NC Medical Debt

As of October 2025, more than 2.5 million North Carolinians have had more than $6.5 billion in medical debt relieved through the state’s Medical Debt Relief Program. This includes debt cleared directly by the program as well as by additional measures that go beyond the requirements of the program. This number will continue to grow as more letters go out. 

If your debt has been relieved, you would have or will soon receive a letter by mail either directly from the hospital that held the debt or from Undue Medical Debt, the nonprofit partner helping to implement this initiative. Undue is facilitating the relief of non-Medicaid debt for NC residents at least 350% of the federal poverty level or with debt that's 5% or more of annual income. There is no action required from you to have your debt relieved or to receive this notification. You will not be asked to pay any fees. 

Yes. Medical debt relief is ongoing. Hospitals and Undue Medical Debt are continuing to identify and notify eligible individuals. At least 255,000 letters are being sent this week alone, with more expected in the months and years to come. If you haven’t received a letter yet, you may still be eligible and will be notified by mail. 

You will receive a letter from Undue Medical Debt confirming that your medical debt has been relieved. These letters are simple, official notices and will clearly state:

• The amount of debt that has been relieved
• Confirmation that no action is needed from you
• A note that the debt will not be reported to credit agencies and if it had been, the negative mark would have been removed

You can view a sample letter. If you receive one of these letters, it means your debt has officially been wiped out. 

Medical debt often results from unexpected illnesses or emergencies, not personal choice. It can lead to serious consequences:

• Damaged credit
• Difficulty finding housing or jobs
• Delayed or avoided medical care
• Emotional stress and anxiety

By removing this burden, North Carolina is helping individuals and families regain financial stability, reduce stress, and access the care they need without fear of lifelong consequences. This is a critical step toward building healthier people and communities across the state. 

North Carolina's 99 acute care hospitals had the option to participate in the medical debt relief program. Every eligible hospital elected to participate. The list of participating hospitals can be found on the NCDHHS website. 

All Medicaid enrollees (who were enrolled in Medicaid on July 1, 2025) will have all outstanding medical debt dating back to January 1, 2014, that is owed to participating hospitals relieved, as part of this current wave of debt relief.

Other consumers not enrolled in Medicaid with incomes at or below 350% of the Federal Poverty Level (FPL), or for whom total medical debt owed to a participating hospital exceeds 5% of income, will have all medical debt that is more than two years old dating back to January 1, 2014 and owed to participating hospitals relieved (exceptions apply to individuals who have a payment plan agreement with the hospital). Much of this income-based debt relief will occur over the next year.

The expected timeline for implementing medical debt relief policies is as follows:

• By March 1, 2025, hospitals entered into an agreement with Undue Medical Debt (or other non-profit partners) to facilitate full implementation of medical debt relief over the next two years.  
• By Jan. 1, 2025, individuals at participating hospitals began to automatically qualify for charity care if they are already enrolled in a public benefit program like WIC and SNAP, if they are experiencing homelessness, and if they or anyone in their household is enrolled in Medicaid.
• Also, by Jan. 1, 2025, hospitals put into place policies that qualify individuals for discounts through charity care based on their income. For example, a family of four with a household income up to around $62,000 is now eligible for a 100% discount on their hospital bills.
• By July 1, 2025, participating hospitals began to curb aggressive debt collection practices, including not selling the debt of low-income individuals, capping interest rates on medical debt, and not allowing medical debt to be the cause of foreclosing on an individual’s property or arrest.
• And by July 1, 2025, medical debt from participating hospitals no longer negatively affects someone’s credit rating. This will remove barriers to securing employment, housing, transportation, and the means to support oneself.
• Also, by July 1, 2025, participating hospitals started to forgive past debt of individuals currently enrolled in Medicaid or were actively working with Undue Medical Debt to relieve debt. Some hospitals provided debt relief for a broader population.

Patients who are currently on Medicaid and who have not received a communication about their outstanding debt being relieved by the end of October should reach out to the hospital at which they have outstanding debt. 

Patients do not need to take any action now. Participating hospitals will work with a third-party vendor to identify outstanding debt that is eligible for relief. NCDHHS will provide additional communications in 2026 when the additional debt relief has been completed.

Participating hospitals will also implement new policies designed to prevent low and middle-income consumers from incurring medical debt in the future. Most of the policies described below will apply to both uninsured and insured patients with incomes less than or equal to 300% of the FPL, which in 2024 for a family of four is $96,450:    

• Providing discounts on medical bills of between 50-100%, with the amount of the discount varying based on the patient’s income.
• Automatically applying discounts on patient bills based on the patient’s income or participation in other government programs, rather than requiring patients to apply for financial assistance.
• Not selling any medical debt for consumers with incomes at or below 300% FPL to debt collectors.   
• Capping interest rates on medical debt held by participating hospitals at 3%.
• Committing to not reporting medical debt to credit agencies.
• Other policies to protect consumers from the harmful effects of medical debt.

Only North Carolina’s acute care hospitals are eligible for the HASP program; therefore, the tool we have available to relieve medical debt applies only to these hospitals. While hospitals are the largest source of medical debt, we know they are not the only source of medical debt.

By opting into this program, North Carolina’s hospitals have taken a powerful leadership role in pushing our entire healthcare system to reckon with this national problem. Additionally, many North Carolina hospitals have charity care programs that go beyond the requirements of this program, so there may be support for individuals with incomes higher than those associated with this program.

 Undue Medical Debt, independent of the state, will continue to acquire and relieve qualifying medical debts from a variety of sources, including physicians’ groups, ERs, ambulance groups and more. Debt relief cannot be requested and is income- and source-based, meaning the nonprofit needs to partner with a provider or debt buyer to erase their qualifying medical debts.

No. The program does not impact provider participation in Medicaid. As always, Medicaid enrollees should make sure to access an in-network hospital if they are enrolled in a managed care plan. View a directory of Medicaid providers in-network with each plan is available.

There are no individual income tax implications for people whose debt is forgiven. Because the NC proposal requires hospitals to either reclassify the debt as charity care or work with third-party non-profit organizations whose purpose is to provide charitable aid by purchasing and forgiving the medical debt, the debt is seen as a gift to the debtor out of “detached and disinterested generosity.” 

The Healthcare Access and Stabilization Program (HASP) - which the Centers for Medicare & Medicaid Services (CMS) refers to as a State Directed Payment (SDP) program - helps provide much needed support to the state’s healthcare safety net. The HASP payments are calculated based on in-network Medicaid managed care payments to acute care hospitals, critical access hospitals, hospitals owned or controlled by the University of North Carolina Health Care System and ECU Health Medical Center.  The SDP program is used across the country to provide direct payments to hospitals.  States can structure the payments in different ways to achieve policy goals — some states hold back funding for quality measures, others require technology connections and data sharing as examples.

Importantly, HASP dollars are not being used to implement medical debt relief for consumers. Rather, hospitals will be required to adopt medical debt policies as a condition of eligibility to receive enhanced HASP payments. Including policy requirements as a condition of eligibility for Medicaid payment programs like HASP is common and permitted under federal regulations. This program leverages existing federal funds to achieve new health outcome measures.  

No. There is no cost to the state for the HASP program payments to hospitals, including the enhanced HASP payments tied to medical debt relief.