AB2123 - Medical Debt Relief Act of 2026.

Amended IN Assembly April 09, 2026 Amended IN Assembly March 16, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2123 Introduced by Assembly Member Aguiar-Curry (Coauthor: Assembly Member Caloza) February 18, 2026 An act to add Section 15464 to the Government Code, and to amend Section Sections 127425 and 128740 of the Health and Safety Code, relating to medical debt, and making an appropriation therefor. debt. LEGISLATIVE COUNSEL'S DIGEST AB 2123, as amended, Aguiar-Curry. Medical Debt Relief Act of 2026. Existing law, the California Health Facilities Financing Authority Act, establishes the California Health Facilities Financing Authority, which has authority to, among other things, make secured or unsecured loans to, or purchase secured or unsecured loans of, any participating health institution in accordance with an agreement between the authority and the participating health institution to refinance indebtedness incurred by that participating health institution, as specified, in connection with projects undertaken, for health facilities acquired, or for working capital. Existing law also authorizes the authority to award grants to eligible clinics and health facilities, as specified. Existing law establishes the California Health Facilities Financing Authority Fund, a continuously appropriated fund, to carry out the purposes of the act. This bill, the Medical Debt Relief Act of 2026, would establish the medical debt relief program, which would be administered by the authority. The The bill would require the authority to enter into an interagency agreement with the Department of Health Care Access and Information to implement the program. The bill would require the authority and department to convene a stakeholder advisory group, as specified, no later than July 1, 2027, to advise on the development, implementation, and administration of the program. The bill would require the stakeholder advisory group, on or before January 1, 2028, to develop recommendations for the authority and department, including, among others, criteria for the ranking and priority of eligible recipients to receive discharge of their medical debt. This bill would authorize the authority authority, in consultation with the department, to, among other things, contract with a medical debt relief coordinator, as defined, for purposes of acquiring medical debt of eligible recipients either directly from a providing health institution or from a debt buyer, as specified. The bill would require the authority to, among other things, maintain books and records of all the medical debt acquired and canceled. The bill would authorize the authority to adopt, amend, or repeal regulations to establish criteria for the operation and administration of the program, and would require the authority to take into account specified factors in developing its ranking and priority criteria. The bill would require the authority to maintain a public internet website for information about the program. This bill would create the California Medical Debt Relief Program Account within the California Health Facilities Financing Authority Fund and would appropriate $2,500,000 from the General Fund to the California Medical Debt Relief Program Account for the purposes of the Medical Debt Relief Act of 2026. make all moneys in the account available, upon appropriation by the Legislature, to the authority for carrying out the purposes of the Medical Debt Relief Act of 2026. The bill would require the authority authority, in consultation with the department, to provide a report to the Legislature and Governor by January 1 of each year, starting January 1, 2028. Existing law requires a hospital to report specified financial and utilization data to the Department of Health Care Access and Information, including, among other things, total operating expenses, and deductions from revenue, such as bad debts and charity care. This bill would require a hospital to report to the department outstanding medical debt owed to the hospital, including debt amount, bill adjustments, source of coverage, whether charity care or discount was provided, demographic data, ZIP Code, and whether the debt led to litigation or wage garnishment. Digest Key Vote: TWO_THIRDS MAJORITY Appropriation: YES NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 15464 is added to the Government Code, immediately following Section 15463, to read: 15464. (a) This section shall be known, and may be cited, as the Medical Debt Relief Act of 2026. (b) The Legislature finds and declares all of the following: (1) The rising costs of health care have had a severe economic impact on Californians. (2) Numerous Californians have found themselves unable to pay for the costs of health care. (3) The burden of unaffordable medical debt on these Californians has impacted their ability to participate equally in California’s economy. (4) Relieving Californians of burdensome medical debt will enhance their ability to participate in California’s economy and lead to more economically beneficial and prosperous lives. (5) It is necessary and appropriate to create a mechanism for needy Californians to escape the burden of medical debt they have no hope of repaying. (c) As used in this section, the following definitions apply, unless the context clearly indicates or requires another or different meaning or intent: (1) “Authority” means the California Health Facilities Financing Authority. (2) “Department” means the Department of Health Care Access and Information. (2) (3) “Eligible health care costs” means health care costs for medical care incurred by an eligible recipient at a health facility by a providing health institution. (3) (4) “Eligible recipient” means a patient who meets all of the following qualifications: (A) The person is a resident of California. (B) The person has incurred medical debt following receipt of care from a providing health institution. (C) The person is unable to repay the debt. (D) The person’s federal adjusted gross income is 400 percent or less than the federal poverty line, or their debt is more than 5 percent of their adjusted gross income as measured by the prior tax return or the estimated return in the current year. (4) (5) “Medical debt” means an eligible recipient’s obligation to pay money arising from the receipt of eligible health care costs. (5) (6) “Medical debt relief coordinator” means a person, company, partnership, or other entity under contract with the authority to facilitate the discharge of medical debt of an eligible recipient. (6) (7) “Medical debt relief program” or “program” means the program administered by the authority to cause discharge of an eligible recipient’s medical debt. (7) (8) “Providing health institution” means any of includes, but is not limited to, all of the following entities that operates operate a health facility: facility or provide health care: (A) A city, county, or city and county. (B) A district hospital. (C) A private nonprofit corporation or association. (A) A general acute care hospital, as defined in subdivision (a) of Section 1250 of the Health and Safety Code. (B) An acute psychiatric hospital, as defined in subdivision (b) of Section 1250 of the Health and Safety Code. (C) A special hospital, as defined in subdivision (f) of Section 1250 of the Health and Safety Code. (D) A provider, as defined in subdivision (t) of Section 127500.2 of the Health and