NC Medical Debt

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.

Medicaid enrollees will have all outstanding medical debt dating back to January 1, 2014 that is owed to participating hospitals relieved.

Other consumers not enrolled in Medicaid with incomes at least 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).

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

• Hospitals will begin the work to relieve past medical debt by Oct. 1, 2024. By March 1, 2025, these hospitals will enter 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 will 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 are enrolled in Medicaid. 
• Also, by Jan. 1, 2025, hospitals will 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 will be eligible for a 100% discount on their hospital bills. 
• By July 1, 2025, participating hospitals will 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 will no longer negatively affect 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 will forgive past debt of individuals currently enrolled in Medicaid.

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.

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 $93,600:    

• 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.

Hospitals that opt into the plan now have a series of deadlines to begin implementing various aspects of the program. By Jan. 1, 2025, patients at hospitals who opt into the program will 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 are enrolled in Medicaid. By July 1, 2025, hospitals will have policies in place to ensure medical debt does not impact a person’s credit rating and to curb aggressive debt collection practices for low-income patients, such as debt sales, excessive interest rates and home foreclosures. 

Participating hospitals will work with NCDHHS and Undue Medical Debt or other non-profit partners over the next two years to fully implement medical debt relief and debt mitigation policies. Patients do not need to take any action to benefit from the program. 

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.

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. A directory of Medicaid providers in-network with each plan is available here.

There are no individual income tax implications for people whose debt is forgiven. Because the NC proposal requires hospitals to 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 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 this program. Public 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 full HASP payments as part of their existing agreement to serve Medicaid patients. Once hospitals have adopted the policies and begin the process of relieving debt, they will donate the debt to Undue Medical Debt (or another similar nonprofit partner).