Connecticut says it will cancel $1 billion in residents’ medical debt

Connecticut Democratic Governor. Ned Lamont said his state planned to become the first to cancel medical debt. He plans to free eligible residents of roughly $1 billion worth of medical bills using $6.5 millions from the COVID era American Rescue Plan Act.

Lamont announced the news on ABC News “Good Morning America” Friday, saying that those in debt due to medical bills should not “suffer twice — first from illness and then the debt.”

Lamont intends to use the 2021 Rescue Plan to contract with nonprofit organizations to purchase medical debt at a fractional cost. According to NPR, this is how it works: the nonprofit buys the debt just as for-profit firms do. However, instead of pursuing debt collection from individuals, the non profit firm notifies them that their debt was canceled.

Connecticut residents are eligible for this program if they earn up to 400% more than the federal poverty level, or just over $125,000 per year for a four-person family. Residents who have debts that are 5% or higher of their income can also apply for debt cancellation.


According to the state, the initial investment of $6.5 million is expected erase the debts for 250,000 residents.

New York City announced last month that it would invest 18 million dollars to erase $2 billion of medical debts for eligible residents up to a half million over the next 3 years.