Got medical debt in North Carolina? A new state program may help you.

A quick-read guide to medical debt relief in North Carolina.

Medical debt is a significant burden for North Carolinians, but a new state initiative is aimed at changing that. 

Below are answers to key questions about the medical debt situation in NC, who’s impacted, and what you need to know about available resources and your rights.

• What’s the situation with medical debt in North Carolina?

North Carolina has one of the highest rates of medical debt in the country. With the state ranking 4th in the country for medical debt, 20% of North Carolinians had medical debt in collections in 2022—that’s one out of every five residents.

But although the statewide rate has decreased to 8% in updated data, medical debt is still a problem—especially in rural NC. And the statewide rate is still higher than the national average. Anson County, a rural county outside Charlotte, has a population that’s almost evenly divided between Black and white residents, and coastal Beaufort County has a diverse population of Black, Latino, and white residents. For those communities of color, medical debt in collections has nearly quadrupled the statewide rate.

Research shows that people with medical debt are more likely to delay or altogether avoid needed care—which could eventually lead to a bigger issue with their health and well-being. 

 

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• Who’s most impacted by medical debt? 

Medical debt disproportionately affects those with low and middle incomes, especially communities of color. NC’s hospital prices are high—ranking 20th in the US—but work wages lag far behind. In one 2024 report on the best and worst states to work, the global poverty organization Oxfam America ranked NC last in the US for its low wages. 

This gap makes it difficult for many to afford their medical bills, leading to debt.

• Who’s making medical debt worse? 

High hospital prices combined with low wages make medical debt particularly hard to manage. Additionally, aggressive debt collection tactics, like selling debt to third parties or reporting it to credit agencies, often worsen the financial strain for those already in debt.

• Who’s trying to help? 

Democratic Gov. Roy Cooper and the North Carolina Department of Health and Human Services (NCDHHS) have created a new initiative to provide relief. 

All 99 acute care hospitals in the state have agreed to participate in a program that helps an estimated 2 million North Carolinians by:  

– Relieving existing medical debt.  

– Preventing new debt through capped payment plans.  

– Protecting patients from unfair debt collection practices.

• What resources are available for medical debt relief?  

– NCDHHS medical debt relief program: By July 1, 2025, hospitals will relieve medical debt for Medicaid recipients dating back to Jan. 1, 2014. Other residents not enrolled in Medicaid will also get relief if their income is up to 350% of the Federal Poverty Level (FPL)—or if their total medical debt is more than 5% of their income, hospitals will forgive any debt that’s over two years old, going back to 2014.

The only catch? If you’re already on a payment plan with the hospital, the terms of that agreement might stay in place.

– Dollar For: This national nonprofit helps patients access charity care, wiping out medical debt for those who qualify. You can check your eligibility through their online tool.  

– Payment plans: Starting Jan. 1, 2025, hospitals will cap payment plans at 36 months, with monthly payments not exceeding 5% of your household income if your income is between 200% and 300% of the FPL.

• What are my rights when it comes to medical debt?

Because of the new NCDHHS initiative for participating hospitals, North Carolinians have several protections:

– Debt forgiveness: Hospitals will forgive medical debt for Medicaid recipients and low-income individuals with unpaid bills going back to Jan. 1, 2014.

– Payment plan caps: Monthly payments will be limited to 5% of household income for patients making between 200%-300% of the FPL. (See the chart above to learn how you would qualify.)

– Automatic discounts: Beginning Jan. 2025, patients who receive services at participating hospitals will automatically receive discounts if they’re enrolled in public benefit programs like SNAP, WIC, or Medicaid, or if they’re experiencing homelessness. Income-based discounts will range from 50% to 100%, depending on household income.

– Interest rate caps: Interest on medical debt will be capped at 3%.

– No credit reporting: As of July 2025, medical debt will no longer be reported to credit agencies, so it won’t affect your credit score. At the federal level, President Joe Biden and Vice President Kamala Harris proposed a similar rule this year, banning medical debt from credit reports for the country.

– Aggressive debt collection banned: Hospitals can’t sell your debt if you’re low-income, and they can’t initiate lawsuits or garnish wages for medical debt.

• What other steps are being taken to help patients?

– Future medical debt prevention: The new policies also work to prevent medical debt. Hospitals will offer automatic discounts based on income, cap payment plans, and prohibit certain aggressive collection practices.

• When will the medical debt relief take effect?

The program is already in motion. FYI: Experts say that patients don’t need to take action right now—participating hospitals are working with third-party vendors to identify people who qualify.

– Oct. 1, 2024: Hospitals began the process of identifying eligible medical debt for relief. 

– Jan. 1, 2025: Automatic charity care and discounts will begin to be applied for eligible individuals.

– July 1, 2025: Full medical debt relief and consumer protections will be in place, including the prohibition on credit reporting and aggressive collection practices.

Starting July 1, 2025, hospitals and their debt collectors will face restrictions in what they can do to collect debts from patients. 

-Hospitals can’t garnish your state tax refunds or report your debt to credit agencies.

-If an insurance appeal is pending within 60 days, hospitals can’t take legal action to collect the debt.

-Debt collectors can’t sell your medical debt to third parties if your income is up to 300% of the FPL (unless it’s for debt relief).

-Debt can’t be sold until at least 120 days after the first bill is sent.

• What if I have medical debt that wasn’t incurred at a hospital?

The current program applies only to NC’s participating hospitals, but many of these hospitals offer charity care that may go beyond the scope of this program. While hospitals are the largest source of medical debt, you should check if your provider offers similar relief options.

• Bottom line: 

If you’re facing medical debt in NC, you’re not alone. 

There are new protections and relief programs in place to help reduce the burden. Make sure you know your rights, take advantage of available resources, and seek out help when needed.