$100M In Medical Debt To Be Forgiven In NJ

TRENTON, NJ — Nearly 50,000 New Jersey residents will see some or all of their medical debt disappear under a new plan unveiled by Gov. Phil Murphy this week.

According to a news release from the governor's office, the state plans to use federal American Rescue Plan funds to become the first state in the country to wipe out nearly $100 million in medical debt.

The announcement follows the signing of the Louisa Carman Medical Debt Relief Act, which protects Garden State families from accumulating medical debt and medical debt collectors. The legislation also prohibits the reporting of medical debt to credit reporting agencies.

"When someone is sick or injured, they should be able to focus on what matters most — getting better — rather than worrying about how they will pay for the life-saving care and services rendered to them," Murphy said in a statement. "New Jerseyans should not have to scrimp and save to ensure their basic health care needs are met, or to pay down lofty medical debts resulting from tragic accidents or devastating diagnoses."

According to the governor's office, the state is partnering with Undue Medical Debt, a national nonprofit that works with hospital systems across the country to purchase large, bundled portfolios of past-due medical debt belonging to those least able to pay.

The state will use approximately $550,000 in federal funds to eliminate $100 million worth of medical debt, officials said.

The state plans to deliver debt relief to 17,905 New Jersey residents who owed $61.6 million to Prime Healthcare hospitals and an additional 31,748 residents owing more than $38.4 million to other providers, primarily collections agencies, officials said.

To qualify for relief, New Jerseyans need to earn at least four times (400 percent) or below the federal poverty level or have medical debts that equal 5 percent or more of their annual income.

There is no application process to obtain relief, officials said.

Eligible Garden State residents should receive an Undue branded letter in the mail starting this week, the governor's office said. Learn more about Undue Medical Debt online.