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The New Orleans City Council, following the footsteps of other local governments in Cook County, Illinois, and Toledo, Ohio, passed a last-minute line item in early December to the city\u2019s 2023 budget: a $1.3 million expenditure that is earmarked to be used to erase more than $100 million in medical debt for city residents.<\/p>\n
The city money will go to RIP Medical Debt, a New York-based nonprofit that buys outstanding debt from health care providers and collection agencies, typically for about a penny on the dollar. But instead of seeking profit, the organization sends out notices to consumers saying that their debt has been cleared.<\/p>\n
City Council President Helena Moreno announced the idea days before the budget was passed on Dec. 1. The timeline for the New Orleans debt erasure to take effect is as yet unclear. Moreno\u2019s office is working with the city\u2019s health department to finalize a partnership with RIP Medical Debt.<\/p>\n
The city has yet to solidify a contract with the nonprofit, said Moreno\u2019s chief of staff, Andrew Tuozzolo, but the goal is to come to an agreement in early 2023.<\/p>\n
In working with RIP Medical Debt, Moreno hopes to use $1.3 million in federal American Rescue Plan Act dollars to eliminate $130 million worth of medical debt from New Orleanians. She said she is particularly committed to helping \u201ccommunities of color who have been disproportionately impacted financially and medically by Covid-19.\u201d<\/p>\n
\u201cThis is a tremendous way to spend one-time federal dollars. \u2026 Being sick or injured shouldn\u2019t put anyone in debt,\u201d Moreno said in a statement.<\/p>\n
Four out of 10 Americans currently carry medical debt, which can impact one\u2019s financial<\/a> and psychological<\/a> well-being. Medical debt also can affect one\u2019s physical health, as people who carry medical debt might avoid seeking additional medical care due to lack of funds.<\/p>\n New Orleans Health Director Jennifer Avegno, a medical doctor, said that medical debt also impacts access to quality care.<\/p>\n \u201cAbout one in seven people with debt said they\u2019ve been denied access to a hospital, doctor, or other providers because of unpaid bills,\u201d Avegno said in a statement.<\/p>\n According to RIP Medical Debt\u2019s website<\/a>, the company uses \u201cdata analytics to pinpoint the debt of those most in need.\u201d Financed by donations or partnerships, the organization purchases \u201cbundles\u201d of debt, \u201cmillions of dollars at a time at a fraction of the original cost\u201d through their partnership with consumer credit reporting agency TransUnion.<\/p>\n Those who have their medical debt forgiven do not face a tax consequence or penalty on their financial records. According to the RIP Medical Debt website, the forgiven debt is a charitable gift from a neutral third party, which is not considered taxable income<\/a>.<\/p>\n To qualify for medical debt relief, the affected household must earn less than four times the federal poverty level or their debt is 5% or more of one\u2019s annual income, according to RIP Medical Debt\u2019s website. The poverty level<\/a> annual income for a single adult in Louisiana currently is $13,590 and $27,750 for a family of four.<\/p>\n <\/p>\n GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX<\/p>\n<\/p><\/div>\n \n