>>1319410>https://www.northjersey.com/story/news/health/2024/07/22/nj-medical-debt-law/74494890007/For hundreds of thousands of uninsured, underinsured and even fully insured New Jerseyans who have racked up debt from medical bills, relief may be on the way.
Gov. Phil Murphy signed a bill into law Monday that will cap the interest on medical debt. The bill also bans reporting many debts to credit rating agencies and prohibits the garnishing of wages up to a certain income level.
The law is an attempt to tackle an issue for many New Jersey residents who have seen their lives upended by mammoth medical bills.
In a state that has some of the highest prices for medical care in the nation, about 11% of New Jersey residents have medical debt that has gone to a collections bureau, according to the nonprofit Commonwealth Fund.
Only 6.8% of residents were uninsured in 2022, suggesting that even those with medical insurance are having a hard time paying their bills.
"This crisis not only threatens the economic well-being of our state's families, it also poses a threat to their physical health," Murphy said at a signing ceremony in Trenton. "We know that when someone is already saddled with medical debt, they are far less likely to seek out medical care."
Here's what NJ medical debt law prohibits
Under the new law, a medical debt collector can no longer:
Charge more than 3% interest each year on outstanding medical bills
Garnish the wages of a patient with annual income "less than 600 percent of the federal poverty level." Since the federal poverty level is $15,060 for an individual this year, that income threshold would be $90,360.
Place a lien on a patient's primary residence or personal property to collect medical debt.
