Following a move by state lawmakers, the accounts of millions of North Carolina residents with medical debt will be cleaned up.
By July 1, 2025, nearly 100 acute care hospitals across the Tar Heel State must begin forgiving medical debt for an estimated two million low- and moderate-income residents who have eligible medical debt dating back to the decade ending in 2014. This is expected to eliminate an estimated $4 billion in debt.
This comes after the federal government decided earlier this year to ban medical debt from being included on credit reports. Research by the Consumer Financial Protection Bureau (CFPB) found that about 15 million Americans have medical bills on their credit reports, which can cause problems when purchasing homes, vehicles and other major purchases.
For all Medicaid recipients, medical debt dating back to January 1, 2014, as well as medical debt deemed uncollectible, will be canceled for all patients whose annual income is at least 350 percent of the federal poverty level or less. Past medical debt exceeding 5 percent of a patient’s annual income will also be forgiven.
The plan was approved by the U.S. Centers for Medicare and Medicaid Services (CMS) on July 26. Now the state’s governor, Roy Cooper, confirmed that 99 eligible hospitals have agreed to participate.
“Medical debt is not a choice, and it’s great that North Carolina hospitals are committing to eliminating their patients’ medical debt,” said Governor Cooper. “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.”
According to an analysis by KFF Health, North Carolina has one of the highest medical debt rates in the country. As of February of this year, 13.4 percent of adults in the state had medical debt, just behind Mississippi (15.2 percent) and South Dakota (17.7 percent).
“This multi-faceted, statewide medical debt relief initiative is truly groundbreaking. North Carolina’s approach is unique in its breadth and reach, benefits North Carolinians across the state AND addresses medical debt in impressive ways both proactively and retrospectively,” said Allison Sesso, CEO and President of Undue Medical Debt. “It’s encouraging to see so many hospitals committed and willing to join the state in this pioneering effort to tackle this problem head-on. It cannot be overstated what a huge success this is.”
While hospitals must forgive their debts by the July 1 deadline, there are other positive aspects for North Carolinians in need of medical care. Starting January 1, 2025, those enrolled in public welfare programs such as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Supplemental Nutrition Assistance Program (SNAP), or Medicaid, or who are homeless, will automatically be eligible for charity care.
Participating hospitals receive higher Medicaid reimbursement under the Healthcare Access and Stabilization Program (HASP).
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