North Carolina to Erase $4 Billion in Medical Debt for Millions
According to Newsweek In a groundbreaking move, North Carolina legislators have announced a plan to clear medical debt for millions of residents. By July 1, 2025, nearly 100 acute care hospitals across the state will begin the process of forgiving medical debt for an estimated two million low- and middle-income individuals. This initiative is expected to eliminate approximately $4 billion in debt.
The decision follows recent federal actions to prevent medical debt from affecting credit scores. According to the Consumer Financial Protection Bureau (CFPB), about 15 million Americans have medical bills on their credit reports, which can hinder their ability to make significant purchases such as homes and vehicles.
Under the new plan, all medical debt incurred from January 1, 2014, will be forgiven for Medicaid beneficiaries. Additionally, debt deemed uncollectible for patients earning at or below 350 percent of the federal poverty level will also be erased. Medical debt that exceeds 5 percent of a patient’s annual income will be forgiven as well.
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The plan, approved by the U.S. Centers for Medicare and Medicaid Services (CMS) on July 26, has received confirmation from Governor Roy Cooper that 99 eligible hospitals have agreed to participate. “Medical debt is not a choice, and it’s monumental to have North Carolina hospitals committing to be part of eliminating medical debt for their patients,” Governor Cooper said. “By joining this first-in-the-nation solution, they are raising the bar for health care, and together we will make a life-changing difference for our families and our economy.”
North Carolina has one of the highest rates of medical debt in the nation. According to KFF Health, 13.4 percent of adults in the state hold medical debt, trailing only Mississippi (15.2 percent) and South Dakota (17.7 percent).
“This state-wide medical debt relief initiative is truly groundbreaking,” said Allison Sesso, CEO and President of Undue Medical Debt. “North Carolina’s approach is notable for its extensive reach and impact, addressing medical debt both prospectively and retrospectively. It’s encouraging to see so many hospitals ready to join this pioneering effort.”
In addition to debt forgiveness, starting January 1, 2025, individuals enrolled in public benefit programs such as WIC, SNAP, Medicaid, or those experiencing homelessness will automatically qualify for charity care. Participating hospitals will also benefit from increased Medicaid reimbursement under the Healthcare Access and Stabilization Program (HASP).
