents, though it remains in development phases with limited initial funding. The program is housed in the state's Office of Wellness and Resilience, part of the Department of Human Services, and will work with nonprofit partners to identify and forgive debt. Residents who qualify will receive notice by mail rather than having to apply, making the process automatic for those who meet the criteria.
Table of Contents
- Who Qualifies for Debt Forgiveness
- The Scale of Medical Debt in Hawaii
- How the Program Will Purchase and Cancel Debt
- Timeline and Funding Status
- The Return on Investment Argument
- Frequently Asked Questions
Who Qualifies for Debt Forgiveness
You qualify for the program if your household income is at or below 400% of the federal poverty level—approximately $140,000 for a Hawaii family—or if your medical debt exceeds 5% of your annual income. These dual thresholds mean the program covers both low-income residents and middle-income families burdened by unusually large medical bills.
The state expects to reach about 50,000 residents through this approach, based on a University of Hawaii and Office of Wellness and Resilience survey. You do not need to apply: qualifying residents will receive notice by mail informing them their debt has been purchased and forgiven, making the process automatic rather than requiring paperwork.
The Scale of Medical Debt in Hawaii
medical debt affects a significant portion of Hawaii's population. One in twenty Hawaii residents carries outstanding medical debt on their credit report, and 19% of families owe more than $500. Many residents report delaying or avoiding medical care due to cost concerns, meaning medical debt functions as a barrier to care itself.
The $91 million figure represents not just the total owed, but the potential for meaningful relief across the state. This scale of debt affects household budgets, credit scores, and access to future credit, making the program's target population among those most financially vulnerable.
How the Program Will Purchase and Cancel Debt
The state will partner with a nonprofit organization that must demonstrate prior experience successfully acquiring and forgiving medical debt in partnership with hospitals and health systems. The nonprofit will purchase outstanding medical debt from hospitals and health care providers at a discount—a standard practice in medical debt relief, where providers often sell debt for pennies on the dollar—then cancel the purchased debt entirely.
This model differs from debt consolidation or settlement: the debt will be forgiven, not restructured or negotiated. The nonprofit's experience requirement ensures the program has partners already equipped to handle large-scale debt acquisition and cancellation efficiently.
Timeline and Funding Status
Act 220 was signed into law on July 9, 2026, but the program remains in active development. The state appropriated $500,000 for fiscal year 2026-2027 to develop, implement, and administer the program. This initial funding supports planning and staffing, not debt purchase itself. The limited initial budget compared to the $91 million potential target means full implementation is not yet guaranteed.
The state will need to secure additional funding or identify alternative sources to actually purchase and forgive the full estimated debt. Monitor the Office of Wellness and Resilience for announcements about nonprofit partner selection and the program's launch timeline.
The Return on Investment Argument
If the state forgives the full $91 million in medical debt with $500,000 in administrative investment, that creates a potential $182-to-1 return on investment. This ratio compares the debt eliminated to the state resources spent, and reflects how inexpensively medical debt can be purchased from providers. However, this ROI assumes the program reaches its maximum potential debt cancellation, which depends on securing funding beyond the initial $500,000 appropriation. The actual impact will depend on the state's ability to fund debt acquisition at scale.
Frequently Asked Questions
Do I need to apply, or will the state contact me?
Qualifying residents will receive notice by mail; you do not need to apply.
What if my income is above 400% of the poverty level?
You may still qualify if your medical debt exceeds 5% of your annual income.
When will the program start forgiving debt?
The program is in development during fiscal year 2026-2027; a full timeline has not been announced.
Will this affect my credit score?
Once debt is forgiven, it should no longer appear as an active obligation, though credit reporting agencies' timelines for updating records vary.