In the coming weeks, 23,000 residents of Connecticut will have part or all of their medical debt erased, officials announced on Monday. This program will cancel $30 million in medical debt, helping thousands of people at a time when high healthcare costs are a national concern.
This is the first phase of a state program that plans to erase about $650 million in medical debt by 2026. Those who qualify will start receiving letters in the mail on December 23.
Lt. Gov. Susan Bysiewicz called this a life-changing moment for many Connecticut residents struggling with medical debt. She described it as an early holiday gift for those who need it most.
To qualify for this debt cancellation, individuals must earn 400% or less of the federal poverty level (around $120,000 for a family of four) or have medical debt that is 5% or more of their income.
According to the Census Bureau, about 15% of households have medical debt. People in poor health, those with disabilities, and Black Americans are more likely to be in this situation, according to KFF Health.
The state is working with a nonprofit group called Undue Medical Debt, which buys debt at a discounted price and negotiates with hospitals and debt collectors. The nonprofit claims that every $1 donated helps cancel $100 in medical debt. They’ve worked with other states and cities like New Jersey, Arizona, and Los Angeles.
Gov. Ned Lamont proposed this medical debt initiative in 2023 and worked with lawmakers to secure $6.5 million in funding from the American Rescue Plan Act. The state signed a deal with Undue Medical Debt in May 2024 to launch the program.
For this first phase, the state used $100,000 to forgive $30 million in medical debt, which is cheaper than usual because of the age of the debt.
Lawmakers also passed a law this year to prevent healthcare providers from reporting medical debt to credit agencies, helping protect residents’ credit scores.
Governor Lamont emphasized that the state is doing everything possible to ease the burden of medical debt. He said that no one should leave the hospital with the added stress of debt.
Past programs in other states have shown that canceling medical debt can relieve a lot of pressure on individuals. On Undue Medical Debt’s website, many people have shared their experiences after having their debt canceled. One person from Texas said, “After finding out my debt was abolished, it felt like such a huge relief. The weight on my shoulders just lifted off.”