Nearly 50,000 in New Jersey to Have $100 Million in Medical Debt Erased

By Liya Cui

NEW YORK (Reuters) – Nearly 50,000 people in New Jersey will have $100 million in medical debt erased, Governor Phil Murphy announced on Tuesday. This initiative is one of the largest instances of a state providing direct relief to individuals struggling to pay medical bills.

Murphy allocated $550,000 from the federal American Rescue Plan and collaborated with Undue Medical Debt, a non-profit organization that purchases unpaid medical bills from hospitals at a discounted rate, to facilitate this one-time debt relief program.

New Jersey residents who qualify for the assistance started receiving letters on Monday, as per a press release from the governor’s office.
“Medical debt accumulates very quickly and can follow a person for decades,” Murphy stated in the release. “We are wiping the slate clean for thousands of New Jersey families, eliminating their debt, and making a real, tangible impact on their lives.”

Eligibility for the relief targets residents earning at least four times below the federal poverty level or possessing medical debt that constitutes 5% or more of their annual income, according to the governor’s statement.

The relief will benefit 17,905 individuals with a total debt of $61.6 million owed to Prime Healthcare hospitals, and 31,748 individuals with approximately $38.4 million owed to collection agencies and other debt holders.

Since 2022, Undue has worked with local governments to relieve debt owed to hospitals. This year, Arizona, Indiana, and New York City launched programs expected to eventually eliminate $1 billion-$2 billion in medical debt with the assistance of Undue.

Additionally, various governments have utilized funds from the American Rescue Plan, part of the $1.9 trillion coronavirus relief bill signed in 2021, to wipe out an estimated $7 billion in medical debt for nearly 3 million Americans, according to a White House press statement released in July.

Some states are exploring alternative methods to alleviate residents’ financial burden from medical bills. For instance, North Carolina recently received approval from the Biden administration to incentivize hospitals to forgive the debt of about 2 million residents in return for increased Medicaid funding.