Safety Code. (D) (E) A limited liability company whose sole member is a nonprofit corporation or association authorized by the laws of this state to provide or operate a health facility. (E) (F) A nonprofit corporation that controls or manages, is controlled or managed by, is under common control or management with, or is affiliated with any of the foregoing. (d) The medical debt relief program is hereby established. The authority shall administer the program. The authority may do or cause to be done any of the following: (e) The authority shall enter into an interagency agreement with the department to implement the program. (f) (1) The authority and department shall convene a stakeholder advisory group no later than July 1, 2027, to advise on the development, implementation, and administration of the program. (2) The members of the stakeholder advisory group shall be appointed by the authority and department. The stakeholder advisory group may consider and vote on recommendations for updates to the program and its policies and procedures. (3) The authority and department shall appoint to the stakeholder advisory group representatives from health care stakeholders and experts with representation from the following groups: (A) State departments and other state entities. (B) Consumers. (C) Organized labor. (D) County health, social services, and public health agencies. (E) Health care service plans and health insurers. (F) Providers. (G) Health facilities, including hospitals. (4) The stakeholder advisory group shall not exceed 17 voting members and shall maintain a balance of perspectives with no more than 50 percent of voting members being providing health institutions. (5) The authority and department shall select a chair from the members. (g) On or before January 1, 2028, the stakeholder advisory group shall develop recommendations for the authority and department on the development, implementation, and administration of the program, including all of the following: (1) Criteria for the operation and administration of the program, including, but not limited to, criteria for the ranking and priority of all of the following: (A) Eligible recipients to receive discharge of their medical debt. (B) Providing health institutions from whom to acquire unpaid medical debt. (C) Categories of eligible health care costs resulting in medical debt to discharge pursuant to this section. (2) The stakeholder advisory group shall take into account all of the following factors in developing its ranking and priority criteria: (A) Methods to maximize the geographic distribution of eligible recipients. (B) The benefit to health institutions achieved by purchasing their medical debt. (C) Impacts to underrepresented populations. (D) The size of medical debt owed by individual consumers as percentage of income. (3) Reporting requirements, in addition to the requirements of subdivision (k), for the authority on the operations and outcomes of the program. (4) New data sources beyond the information obtained from paragraph (18) of subdivision (a) of Section 128740 of the Health and Safety Code, which, at a minimum, should be collected from providing institutions to inform the ongoing administration of the program. (h) The authority, in consultation with the department, may do or cause to be done any of the following: (1) Contract with a medical debt relief coordinator for purposes of acquiring medical debt of eligible recipients, either directly from a providing health institution or from a debt buyer as provided in Section 127425 of the Health and Safety Code. Upon the acquisition, the medical debt relief coordinator shall convey the acquired indebtedness to the authority. The authority shall do all of the following: (A) Determine if the eligible recipient was eligible for charity care or discount under Section 127405 of the Health and Safety Code. If the recipient is eligible, and if the hospital is still in possession of the debt, the medical debt coordinator shall notify the hospital and see how much of the debt will be relieved under existing law and cancel the rest. (A) (B) If the authority cancels the debt, the authority shall record that the debt is no longer an obligation of the eligible recipient or any other person or entity. (B) (C) Maintain books and records of all the acquired and canceled medical debt. (C) (D) Provide written notice to the eligible recipient that the medical debt acquired by the authority has been canceled and is no longer an obligation of the eligible recipient. (2) Adopt, amend, or repeal regulations establishing criteria for the operation and administration of the program, including, but not limited to, criteria for the ranking and priority of all of the following: (A) Eligible recipients to receive discharge of their medical debt. (B) Providing health institutions from whom to acquire unpaid medical debt. (C) Categories of eligible health care costs resulting in medical debt to discharge pursuant to this section. (2) Report on the contracts and terms entered into with providing health institutions and debt buyers. (3) Adopt, amend, or repeal rules and regulations pursuant to this chapter as emergency regulations. The adoption, amendment, or repeal of these regulations is conclusively presumed to be necessary for the immediate preservation of the public peace, health, safety, or general welfare within the meaning of Section 11346.1. (4) The authority shall take into account all of the following factors in developing its ranking and priority criteria: (A) The extent to which the cancellation of medical debt will allow categories of eligible recipients to participate meaningfully in the California economy. (B) Methods to maximize the geographic distribution of eligible recipients. (C) The benefit to health institutions achieved by purchasing their medical debt. (i) The authority shall maintain a public internet website on the program that contains all of the following: (1) Information about the program. (2) Information on other financial relief programs available to consumers, including hospital financial assistance under Section 127405 of the Health and Safety Code. (3) Reports submitted pursuant to subdivision (k). (e) (1) (j) The California Medical Debt Relief Program Account is hereby created in the California Health Facilities Financing Authority Fund. All moneys in the account are hereby appropriated shall be available, upon appropriation by the Legislature, to the authority for carrying out the purposes of this section. (2) An amount of two million five hundred thousand dollars ($2,500,000) is hereby appropriated from the General Fund into the California Medical Debt Relief Program Account for the purposes of this section. (f) (k) (1) The authority authority, in consultation with the department, shall prepare and provide a report to the Legislature and the Governor by January 1 of each year, starting January 1, 2028, on the operations and outcomes of the medical debt relief program, including, but not limited to, all of the following: (A) Any contracts entered into with a medical debt relief coordinator. (B) The cost of medical debt purchased. (C) The amount of medical debt canceled. (D) The benefits to eligible recipients whose medical debt has been purchased. (E) The balance of the California Medical Debt Relief Program Account. (F) Providing health institutions. (G) The data collected [Text truncated for display. Full text available on Congress.gov.]