New Jersey is using unspent federal pandemic relief money to eliminate $100 million in medical debt for nearly 50,000 people across the state.
An additional 31,748 residents with over $38.4 million in debt owed to other providers, mostly through debt collection agencies, also will receive relief.
The sweeping debt cancellation was made in partnership with Undue Medical Debt, a charitable organization that uses donations to bulk-buy unpaid medical bills at a discount and then abolish them.
Earlier this year, Arizona, Indiana, and New York City announced plans that could each potentially wipe out $1 billion to $2 billion in medical debt with the assistance of Undue.
Those who qualify are either four times below the federal poverty level or have medical debts that equal 5 percent or more of their annual income, according to the Murphy administration.
The state has allocated $550,000 it received from the federal government during the COVID-19 pandemic for the initiative.
“No one chooses to get sick, be in an accident, or have a chronic illness and we look forward to helping even more people over the course of this partnership with the New Jersey government,” said Allison Sesso, CEO and president of Undue Medical Debt.
There is no application process for this one-time debt cancellation. Eligible people are being sent letters from Undue in the mail.
The debt erasure comes weeks after Murphy signed the Louisa Carman Medical Debt Relief Act. Under the new law, creditors and debt collectors cannot report a patient’s paid medical debt or debts less than $500, charge more than 3 percent interest on medical debt, garnish wages of patients earning less than 600 percent of the federal poverty level, or engage in any collection actions against the patient until 120 days after the first bill for a medical debt has been sent.
Murphy, who was attending the Democratic Party’s national convention in Chicago, celebrated both actions.
“Medical debt accumulates very quickly and can follow a person for decades,” the governor said in a press release.
“With this strategic investment and our partnership with Undue, we are wiping the slate clean for thousands of New Jersey families, eliminating their debt, and making a real, tangible impact on their lives.”
