Connecticut will forgive medical debt for all eligible residents, the governor announced Friday, becoming the first state to do so.
Gov. Ned Lamont appeared on “Good Morning America” to announce the state will forgive medical debt for thousands of residents in a new initiative aimed at relieving people of significant financial burdens. Then he said.
“This is not something they did because they spent too much money. This is because they had a medical emergency and they shouldn’t have to suffer twice, first with illness and then with debt.” Lamont said.
Eligible residents do not need to apply for relief because the state will work directly with contracting agencies to eliminate medical debt.
The relief measure should go into effect by June, the state said.
The state announced that the IRS will no longer count medical debt canceled through nonprofit organizations as taxable income, so those whose debts are ultimately cleared will not incur any associated tax liability.
According to GMA, eligible residents must have a household income of 400% or less of the federal poverty line ($156,000 per year for a family of four) or medical debt equal to 5% or more of annual income. Includes people who do Be eligible for the program. ”
The new state plan will use $6.5 million in American Rescue Plan Act funds to eliminate about $1 billion in medical debt, Lamont said.
The governor originally announced a proposal to tie the relief package to coronavirus-related funds on the same day last year.
“Several states and local governments have had great success in using this model to wipe out medical debt for their residents, and we think this is absolutely the right way to use these COVID-19 recovery funds. ” Lamont said on February 2, 2023.
He added, “This initiative will not only help Connecticut residents who are financially in debt, but also the tremendous impact that this type of debt has on individuals who don’t have the means to get out, especially those who are in debt.” It will also reduce the mental burden,” he added. He is also experiencing serious medical problems. This debt cancellation will put millions of dollars back into Connecticut’s economy and provide economic stimulus to our local communities. ”
According to the U.S. Census Bureau, nearly one in five households in the United States has at least some type of medical debt. The median debt amount is $2,000.
Connecticut hopes to be the first state to eliminate medical debt, but several cities have announced or implemented similar plans, including New York City, New Orleans and Pittsburgh.
