Gov. Murphy announces medical debt eliminated for 77K families

People who will have their medical debt eliminated will receive a letter notifying them beginning Thursday, Oct. 17. (Getty Images)

About 77,000 New Jerseyans with unpaid medical bills at one of the state’s largest hospital systems will see much of their debt eliminated under a plan Gov. Phil Murphy announced Tuesday.

Using $900,000 in federal COVID-19 relief funds, Murphy’s administration partnered with New York-based nonprofit group Undue to purchase $120 million in medical debts from Atlantic Health System. This second round of debt elimination brings the total amount of medical debt erased to $220 million for 127,000 residents, Murphy’s office said.

“Investing in affordable and accessible health care allows residents to prioritize their well-being without having to take on the significant burdens of medical debt, which has long served as a debilitating barrier to receiving the life-saving care and services they deserve,” he said. “That is why our Administration has taken action to both protect residents from accumulating debt and eliminate existing debt so that New Jerseyans can focus on what matters most: their health.”

Atlantic Health System operates seven hospitals across New Jersey, including Morristown Medical Center, CentraState Medical Center in Freehold, Overlook Medical Center in Summit, and Newtown Medical Center.

Murphy announced in his January State of the State address that he would target medical debt, saying it can hurt low- and middle-class families. Murphy also signed the Louisa Carman Medical Debt Relief Act in July , a law that offers new protections for people falling into medical debt, like requiring hospitals to offer payment plans and barring debt from being sent to collections until 120 days after the first medical bill was sent.

There is no application process for this debt relief. Undue works directly with the hospital systems to purchase the debt and erase it.

Some health care providers will sell medical debt for pennies on the dollar because it is often so hard to collect.

Those who qualify for medical debt relief under the Murphy administration’s plan must have medical debts that equal 5% or more of their income, or they have incomes that are not higher than four times the federal poverty line. That would amount to about $60,000.

People who will have their medical debt eliminated will receive a letter from Undue beginning Thursday.

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