NJ eliminates $100 million in medical debt for 50,000 patients

Nearly 50,000 people in New Jersey will have their medical debts forgiven, totaling $100 million, Gov. Phil Murphy announced.

It is one of the largest instances of a U.S. government providing direct relief to people who cannot pay their medical bills.

There is no application process for this one-time abolition of medical debt. New Jersey residents who qualify for the relief began receiving letters on Monday, August 19.

Who qualifies for the relief? People who are at least four times below the federal poverty level or have medical debt equal to 5% or more of their annual income, according to a news release from the governor’s office.

The benefit will go to 17,905 people who owed $61.6 million to Prime Healthcare hospitals. The governor also will provide relief to 31,748 New Jersey residents who owe more than $38.4 million to secondary debt market providers, including collection agencies, the governor said. CBS News.

“We are giving thousands of New Jersey families a clean slate, eliminating their debt and making a real, tangible impact on their lives.”

Murphy allocated $550,000 in federal funds from the American Rescue Plan and partnered with Undue Medical Debt, a nonprofit that buys unpaid medical bills from hospitals at a discount to execute debt abolition, he explained. Reuters.

“Medical debt accumulates very quickly and can follow a person for decades,” Governor Murphy said in the release. “We are giving thousands of New Jersey families a clean slate, eliminating their debt and making a real, tangible impact on their lives.”

Undue Medical Debt has been partnering with local governments to acquire hospital debt since 2022: Arizona, Indiana, and New York City have all announced programs this year that could eventually erase between $1 billion and $2 billion in medical debt.

Governments have also tapped into funds from the American Rescue Plan, the $1.9 trillion coronavirus relief bill signed into law in 2021 to eliminate roughly $7 billion in medical debt for nearly 3 million Americans, according to a White House press release.