Grant Source / flickrcc
Two in three American bankruptcies cite medical debt as a leading cause.
RIP Medical Debt, a national nonprofit dedicated to eliminating personal medical debt, has canceled $33 million in debt owed by nearly 16,000 Cleveland residents thanks to ARPA dollars allocated by Cleveland City Council earlier this year.
When medical debt goes unpaid long enough it reaches bad debt status, at which point the hospital will sell it to a debt buyer or collection agency. RIP Medical Debt has eliminated more than $10 billion of that medical debt by buying millions of dollars of debt in bundles at a fraction–usually about 1%–of the original cost.
“The impact for our residents is immediate and relieves a giant weight from the shoulders of tens of thousands of Clevelanders,” said councilman Charles Slife.
Cleveland City Council passed legislation in April to use $1.9 million from the American Rescue Plan Act to partner with RIP Medical Debt to buy the debt of Clevelanders who either use 5% or more of their annual household income to pay off medical debt or make less than 400% of federal poverty guidelines.
“Council made a decision that revenue recovery funds the city received through the American Rescue Plan Act needed to go to residents’ needs and positively impact their everyday lives,” Council President Blaine Griffin said. “I’m proud we used the funds for programs like RIP, making our community safer, and for ensuring housing improvements and repairs throughout the city. These impact Clevelanders’ lives.”
About 80% of Cleveland meet the income criteria. A single-person household making up to $54,360 would qualify, as would a six-person household making up to $148,760.
However, residents can’t apply to have their medical debt eliminated. Instead, RIP Medical Debt erases debt it acquires through providers. Those who have debt eliminated and off their credit reports are then notified through a branded letter from RIP Medical Debt.
The $33 million forgiven is just the beginning, as the initiative is expected to eliminate $181 million in medical debt owed by roughly 50,000 Cleveland residents. According to Council, it expects announcements from other hospital systems over the next year.
“I am proud to see this program up and running to help tens of thousands of Clevelanders stuck in the trap of medical debt and hounded by debt collectors,” said councilman Kris Harsh.
Subscribe to Cleveland Scene newsletters.
Follow us: Apple News | Google News | NewsBreak | Reddit | Instagram | Facebook | Twitter | Or sign up for our RSS Feed
