Lexington will soon erase millions in medical debt for thousands of qualifying local residents through a new partnership with Undue Medical Debt, a national nonprofit that buys and abolishes outstanding bills for pennies on the dollar.
The Urban County Council unanimously approved $1 million for the program last October. City officials say the investment is expected to eliminate upward of $90 million in medical debt for Fayette County residents. Undue Medical Debt typically erases $100 in debt for every $1 donated, representatives said.
“With costs going up on everything, we had an important opportunity to put real money back into Lexington families’ pockets,” Vice Mayor Dan Wu said in announcing the program. “We may not be able to fix all the problems with the national health care system, but as the form of government closest to the people, we can take meaningful steps to improve day-to-day lives. I’m grateful to my colleagues on council for making this possible.”
The first phase of the initiative will abolish $12.6 million in debt for 6,484 residents. Eligible recipients must live in Lexington-Fayette County and either earn up to 400 percent of the federal poverty level or hold medical debt equal to at least 5 percent of their annual income. Undue Medical Debt will notify qualifying residents by mail starting this week. The relief carries no tax penalties.
“Please don’t throw away your letter from Undue Medical Debt,” Wu said. “It can be used as proof for creditors that your debt is canceled.”
Lexington is the first community in Kentucky to launch this type of medical debt relief, joining a growing number of cities taking local action to ease financial burdens for residents