Beginning this week, thousands of working-class New Yorkers will start receiving letters notifying them that their medical debt has been eliminated.
New York City Mayor Eric Adams and New York City Department of Health and Mental Hygiene Acting Commissioner Dr. Michelle Morse on Friday said about 35,000 New Yorkers will have about $80 million worth of debt wiped out as part of a program launched by Adams last year, according to a press release.
Medical debt is the number one cause of bankruptcy in the United States, which disproportionately affects uninsured, under-insured and low-income households.
“Working-class families should not have to choose between paying medical bills and keeping a roof over their heads, and thanks to our administration, they won’t have to,” said Adams.
The city has partnered with Undue Medical Debt, a 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. There is no application process for the one-time debt relief program, which is the largest municipal initiative of its kind in the country.
Undue 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% of the Federal Poverty Line or 2) having medical debt equal to 5% or more of their annual household income.
To supplement the city’s investment, Undue Medical Debt and the Mayor’s Fund to Advance New York City will also partner to raise additional funding over three years in order to relieve more medical debt. 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 necessary expenses. Black and Latino communities are 50% and 35% 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.
