New Law Protects NJ Residents from Medical Debt Collectors

TRENTON, NJ — Legislation that Gov. Phil Murphy says "is a monumental step toward building a health care system that is more affordable and more accessible for families all across New Jersey" was signed into law in July in Trenton.

The Louisa Carman Medical Debt Relief Act protects New Jerseyans from falling into medical debt and protects residents from medical debt collectors.

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"No one should have their credit ruined because they got sick or were injured," Laura Waddell, Health Care Program Director for New Jersey Citizen Action, said in a news release. "This landmark law will help protect 1.5 million New Jersey residents from the worst effects of medical debt."

The law prohibits a medical creditor or medical debt collector from reporting a patient's medical debt to any consumer reporting agency, for health care services performed on or after the date of the bill.

In addition, the law keeps a medical debt collector from:

• Making a consumer report containing a patient’s paid medical debt or a medical debt worth less than $500, regardless of the date the medical debt was incurred,
• Charging an interest rate on a medical debt of more than 3% per year,
• Garnishing the wages of a patient with an annual income of less than 600 percent of the federal poverty level to collect medical debt owed by that patient,or
• Engaging in any collection actions against a patient until 120 days after the first bill for a medical debt has been sent or against a patient who accepts and complies with the terms of a reasonable payment plan.

Any medical creditor or medical debt collector who violates any part of the bill could be fined and may have to pay the money back.

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Carman was a member of the Governor's Office who helped draft the proposal, who died in a car crash in Plainsboro on New Year's Day.

“This legislation comes at a critical time where more than one in ten people in New Jersey, and even more in our Black and Brown communities, have medical debt in collections," Lt. Gov. Tahesha Way said in a news release. "This Louisa Carman Medical Debt Relief Act would not exist without her passion and advocacy and it will help thousands of families access the care they need and deserve without fear of financial ruin.”

Members of Carman's family attended Monday's signing ceremony at the State Capitol.

“She inspired her colleagues — as well as her friends and family members — to adopt her passion for combatting predatory medical debt collection and ending the indignity of medical debt," Carman's family said in a news release.

“(Carman's) work gave us the foundation for the critical consumer protections against medical debt provided through this legislation and her work will live on to help so many individuals and their families to be less burdened by the crushing impact of medical debt," Shabnam Salih, Director of the Office of Health Care Affordability, said in a news release.

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