TRENTON, NJ – More than 48,000 New Jersey residents will have their medical debt completely erased in the coming days, as Gov. Phil Murphy announced a major debt relief initiative Wednesday that will eliminate approximately $59 million in outstanding medical bills.
The debt forgiveness program is being administered through Undue Medical Debt, a national nonprofit organization that specializes in purchasing and eliminating medical debt for individuals who can least afford to pay. The initiative represents one of the largest single medical debt relief efforts undertaken in New Jersey.
Using approximately $500,000 in American Rescue Plan funds provided by the federal government during the COVID-19 pandemic, Undue Medical Debt purchased the outstanding debts from a variety of sources, including hospitals, medical providers, collection agencies, and debt buyers. The nonprofit’s business model allows it to acquire debt portfolios at a fraction of their face value, maximizing the impact of public dollars.
New Jerseyans whose debt qualifies for relief will receive letters branded with the Undue Medical Debt logo in their mailboxes over the coming days. The letters will inform recipients that their medical debt has been purchased and forgiven, and no further action is required on their part.
Eligibility for the debt relief program is based on two specific criteria established to target those most in need of financial assistance. First, individuals must have income at or below 400 percent of the federal poverty line. Second, a person’s total medical debt must equal at least 5 percent or more of their annual income.
These requirements ensure the program focuses on residents who are genuinely struggling with medical bills rather than those who have the means to pay. The 400 percent threshold recognizes that even middle-income families can be devastated by unexpected medical expenses.
Importantly, there is no application process for the medical debt relief. Residents do not need to take any action to qualify or receive the benefit. Undue Medical Debt purchases bundled portfolios of past-due medical debt belonging to individuals who meet the eligibility criteria, then automatically forgives those debts.
The initiative builds on previous medical debt relief efforts in New Jersey. Earlier this year, the state announced it had erased $100 million in medical debt for residents, demonstrating an ongoing commitment to addressing the healthcare affordability crisis.
Medical debt remains a significant burden for millions of Americans, often leading to damaged credit scores, wage garnishments, and financial instability. Healthcare advocates have long pushed for systemic solutions to prevent medical debt from accumulating in the first place, including reforms to hospital billing practices and expansion of health insurance coverage.
New Jersey joins a growing number of states and municipalities using public funds to purchase and forgive medical debt. The strategy has gained popularity as an efficient way to provide immediate relief to residents while bringing attention to the broader issue of healthcare costs.
Gov. Murphy’s administration has positioned the debt relief program as part of a comprehensive approach to making healthcare more affordable and accessible for New Jersey families. State officials note that eliminating medical debt not only helps individual families but also strengthens local economies by freeing up household income for other expenses.
The $59 million in debt relief represents money that would have otherwise burdened tens of thousands of families for years, potentially affecting their ability to secure housing, transportation, or other necessities. Financial counselors often cite medical debt as one of the leading causes of personal bankruptcy in the United States.
