It is a large island covered with sand and tall trees located on the far side of Goo Lagoon. It has a wooden dock and a large skull-shaped mountain in the center.
At the end of the comic, the island is revealed to be a fake island made by Mr. Krabs in order to cure his employees of hiccups. The large mountain is actually made of cardboard and metal, and the hiccups come from a record player that is wired up to some speakers.
According to Mr. Krabs, after a fry cook named Phlegmy McWelterson accidentally sunk the S.S. Glottis (a ship Phlegmy worked on), it has become a custom to banish all hiccuping sailors to Hiccup Island, where they are left to hiccup, cry, drink their tears, and cry some more. The Flying Dutchman often spends his summers here.
Role in comic
When Mr. Krabs finds out SpongeBob has a persistent case of hiccups, he tells SpongeBob about Hiccup Island and how hiccuping sailors are banished there, and the two travel there to banish SpongeBob.
Once there, they meet the Flying Dutchman, who is spending the summer on the island. Mr. Krabs tells the Flying Dutchman about SpongeBob's hiccups, and the Flying Dutchman demands SpongeBob to prove he should be banished.
SpongeBob tries to hiccup, but is so nervous he is unable to. The Flying Dutchman tells SpongeBob to leave, and Mr. Krabs and SpongeBob celebrate. As SpongeBob leaves, Mr. Krabs and the Flying Dutchman reveal Hiccup Island to be an elaborate set up to cure people of hiccups. Mr. Krabs then ends up getting the hiccups himself, ending the comic.