According to CBS News, many Americans are falling into financial difficulty due to unresolved medical debt. For example, medical debts precipitate half of the nation’s filings for bankruptcy and over half of the debt collection efforts. Also, one in six Americans has an unpaid medical bill that is harming their credit score. Keel Associates, consumer debt solutions provider, reports that many calls from people struggling under heavy debt have unpaid medical bills.
An Innovative Organization Has a Solution –
Such a huge amount of medical debt in any country can deeply harm the financial security of many of its citizens, so a company from New York called RIP Medical Debt stepped in. They buy up medical debt from medical providers for pennies on the dollar and then encourage local church organizations to make a donation to pay off the debts.
How It Works –
Medical providers only attempt to collect medical debts for a few months, then they send the debt to the first collection agency. According to Statesman Journal, these collection agencies are unsuccessful making any collection on about 85 percent of the debts. The unsuccessful collection actions are sent back to the hospital. The hospital then tries one more collection agency. This second agency will also average the same dismal collection results and send the bad debts back to the hospital.
At this point, after two collection agencies have attempted to collect the debt, a buyer of medical debts will come in and purchase the debts for pennies on the dollar. This debt buyer now owns the medical debt and has the legal right to sue the patient for the money or charge them additional interest and fees. A third of all medical providers in the country sell medical debts to such a buyer.
According to Statesman Journal, since they have purchased the medical debt for pennies on the dollar, RIP Medical Debt can stretch the each church’s donation dollars. For every $1 each church donates to retire medical debts, $100 of debt is absolved. Churches are able to select counties that they want to target to eliminate medical debt.
RIP Medical Debt would like to work with hospitals earlier in the collections process to retire more medical debts.
A Hidden Benefit –
Usually, when one has a debt forgiven, the recipient need to make a report to the IRS and will have to pay taxes on the gift. In the case of these donations, that is unnecessary because the donations are made to people struggling under unpaid medical debt by county. The gift is not directed to an individual. The healthcare privacy law, HIPPA, keeps their identity private.
Some Success Stories –
According to Kaiser Health News, RIP Medical Debt has been working with churches since early 2018. As of June 2019, they have eliminated $34.4 million in medical debt working with 18 churches.
A small Maryland church with only 200 members that does not even have its own building was able to raise $15,000, which eliminated $1.9 million in medical debt for 900 families.
A Medford, Oregon church raised $30,000 and donated it to RIP Medical Debt, eliminating $2 million in medical debt for Oregon residents and $1 million in medical debt for veterans nationwide.
An Episcopal church in Champaign, Illinois hoped their $15,000 would eliminate medical debt in their county. Instead, their donation eliminated $4 million of debt in the entire southern portion of the state.
Medical debt is very crippling in this country. If you do not have the benevolence of a local church and RIP Medical Debt to help you, contact Keel Associates. We are experts in helping families find solutions to medical and consumer debt