New Jersey has completed its medical-debt cancellation program after a final round erased $90 million owed by nearly 20,000 residents, bringing the initiative’s total relief to more than $1.6 billion for nearly 900,000 people since 2023.
The state Department of Health said the ninth round exhausted the program’s remaining money. The announcement said letters from the nonprofit Undue Medical Debt began arriving this week and recipients need not apply or take any action. The program used an initial state investment and one-time federal American Rescue Plan funds.
Relief was limited to debt held by participating hospitals, collection agencies and other providers that chose to sell qualifying accounts. Residents qualified if household income was at or below 400% of the federal poverty level or if medical debt equaled at least 5% of annual income. Because the program bought portfolios of debt rather than accepting individual applications, otherwise eligible people could not request cancellation if their creditor did not participate.
The model relies on distressed debt being sold for a fraction of its face value. Undue purchases bundled accounts and cancels them instead of collecting. A January program update said roughly $1 million in federal funds supported an earlier $100 million round, illustrating how public dollars can retire obligations at a steep discount. The latest state release did not specify the purchase price for the final $90 million portfolio.
Completion ends the direct cancellation campaign, but it does not end the state’s broader medical-debt policy. The Office of Health Care Affordability and Transparency says the Louisa Carman Medical Debt Relief Act bars reporting certain medical debt to consumer agencies, caps annual interest at 3% and restricts wage garnishment for patients below 600% of the federal poverty level. The law’s bill text also establishes notice and payment-plan protections.
State health officials describe cancellation as immediate relief rather than a remedy for the underlying cost of care. Nearly one in seven New Jersey residents lived in families spending more than 10% of annual income on premiums and other out-of-pocket costs in 2024, according to the department. The state’s affordability office separately reports that rising prices, rather than increased use of services, are the principal driver of health-cost growth.
The final round therefore closes one fiscal intervention while leaving the affordability problem in place. For recipients, the effect is concrete: the selected balance is canceled, no payment is due and the relief is not a loan. For other residents with medical bills, there is no successor application window because the source-based program is finished.
The Department of Health said it will continue overseeing Charity Care and uncompensated-care support for hospitals and federally qualified health centers, while using cost-growth data to shape future policy. Those programs may reduce future burdens, but they do not replicate the completed portfolio purchases. The distinction matters: New Jersey has retired a large stock of old debt, while the flow of new medical bills will depend on coverage, provider prices and access to preventive care.
