S3754

An Act concerning medical debt of State residents and making an appropriation.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. The accumulation of medical debt is a national concern, felt acutely by the residents of the State.

b. Medical debt, unlike some other forms of debt, often accumulates through no fault of an individual.

c. While any person can accumulate medical debt, minority households are often disproportionately affected by medical debt.

d. Since medical debt can be difficult for hospitals and other entities to collect, these entities will often settle debt obligations for a fraction of the total amount.

e. Nonprofit organizations have been created to address the settlement of medical debt, and these organizations raise funds from private sources and negotiate with hospitals and other entities to pay off medical debt.

f. The nonprofit organizations work directly with hospitals and other entities so that individuals need not apply for assistance; if an individual qualifies under the program, the nonprofit organization will proactively work to eliminate the medical debt.

g. Cities across the country are adopting models to contract with these nonprofit organizations to settle medical debt obligations for their residents, and using federal funds to contract with the nonprofit organizations.

h. It is therefore an appropriate public purpose to establish a “Medical Debt Relief Initiative Program” to contract with a nonprofit organization to raise funds to relieve State residents of their medical debt.

2. a. There is created, in the Department of Banking And Insurance, the “Medical Debt Relief Program.” The purpose of the program shall be to relieve State residents of their medical debt by contracting with an eligible nonprofit organization that will raise funds to negotiate and settle medical debt with hospitals and other entities.

b. Within six months from the date of enactment of this act, the department shall contract with an eligible nonprofit organization to negotiate and settle medical debt of qualified State residents. In order to qualify for medical debt relief under the “Medical Debt Relief Program,” an individual shall have:

(1) annual income up to 400 percent of Federal Poverty Guidelines; or

(2) medical debt that is five percent or more of the individual’s estimated household annual income.

c. The contracted nonprofit organization shall:

(1) identify individuals who qualify for the program;

(2) raise funds from private sources for the purpose of acquiring medical debt;

(3) negotiate and acquire medical debt in accordance with this act;

(4) within 60 days of the acquisition of an individual’s medical debt, notify an individual of the debt acquisition; and

(5) on a quarterly basis, beginning three months following the date on which the nonprofit organization enters into the contract pursuant to this act, provide a report to the Department of Banking and Insurance that details the measures taken, funds raised, and debt relief provided for each preceding quarter of the program, and any other information that the commissioner deems appropriate.

d. The Commissioner of Banking and Insurance, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), shall adopt rules and regulations necessary to effectuate the purposes of this act.

3. a. There is established in the Department of Banking and Insurance a nonlapsing fund that shall be known as the “Medical Debt Relief Initiative Program Fund” (MDRIP Fund). MDRIP Fund shall be administered by the Commissioner of Banking and Insurance pursuant to section 2 of this act.

b. The fund shall consist of all moneys appropriated by the Legislature for inclusion in the fund and investment earnings of the fund. The moneys in the fund shall be invested and reinvested by the Director of the Division of Investment in the Department of the Treasury.

4. There is appropriated from the general fund $10 million to the “Medical Debt Relief Initiative Program Fund” for the purpose of contracting with a qualified nonprofit organization to effectuate the purposes of this act. To the extent permitted by federal law, the funding shall come from the monies received by the State under the federal "American Rescue Plan (ARP) Act," Pub.L.117-2, or any other available federal funding.

5. This act shall take effect on the first day of the third month next following the date of enactment and shall expire on January 1 of the sixth year next following the date of enactment.

STATEMENT

This bill creates the “Medical Debt Relief Program.” The purpose of the program is to relieve State residents of their medical debt by contracting with an eligible nonprofit organization, such as RIP Medical Debt, Inc., to negotiate and acquire medical debt from hospitals and other entities on behalf of State residents. State residents will not need to apply for inclusion in the program; if they meet the eligibility criteria, the nonprofit organization will proactively seek acquisition of their debt.

To qualify for the program, a State resident must have:

(1) annual income up to 400 percent of Federal Poverty Guidelines; or

(2) medical debt that is five percent or more of the individual’s estimated household annual income.

Under the bill, the contracted nonprofit organization is required to:

(1) identify individuals who qualify for the program;

(2) raise funds from private sources for the purpose of acquiring medical debt;

(3) negotiate and acquire medical debt in accordance with this act;

(4) within 60 days of the acquisition of an individual’s medical debt, notify an individual of the debt acquisition; and

(5) on a quarterly basis provide a report to the Department of Banking and Insurance that details the measures taken, funds raised, and debt relief provided for each preceding quarter of the program, and any other information that the commissioner deems appropriate.

The bill appropriates from the general fund $10,000,000 to the “Medical Debt Relief Initiative Program Fund” to effectuate the purposes of its provisions, but to the extent permitted by federal law, the bill requires that the funding come from the monies received by the State under the federal "American Rescue Plan (ARP) Act," Pub.L.117-2, or any other available federal funding.