Medical debt is one of the leading causes of bankruptcy, and in Arizona, the estimated amount of medical debt is about $2.4 billion.
But hundreds of thousands of Arizonans just got relief from those bills.
Last year, Gov. Katie Hobbs' office announced a partnership with a national nonprofit, Undue Medical Debt, that would cancel $2 billion of medical debt for up to one million Arizonans.
On Wednesday, the governor made an announcement on Today in AZ, that $429 million has been canceled so far.
"We're so proud to announce that $429 million in medical debt is so far being canceled," said Hobbs. "...and Arizonans who are benefiting from this should start to see letters in the mail."
Hobbs said the first round is more than 352,000 Arizonans.
"So if you get a letter like this in the mail, make sure that you open it," said Hobbs. "It means your medical debt is being canceled."
The effort is part of Hobbs' larger initiative to erase $2 billion in medical debt for up to one million Arizonans, supported by funds from the American Rescue Plan Act.
This initiative aims to improve economic stability and health outcomes for working-class residents.
The good news will come in the form of a letter.
The letter is a notification that we have purchased it and abolished it," said Courtney Story, vice president of government initiatives for Undue Medical Debt. "So when they receive that, there's no more action that they need to take.
The story says the nonprofit buys up medical debt at scale, directly from hospital systems and the secondary market, also known as third-party debt collectors. She says once they buy it, they cancel it.
There's no application, no red tape, no strings attached," she said. "Once you get that letter, your medical debt is abolished, and you can move on.
Those eligible for debt relief include individuals who earn 400% of the Federal Poverty Level or below and/or individuals whose medical bills exceed 5% of their annual income.
Not only does it take a mental weight off their shoulders, knowing that they no longer owe this debt, but it also allows them to return to care, to maybe seek preventative care that they otherwise were afraid to get, because they may be forced to pay this bill or they may be charged additional money," said Story. "We are just very grateful that people are able to return to care and have this burden lifted.
After all, more than $1,300 is the median medical debt in collections in Arizona, according to the latest data from the Urban Institute.
"It is one of the leading causes of bankruptcy as well," said Thomas Nitzsche of Money Management International.
Nietzsche works on initiatives aimed at empowering individuals and families to achieve financial wellness. He says while this announcement is encouraging for those having their debt erased, it draws attention to a wide-scale issue.
"Their work is really the symptom of a really broken system, because there are so many people with medical debt," he said.
Nietzsche hopes the announcement also draws more attention to solutions for those who did not have their medical debt erased.
There's a great 'Debt Free' community on Reddit, which we really love," he said. "You can also turn to ChatGPT and get some advice... obviously, do your research and don't take any one source as gospel.
If you are facing increasing medical debt and have not received a letter, there are many resources available for you to use.
For more information about how you can reduce your debt stress, click here .
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