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Connecticut Will Cancel $650 Million in Medical Debt

Connecticut reportedly plans to cancel $650 million in medical debt for its residents.

This relief will impact around 250,000 people and will make Connecticut the first state in the country to undertake such an effort, CNN reported Friday (Feb. 2). 

The goal is to free residents from “the cloud” over their heads and give them more freedom to buy a home, start a business or continue with their education, Gov. Ned Lamont told CNN.

“It’s a debt that you had no control over,” Lamont said. “It’s not like you overspent. You get hit by a healthcare calamity.”

According to the report, people whose medical debt equals 5% or more of their yearly income or whose household income is up to 400% of the federal poverty line — about $125,000 in 2024 — are eligible for the relief.

Qualified residents won’t need to apply, the report said, as they will get letters in the mail saying their debt has been eliminated, with those letters expected to go out as soon as this summer. The CNN report noted that more than 10% of Connecticut residents have medical debt in collections.

The program will use $6.5 million in COVID-19 funds from the 2021 American Rescue Plan Act to cover the debt, working with a nonprofit group that purchases medical debt from hospitals and eliminates it for much lower than what the patient owed.

Connecticut’s efforts come at a time when many Americans are being pestered by collection agencies over their medical debt, in many cases for bills they don’t even owe, the Consumer Financial Protection Bureau (CFPB), said last year.

The bureau said 15% of the complaints the bureau received in 2022 dealt with debt collectors trying to settle an allegedly unpaid medical bill.

“Tens of millions of people are pursued by debt collectors for medical bills, and today’s report highlights the problem of the collection of medical bills that are inaccurate or not owed,” the bureau said in a news release. “The CFPB has previously described the significant evidence, including reports from consumers themselves, that the collection, furnishing, and reporting of medical bills is plagued by inaccuracies.”

Meanwhile, research by PYMNTS Intelligence finds that a majority of consumers want more ease in paying the medical bills they do owe.

The report  “Healthcare In The Digital Age: Consumers See Unified Platforms As Key To Better Health,” created in collaboration with Lynx, found that among the consumers who wanted a single digital platform to manage all of their healthcare activities, 79% wanted a feature that let them pay all types of medical bills.