New Jersey to Erase $100 Million in Medical Debt for Thousands

Nearly 50,000 New Jersey residents will have $100 million in medical debt erased through a program involving federal funds and a non-profit. Governed by new eligibility criteria, the initiative aims to provide significant financial relief for low-income individuals, following a similar approach adopted by other states.

Nearly 50,000 people in New Jersey will see $100 million in medical debt erased, Governor Phil Murphy announced on Tuesday. This move represents one of the largest instances of a state providing direct debt relief.

Murphy allocated $550,000 in federal American Rescue Plan funds, collaborating with Undue Medical Debt, a non-profit that purchases unpaid hospital bills. Eligible New Jersey residents began receiving notification letters on Monday, according to a press release from the governor's office.

“Medical debt accumulates very quickly and can follow a person for decades,” Murphy said 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.” The relief targets those significantly below the federal poverty level or whose medical debt exceeds 5% of their annual income.

A total of 17,905 people who owed $61.6 million to Prime Healthcare hospitals, and 31,748 people owing about $38.4 million to other debt holders, will benefit. Undue Medical Debt has been partnering with local governments since 2022, with similar initiatives in Arizona, Indiana, and New York City potentially erasing billions in medical debt.

The American Rescue Plan has also enabled governments to eliminate $7 billion in medical debt for almost 3 million Americans, according to a July White House statement. States like North Carolina are exploring alternative methods, such as hospital debt forgiveness in exchange for more Medicaid funds.