NJ is wiping out $100M in medical debt for about 50,000 New Jerseyans

TRENTON – About 50,000 New Jersey individuals and families will have some or all of their medical debt eliminated, Gov. Phil Murphy announced on Tuesday.

Through a partnership with the non-profit Undue Medical Debt, the state used more than $550,000 in federal American Rescue Plan funds to buy up bundled portfolios of past-due medical debt in New Jersey.

Instead of trying to collect, Undue forgives the debt.

In this case, Undue worked with Prime Healthcare and other New Jersey-based health care providers to identify unpaid medical debts that qualify for being erased.

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The plans would benefit 17,905 New Jersey residents who had owed $61.6 million to Prime Healthcare hospitals.

It also involved 31,748 residents who owed more than $38.4 million to other providers through the secondary debt market, primarily collections agencies.

This is a one-time abolishment, according to the governor’s office, to help remove the financial and emotional burden of "unpayable" medical debt.

There was no application process for this medical debt relief.

Instead, those who qualified were either four times or below the federal poverty level or had medical debts that equal 5% or more of their annual income.

Those receiving this massive, one-time round of relief would be getting an Undue branded letter in the mail beginning Aug. 19.

According to Undue, over 100 million people in the U.S. struggle with medical debt, owing a collective $195 billion in past-due medical expenses.

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NJ among 5 states with two-prong effort to ease medical debt

Last month, Murphy signed into law the Louisa Carman Medical Debt Relief Act.

It protects residents against predatory medical debt collectors, and bans the reporting of medical debt to credit reporting agencies.

As of August, New Jersey was among just five U.S. states that have both banned medical debt reporting to credit agencies and earmarked funding to provide residents with direct medical debt relief.

The others were Connecticut, Rhode Island, North Carolina and Illinois, according to an analysis under the Robert Wood Johnson Foundation.