Attorney General Ellison, Senator Boldon, and Representative Reyer announce Minnesota Medical Debt Reset Act

Act invests $5 million to relieve an estimated $500 million in medical debt

February 14, 2025 (SAINT PAUL) — Today, Attorney General Keith Ellison, Senator Liz Boldon, and Representative Liz Reyer announced the Minnesota Medical Debt Reset Act (SF 1347), legislation which makes a one-time, $5 million appropriation to buy and forgive the medical debt of hundreds of thousands of Minnesotans through a partnership with Undue Medical Debt, a national medical debt-forgiveness nonprofit. Undue Medical Debt estimates that $5 million could relieve approximately $500 million in medical debt from roughly 250,000 – 400,000 Minnesotans.

"When last year's Debt Fairness Act went into effect, I promised that helping Minnesotans with the burden of debt so they can afford their lives would remain a priority for my Office and these legislative champions," said Attorney General Keith Ellison. "The Minnesota Medical Debt Reset Act is the next phase of that crucial work. When passed, this bill will be a win for struggling Minnesotans who didn’t choose to get sick and who didn't ask for the debt that came along with that. It will support our hospitals by helping them fulfill their commitment to community wellbeing, while also getting uncollectable debt off their balance sheets. And at a time when the politics of cruelty are on full display in the White House, it will be a beacon that Minnesota's commitment to helping our neighbors remains as strong as ever."

“Medical debt isn’t like other types of debt,” said Senator Liz Boldon. “No one chooses to have an extended stay in a hospital. No one plans on having their appendix burst or having a heart attack. Medical expenses shouldn’t be treated like a loan for a business. It doesn’t have to be this way. Thanks to last year’s Minnesota Debt Fairness Act, Minnesotans with medical debt now have stronger protections against predatory collection practices and a fairer repayment process. I am proud to continue this work and partner with Representative Reyer and Attorney General Ellison again. This appropriation will serve as a much-needed reset for Minnesotans who are struggling with these unnecessary burdens.”

“We know that medical debt triggers additional forms of consumer debt and adds great stress to people’s lives,” said Representative Liz Reyer. “I’ve seen this in my family and my community. The Minnesota Medical Debt Reset Act lifts this burden while also helping Minnesota’s hospitals. It’s truly a win-win that will help all communities across the state.”

How the Minnesota Medical Debt Reset Works

Health care providers like hospitals and physicians’ groups generally try to recover medical debt themselves at first by way of phone calls and letters. If they are unsuccessful after a certain period of time, the debt is often deemed uncollectable; some will employ collection agencies on a contingency basis to try and collect and a minority of providers sell to collections agencies in bulk at a massive discount. Undue Medical Debt works with providers and commercial debt buyers on the secondary market to purchase that uncollectable medical debt in bundled portfolios for pennies on the dollar, then erases it. On average, $1 is able to relieve up to $100 in medical debt.

The Minnesota Medical Debt Reset aims to provide relief to Minnesotans who cannot afford to pay back their medical debt. To qualify for relief, Minnesotans must:

1. have household income at or below 400% of the Federal Poverty Guidelines, or
2. have medical debt equal to or exceeding 5% of their household income

Undue confirms individuals’ current incomes in partnership with FinThrive which owns TransUnion, one of the three main credit reporting agencies.

Under the Minnesota Medical Debt Reset Act, Minnesotans cannot apply for relief. Minnesotans who qualify for debt forgiveness will receive Undue Medical Debt branded letters out of the blue in the mail notifying them that some or all of their debt has been erased. The Minnesota Medical Debt Reset creates no income tax liabilities or obligations, and there are no strings attached. If the act, and a contract with the nonprofit, moves forward the state will announce when debt relief letters are forthcoming. There is no timeline as of yet for relief. As providers partner with the state more debt relief will be announced.

The Burden of Medical Debt

Millions of Americans carry medical debt. In fact, recent analysis found that people in the U.S. collectively owe roughly $220 billion in medical debt. The burden of medical debt is widespread and is not limited to those without health insurance. Despite over 90% of Americans having health insurance, 54% of Americans carry or have carried medical debt within the last five years.

A recent poll found that nearly half of patients surveyed said medical debt or the fear of it can cause many to delay seeking medical care, which can lead to worse and more costly health outcomes down the road.  In fact, the majority of people who say they deferred or skipped seeking health care due to cost also say their health condition got worse as a result. A recent poll found that, of people with medical debt, nearly half described feeling trapped by that debt and fearing they could never pay it off.

Background on Undue Medical Debt and Saint Paul’s Debt Reset Program

Undue Medical Debt has a long history of successfully partnering with state and local governments to help relieve the burden of medical debt from their residents, including the states of New Jersey, Rhode Island, Arizona, Connecticut, and Illinois.

“Building on our work with the city of Saint Paul, it’s exciting to see state funded medical debt relief moving ahead in the Minnesota legislature,” said Undue Medical Debt CEO and president Allison Sesso. “This medical debt relief program builds dynamically on the Minnesota Debt Fairness Act and we look forward to hopefully partnering with the state and local providers like hospitals to clear unpaid debts, providing some funding for uncompensated care and, most importantly, removing the emotional and financial burden of medical debt on Minnesota residents so they can breathe easier and re-engage with the health care system for the essential care they need.”

Recently, Saint Paul Mayor Melvin Carter partnered with Undue Medical Debt to invest $1.1 million of American Rescue Plan dollars to erase an estimated $110 million in medical debt from city residents. In November 2024, Mayor Carter announced that $40 million in medical debt has already been erased from Saint Paul residents. In that first round of debt forgiveness, the average debt forgiven was $268, while the largest was $104,972.

"When even one of our neighbors struggles to access medical care, the health of our entire community suffers," said Saint Paul Mayor Melvin Carter. "Our medical debt relief work eliminates the barrier that too often forces people to delay or forgo critical, essential care. This is about investing in the long-term well-being of our residents."

One Saint Paul resident who had a portion of her medical debts forgiven was Jenn Schultz, whose four separate skin cancer diagnoses in the last decade left her with significant medical debt.

"Whether you’re a cancer patient or survivor, the costs associated with ongoing care can add up quickly: oncology appointments, scans, biopsies, ultrasounds, medication, treatment and so on,” said Jenn Schultz. “Medical debt shouldn’t be a lifelong side effect of my cancer diagnosis."

Attorney General Ellison, Senator Boldon, and Representative Reyer began discussions with Undue Medical Debt in 2024, around the time the Minnesota Debt Fairness Act the three worked on together was signed into law. The law worked to improve flaws in Minnesota’s debt collection system by banning the automatic transfer of medical debt to one’s spouse, banning reporting medical debt to credit bureaus, and banning denying necessary medical care on the basis of unpaid bills.