About 3,000 Rhode Islanders have had $7 million in medical debt forgiven since the launch of a debt relief program last October, the state’s General Treasurer has announced.
“This program provides crucial relief to many who are burdened with medical debt, and I hope to wipe out even more debt soon,” said Rhode Island General Treasurer James A. Diossa in a statement Monday.
There’s no enrollment or application process for the program. The program administered by New York-based nonprofit Undue Medical Debt identifies, purchases and cancels the debts of eligible Rhode Islanders. Debts of $600 and up can be forgiven, and there’s no maximum amount, although debts must be equal to at least 5% of a person’s annual income. Any amount of debt can be forgiven for people earning less than 400% of the federal poverty level.
No action is needed on the consumer’s part. People whose debt is forgiven will receive a letter in the mail that identifies the amount erased. The treasurer’s office calls the forgiven debt a “no-strings-attached gift” that does not qualify as earned income. There’s no obligation for people to repay the debt.
Legislation in the 2024 session created the program. The Rhode Island General Assembly allocated $1 million for the program in the fiscal 2025 budget. About $50,000 of the $1 million allotment has been used so far, according to Diossa’s announcement. The program uses bulk-purchasing power to buy debt from health care providers and collection agencies at a discounted price. There are more than 20 city, county and state governments nationwide that offer such programs, including Connecticut.
The Rhode Island Treasury collaborates with the New York-based Undue Medical Debt to buy debt from providers like hospitals and physician groups as well as debt collectors.
About a third of the fiscal 2025 allotment, around $370,000, covers overhead for Undue Medical Debt. The nonprofit was founded by ex-debt collectors in 2014 and has helped forgive about $15 billion in medical debt across the country since then.
This story was originally published by the Rhode Island Current.
