Delete WardApr 26, 2023
Cleveland City Council allocated $1.9 million in federal pandemic recovery money at its recent meeting to erase roughly $190 million in medical debt for about 50,000 residents.
The city will contract with the nonprofit RIP Medical Debt, which is known for its work with municipalities nationwide, to eliminate medical debt. RIP Medical Debt buys large bundles of past due medical debt at one time for pennies on the dollar directly from providers like hospitals.
So far, RIP Medical Debt has eliminated more than $8.5 billion in medical debt for almost 5.5 million individuals and families.
RIP Medical Debt persuades local hospital systems to let it purchase portfolios of bad medical debt, which are already for sale on secondary markets. Instead of trying to collect, they forgive the debt. Eliminating the debt improves residents credit scores, which makes buying a car, a house or a couch, more affordable.
One of the legislation's sponsor, Councilman Kris Harsh, noted at a press conference that this debt is typically bought by collectors who "hound you to your grave. It never goes away, you think about it constantly, and it affects your credit score."
Residents qualify if they live in a household with income up to 400% of federal poverty guidelines or medical debt that is at least 5% of annual household income. The 400% of federal poverty guidelines means about 80% of Cleveland residents are eligible. A one-person household making up to $54,360 is eligible, as is a six-person household making up to $148,760.
Residents don’t apply. Instead they will be notified via a branded RIP Medical Debt letter in the mail that their debt is eliminated and is off their credit report.
A positive side effect of Cleveland City Council's actions is that when RIP gets a portfolio of Clevelanders' medical debt, some suburban debt may be included. RIP will use city money for the Clevelanders and use private donations they've collected for the other debt in the bundle.
More information on RIP Medical Debt.