For more than 140,000 Arizonans, the holidays just brought a welcome surprise: relief from overwhelming medical debt. Gov. Katie Hobbs announced Monday that $213 million in medical debt will be forgiven through a state partnership with the nonprofit organization Undue Medical Debt.
“This is huge for folks that are struggling with medical debt,” Hobbs said during an interview with Phoenix’s 12News, emphasizing that many families across Arizona will soon receive letters notifying them of the debt cancellation.
This marks the second round of forgiveness under the initiative, which began in 2024 when Hobbs allocated $30 million in federal American Rescue Plan Act funds to help purchase medical debt from hospitals and collection agencies at a fraction of its value. The first round, announced last July, cleared $429 million in debt for more than 350,000 residents.
The program targets Arizonans earning up to 400% of the federal poverty level or those with medical bills exceeding 5% of their annual income. Eligible individuals do not need to apply; Undue Medical Debt works directly with healthcare providers and collectors to identify qualifying accounts.
With a total of up to $2 billion in relief planned, roughly $1.3 billion in potential forgiveness remains available. Letters confirming eligibility are being mailed statewide, though Hobbs cautioned the process takes time.
The governor has framed the initiative as part of her broader effort to reduce financial stress for working families — a move that could bring lasting relief to those hit hardest by the rising costs of healthcare in Arizona.
