NJ wipes out over $1B in medical debt for 629,000 people

🔰NJ and non-profit Undue buy past-due debt

🔰 Fourth round largest yet

🔰 Another $927M in medical debt erased

TRENTON – New Jersey and a nonprofit have announced their largest round yet of medical debt relief — wiping out $927 million of past-due bills for 629,000 New Jerseyans.

There have been four waves of relief through the partnership with Undue Medical Debt, eliminating a collective $1.1 billion in medical debt since last summer.

This time, the past-due medical debt was purchased from RWJBarnabas Health and from the secondary debt market, using $5.8 million in American Rescue Plan federal funds.

The first two rounds announced in August and October 2024 saw $220 million in medical debt eliminated for 127,000 New Jersey residents.

On Friday, Jan. 31, the administration announced a third round of medical debt relief, totaling over $26 million for another 20,000 New Jersey residents.

Instead of trying to collect, Undue erases the debt, sending letters in the mail over the coming weeks.

Over half a million households will be notified that some or all of their medical debt has been abolished.

Undue works directly with hospital systems to buy large, bundled portfolios of past-due medical debt for pennies on the dollar — belonging to those least able to pay.

Previous debt relief in the state has involved the Atlantic Health System.

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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.

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

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.

New Jersey has a law dubbed the Louisa Carman Medical Debt Relief Act, which protects residents against predatory medical debt collectors and bans the reporting of medical debt to credit reporting agencies.

Last year, NJ became one of just five states that both prohibit medical debt reporting to credit agencies and that have allocated funds to help with direct medical debt relief.

“Nobody should have to choose between their health and their financial stability. My Administration has pursued lasting systemic reforms to put more affordable health care in reach for New Jersey families and better protect our residents from accumulating debt,” Gov. Phil Murphy said in a written statement.

"Medical debt is a silent crisis affecting millions of families, exacerbating health disparities and preventing far too many people from seeking the care they need,” state Department of Health Commissioner Kaitlan Baston said in the same release.

“I’m very proud that we’ve helped the State and Governor Murphy reach this momentous milestone of over $1 billion of medical debt erased for New Jersey residents,” Undue Medical Debt CEO and president Allison Sesso said, while also thanking RWJBarnabas Health for their partnership.

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