If you get a letter saying your medical debt is forgiven, don't assume it's a scam: Here's what's going on

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Key Points
  • RIP Medical Debt is a nonprofit organization that has paid off almost $7 billion dollars of medical debt to-date, helping more than 3.6 million families.
  • To help clear people's medical debt, the organization acts like a debt collector, buying bundled portfolios of debt for pennies on the dollar.
  • If you have outstanding medical debt, "do not just blindly pay the bill," says Allison Sesso, the president and CEO of RIP Medical Debt.

Americans owed at least $195 billion of medical debt. That's despite the fact that more than 90% of the population has health insurance coverage, according to March research by the Kaiser Family Foundation.

RIP Medical Debt is trying to relieve Americans of that burden. The nonprofit organization pays off medical bills for individuals who need it most.

The charity looks for households whose incomes are less than two times the federal poverty level guideline, which is $13,590 for 2022, or who have medical debt representing at least 5% of their gross income.

RIP Medical Debt uses "precise data analytics to pinpoint the medical debt of those most in need of relief," according to the charity's website. Once it has paid off their debts, the organization then sends out a surprise letter in the mail letting individuals know that their medical debt has been wiped away.

Since the charity's inception in 2014, it has helped pay off almost $7 billion dollars of medical debt to-date, aiding more than 3.6 million families, says Allison Sesso, the president and CEO of RIP Medical Debt. In one well-publicized sweep in 2016, late-night host John Oliver purchased nearly $15 million worth of medical debt as part of a "Last Week Tonight" segment on the debt-buying industry, and then donated it to the organization.

Despite the nonprofit's big wins, there's still more to be done. Medical debt is so common, "I'm doing everything I can to scream from the rooftops about it and make sure that we do something systemically about this issue," Sesso says.

A charity that acts like a debt collector

To help clear people's medical debt, RIP Medical Debt acts like a debt collector, buying bundled portfolios of debt for pennies on the dollar. However, instead of collecting the debt, the charity pays it off for patients using funds that others have donated to the cause.

This works because "debt buyers basically realize that if they're going to buy a portfolio of bad debt, there's only a small percentage of it that they will recover," Sesso says. "They'll try to recover it by using various tactics, like putting medical debt on credit reports, or calling people incessantly."

Since medical debt is so hard to recover, it's cheap to buy in bulk, she explains.

'Do not blindly pay the bill'

Even if you aren't lucky enough to receive a letter from RIP Medical Debt, you can still negotiate down your medical debt.

If you have an outstanding bill, "do not just blindly pay the bill. Do not put it on a credit card. Do not just take take it at face value for what it's worth," Sesso says.

Instead, "I know it's difficult, but try to navigate a hospital's charity care policy," she suggests. If you don't have Medicaid or a federal subsidy from the government, "talk to your insurance company and explain your predicament." Try to negotiate and see if they'll take a lesser amount than what you owe, she says.

Get an itemized bill from the doctor or hospital to make sure you're not being charged for anything you don't owe, experts recommend. Another way to see if you're being charged a fair amount is by using the website, a nonprofit organization that gathers what insurance companies are paying in communities all over the country, Marshall Allen, author of "Never Pay the First Bill," told Grow in September.

And remember: Having medical debt "is not a personal failing," Sesso says. "Tell your story, talk to other people. You'd be surprised how many other people have similar stories. You'll feel sense of relief from the mental anguish of feeling like somehow you did something wrong," she says.

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