NYC to Clear $2 Billion in Medical Debt for 500,000 Residents
New York City Mayor Eric Adams and New York City Department of Health and Mental Hygiene (DOHMH) Commissioner Dr. Ashwin Vasan today announced a pioneering medical debt relief program, that will invest $18 million over three years to relieve over $2 billion in medical debt for hundreds of thousands of working-class New Yorkers.
Medical debt – the number one cause of bankruptcy in the United States – disproportionately affects uninsured, under-insured, and low-income households, and the city’s program would wipe out debt for up to 500,000 New Yorkers on a one-time basis. The city will partner with RIP Medical Debt, a national, New York City-based nonprofit specializing in buying and ultimately wiping out medical debt to acquire debt portfolios and retiree debt from health care providers and hospitals across New York City. Affected New Yorkers will then be notified that their medical debt has been relieved; there is no application process for this program. The one-time debt relief program, the largest municipal initiative of its kind in the country, will launch in early 2024 and run for three years.
“Getting health care shouldn’t be a burden that weighs on New Yorkers and their families,” said Mayor Adams. “Since day one, our administration has been driven by the clear mission of supporting working-class New Yorkers and today’s investment that will provide $2 billion in medical debt relief is another major step in delivering on that vision. Up to half a million New Yorkers will see their medical debt wiped thanks to this life changing program – the largest municipal initiative of its kind in the country. No one chooses to go into medical debt – if you’re sick or injured, you need to seek care. But no New Yorker should have to choose between paying rent or for other essentials and paying off their medical debt, which is why we are proud to bring this relief to families across the five boroughs, as we continue to fight on behalf of working-class New Yorkers.”
RIP Medical Debt will purchase bundled medical debt portfolios from providers like hospitals and commercial debt buyers to then abolish that debt at pennies on the dollar. Debt relief recipients will then be notified that their debt has been bought by a third party and erased, with no strings attached. Recipients owe nothing on the debt and face no tax penalty. New Yorkers who fit one of the two eligibility criteria will qualify for the debt relief announced today, if their debt has been acquired: 1) having annual household income at or below 400 percent of the Federal Poverty Line or 2) having medical debt equal 5 percent or more of their annual household income.
To supplement the city’s investment, RIP Medical Debt and the Mayor’s Fund to Advance New York City will also partner to raise additional funding over three years. New Yorkers interested in helping relieve medical debt can donate online.
More than 100 million Americans hold some medical debt, with the total amount nationwide exceeding $195 billion. Carrying medical debt can undermine financial stability and mobility, as it can affect credit scores and put individuals and families in difficult positions to choose between care and other needed expenses. Black and Latino communities are 50 percent and 35 percent, respectively, more likely to hold medical debt than their white counterparts, and while medical debt may be held by those without insurance, even those with insurance are at risk of carrying medical debt.
