New Jersey cancels $100M in medical debt for nearly 50,000 patients

NEWARK, N.J. (PIX11) -- The weight of medical debt is about to be lifted off the shoulders of nearly 50,000 people in New Jersey.

Governor Phil Murphy announced that qualifying patients will have some or all of their medical debt erased.

The State says those who are either at or below four times the federal poverty level or have medical debt equal to at least 5 percent of their annual income will qualify. The State partnered with Undue Medical Debt, which will work with hospitals to purchase debt and erase it.

It also leveraged more than half a million dollars in American Rescue Plan money.

"It's very appropriate that this is COVID money that's being used here," said Jeff Stephens, an attorney at Newark-based Volunteer Lawyers for Justice. He says in his time serving clients and serving as a volunteer EMT, he saw clients' underlying health issues get worse during the pandemic.

Out of the nearly 50,000 people who qualify for relief, nearly 18,000 owed money to Prime Healthcare Hospitals, which has five locations in New Jersey.

"It is something that we think is a solid step forward in our State," said Stephens. 

Now that some are seeing this burden removed, Eatontown-based credit repair expert Paul Oster says it's a chance for those families to tackle other debt and improve their credit score.

"Let's not forget credit card debt has now reached its all-time high along with the highest interest rates we've ever seen," said Oster. 

Tackling medical debt relief has been a marquee goal of the Murphy administration. Last month, Murphy signed into law the Louisa Carman Medical Debt Relief Act, which provides some protections against medical debt collectors.

The State says patients who qualify for relief will be receiving letters in the mail starting this week.