Medical debt is plaguing the lives of many Americans: 41% of adults currently have some debt caused by medical or dental bills, according to a July Kaiser Family Foundation survey. But there is some potential relief for some, as one New York-based nonprofit — RIP Medical Debt — has wiped out $7.1 billion in medical debt so far, aiding almost 4 million Americans.
Two former debt collections executives founded RIP Medical Debt in 2014. The nonprofit uses donations to buy large bundles of debt “that is erased with no tax consequences to donors or recipients,” according to its website.
“We buy debt in bundles, millions of dollars at a time at a fraction of the original cost. This means your donation relieves about 100x its value in medical debt,” according to the website. “People across the country receive letters that their debt has been erased. They have no tax consequences or penalties to consider. Just like that, they’re free of medical debt.”
Every $100 donation relieves $10,000 of debt, according to the 501(C)(3) nonprofit’s website. RIP Medical explains that it aims to erase debt for individuals who earn less than four times the federal poverty level, and for individuals whose debts are 5% or more of annual income.
Can You Apply to Have Your Medical Debt Erased by RIP Medical?
RIP Medical Debt notes, however, that Americans cannot apply to have their debt relieved.
“While we would love to help everyone who needs assistance, RIP Medical Debt cannot abolish medical debt for specific individuals. We approach the problem of medical debt by acquiring large portfolios of debt to help thousands of people at once,” a FAQ on the nonprofit’s website reads.
Allison Sesso, RIP’s CEO, told NPR that it depends on which hospital debts are available for purchase. “So nobody can come to us, raise their hand, and say, ‘I’d like you to relieve my debt,'” she said.
NPR reports that a surge in recent donations is helping RIP’s expansion.
In Dec. 2020, for example, philanthropist MacKenzie Scott donated a $50 million gift — the largest in the organization’s history — according to a press release.
“Our deepest gratitude to Ms. Scott for her compassionate and most generous gift. This is a gamechanger for RIP Medical Debt, allowing us to move towards our goals in a greatly accelerated way,” Sesso said at the time, according to the release. “We will immediately put this generous donation to work against our vision that includes the strategic engagement of communities across the country, to achieve health equity for all.”
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