New Jersey Department of Health Announces Elimination of $90 Million in Medical Debt for Nearly 20,000 New Jerseyans

Final round of debt relief under COVID-era funds that New Jersey leveraged to reach nearly 900,000 residents

TRENTON, NJ - The Office of Healthcare Affordability and Transparency (OHCAT), part of the New Jersey Department of Health (NJDOH), today announced that in partnership with national nonprofit Undue Medical Debt (Undue), the State is delivering a ninth and final round of medical debt relief, impacting nearly 20,000 New Jersey residents who owed a combined $90 million in medical bills. Throughout this partnership and as part of the State's overall efforts to make healthcare more affordable, the State retired over $1.6 billion in medical debt for nearly 900,000 New Jersey residents.

Funded with an initial state investment and expanded with one-time federal American Rescue Plan Funds, New Jersey's medical debt abolishment program partnered with Undue to purchase this qualifying medical debt from healthcare providers. Undue-branded letters to impacted New Jerseyans began arriving in the mail this week. No action is required from recipients.

"Across the country and here in New Jersey, families are struggling to stay afloat as rising healthcare costs force too many people to choose between seeing a doctor, filling a prescription, and paying for everyday necessities," said Governor Mikie Sherrill. "While the federal government is cutting access to affordable healthcare, my Administration is focused on ensuring our communities can access the best possible care without fear of collecting mountains of medical debt. We will continue fighting to lower costs, protect coverage, and make high-quality healthcare more accessible and affordable for New Jersey families."

"Medical debt is a symptom of the problem in our healthcare system: Care that is too costly for too many people, creating an unjust burden," said Dr. Raynard E. Washington, New Jersey Health Commissioner. "We will never succeed at closing wide gaps in life expectancy until all our residents can afford to access basic healthcare, and we will never lower costs if we do not emphasize access to primary care and avoiding costly hospitalizations."

"I'm grateful for the state of New Jersey's partnership, which has now erased an additional $90 million in medical debt for more than 20,000 New Jersey residents," said Allison Sesso, President and CEO of Undue Medical Debt. "I'm also grateful to Governor Sherrill for her continued commitment to healthcare affordability and removing barriers to care for burdened patients while empowering providers to keep families healthy. No one chooses to get sick, be in an accident or have a chronic condition. At a time when budgets are tight, this program is one clear example of how New Jersey has stepped up to ease the burden on those who need it most."

"It has been exciting to see the impact that these funds have had on New Jerseyans burdened with medical debt," said James Lloyd, Director of the Office of Healthcare Affordability and Transparency. "Relief from debt can be critically important for those families who receive it, and we have to work together to make care more affordable for everyone."

With the funds fully expended, the debt elimination program launched in 2023 is now complete. Despite the program's end, the Department remains focused on reducing the burden of healthcare costs to New Jerseyans to address the root of medical debt.

Addressing Healthcare Costs in New Jersey

Rising healthcare costs fall hardest on those least able to bear them. In 2024, nearly 1 in 7 New Jersey residents lived in families whose out-of-pocket health care spending, including insurance premiums, exceeded 10% of their annual income.

The Office of Healthcare Affordability and Transparency (OHCAT), housed within the Department, is continuing to identify the drivers of healthcare cost increases. OHCAT's research has already identified that rising prices - not utilization - is the primary driver of cost growth in New Jersey.

Other NJDOH initiatives seek to make it easier for individuals to access routine and preventive healthcare and chronic disease management, which reduces the likelihood of costly health crises that often lead to medical debt.

The State is leveraging Rural Health Transformation Program funds to advance healthcare access and affordability in rural New Jersey, with Year One grants announced this summer.

In August, NJDOH partnered with healthcare systems to expand opportunities for families get routine vaccinations, annual physicals, and other health and wellness services ahead of the school year.

The Department also oversees the Charity Care subsidy to hospitals for providing care for people who cannot afford their care, as well as the Uncompensated Care Fund to support Federally Qualified Health Centers to defray care costs for low-income New Jerseyans who are uninsured or underinsured. The Fiscal Year 2027 budget signed by Governor Mikie Sherrill includes $83.9 million in state and federal funds for Charity Care, and $39 million for Uncompensated Care Fund.

New Jersey's efforts to improve healthcare access and affordability are made significantly more difficult by federal changes that are now pushing quality health insurance coverage out of reach for more New Jerseyans. Changes to Medicaid could result in more than 300,000 New Jerseyans losing NJFamilyCare coverage. Nearly 70,000 New Jerseyans dropped their GetCoveredNJ plans in the months after the federal government's elimination of enhanced Affordable Care Act subsidies.

How Debt Relief Works

Those who qualified for medical debt relief met one of two criteria; they were either at or below 400% of the federal poverty line or had medical debts equal to 5% or more of their annual income.

This is a one-time abolishment to help remove the financial and emotional burden of unpayable medical debts. Medical debt relief is source-based and cannot be requested, depending on community-minded providers like hospitals and secondary market partners like collection agencies who choose to engage and sell their qualifying medical debt.

Those benefiting from medical debt relief will receive an Undue-branded letter in the mail.

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The New Jersey Department of Health is a nationally accredited health department working to ensure that all New Jerseyans live long, healthy lives and reach their fullest potential. With more than 6,000 employees, the Department serves to protect the public's health, promote healthy communities, and continue to improve the quality of health care in New Jersey. 

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