ORLANDO, Fla. – Hundreds of millions of dollars in medical debt could be absorbed as Orange County leaders consider how to spend leftover federal aid from the American Rescue Plan.
On Tuesday, county commissioners agreed to use $4.5 million from the county’s share of the money for medical debt relief. The county would buy up residents’ medical debt and absorb it.
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The county is looking to work with the nonprofit RIP Medical Debt. The group said $4.5 million is enough to take on about $450 million in debt, reportedly helping thousands of county residents.
The nonprofit buys medical debt in large bundles at a fraction of the original cost. The group says $1 is equal to $100 in medical debt.
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To qualify for having medical debt “erased” through the nonprofit, residents have to earn less than four times the federal poverty level (around $31,000 for a family of four) or have debt that is 5% or more of their annual income.
To get the debt forgiven, the county and RIP Medical Debt would work to get medical providers to take part in the program and sell the debt at a discounted rate. The medical providers have to want to sell the debt though, according to Warren Lakhan with Orange County.
There’s no application. If a person meets the criteria, they will be identified and receive a letter in the mail saying their debt is “canceled,” Lakhan said.
“Whatever that debt is, regardless of who has the debt,” Lakhan told the commission Tuesday. “If somebody has $100,000 worth of debt, if somebody has $50 worth of debt, it’ll be canceled.”
Past-due medical bills can adversely affect a person’s credit, and thus jeopardize their abilities to get loans, or even renting an apartment or getting a job. According to a recent analysis of Census data by the Kaiser Family Foundation, 1.5 million Florida adults report having medical debt in a given year.
Recipients who have their debt relieved face no adverse consequences, according to RIP Medical Debt, because the relief is considered a gift, and an act of generosity.
Orange County would join other governments around the country including New York City, Washington, D.C., Pittsburgh and New Orleans. Connecticut recently became the first state in the country to erase medical debt.
The county has $23 million in leftover American Rescue Plan funding it is shifting. Money will go to affordable housing, mental health, homeless programs, Second Harvest Food Bank, Career Source and to help fund three fire stations.
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