New Medical Debt Relief Program Launches In Rhode Island

RHODE ISLAND — Rhode Island has launched a new program which aims to help state residents eliminate medical debt, General Treasurer James Diossa said Tuesday.

Diossa announced a partnership with Undue Medical Debt, a national nonprofit that purchases medical debt from health-care providers like hospitals and doctors' offices and from debt collectors. The RI Medical Debt Relief Program has received $1 million in funding from the Rhode Island General Assembly for the "purchase, cancellation and forgiveness of medical debt."

Medical debt is the leading cause of bankruptcies in the United States, and it impacts more than two in five American adults, state officials said.

"I have heard from folks across the state who are struggling with medical debt," Diossa said. "The financial constraints brought on by unaffordable medical bills drive people to defer needed medical care, leading to a cycle of debt, distress, and unresolved, potentially escalating health issues. This new program is a critical resource to protect Rhode Islanders’ finances, dignity, and health."

Rhode Island joins nearly 20 states, counties, and municipalities across the United States providing some form of medical debt relief.

"Too many Rhode Islanders are one medical crisis away from financial ruin," state House Speaker K. Joseph Shekarchi (D-Warwick) said. "Medical debt can accumulate quickly and become a deterrent to seeking needed health care. This new program will bring real results for hundreds of families and enable them to have a clean state."

How The Debt Relief Program Works

Undue’s model mimics that of for-profit debt buyers, but uses government grants and charitable donations to purchase large portfolios of medical debt for pennies on the dollar. Undue Medical Debt offers a standard pricing model that corresponds to the fair market value of medical debt. Prices vary based on the age of the accounts. Older accounts are generally priced lower than newer accounts.

Once Undue purchases medical debt, it will work to identify those Rhode Island residents who are eligible for the debt forgiveness program. Any health care provider holding medical debt owed by a Rhode Island resident can partner with the state to participate in the Medical Debt Relief Program.

To be eligible, a person must be a Rhode Island resident who incurred debt in order to obtain necessary medical treatment and has an estimated income equal to 400 percent or less of the federal poverty line or possess medical debt that is more than 5 percent of their estimated income.

State officials said eligible Rhode Islanders will receive a letter from Diossa and Undue, stating the amount of debt forgiven and the former holder of that debt (i.e. the medical provider). There is no application process. Debt will be cancelled automatically as it is identified, obtained, and abolished, according to state officials.

More information on the Rhode Island Medical Debt Relief Program is available online.

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