lexington, Kentucky Pioneers Medical debt Relief for Residents
Lexington-Fayette County has become the first city in Kentucky to actively erase medical debt for its residents, launching a groundbreaking initiative three years in development. The program began with a proposal by a city official to allocate $1 million towards tackling the escalating medical debt crisis, a plan unanimously approved by the Urban County Council in October 2024.
The city is partnering with Undue Medical Debt, a national nonprofit organization specializing in purchasing large portfolios of unpaid medical bills at considerably reduced prices and then abolishing them. In its initial phase, this partnership has resulted in the elimination of $12,641,416 in medical debt, providing relief to 6,484 Lexington residents.
City officials project the $1 million investment will ultimately lead to the erasure of up to $90 million in medical debt. Undue Medical Debt’s model allows for approximately $100 of debt to be eliminated for every dollar donated, achieved by acquiring debts in bulk at a fraction of their original value.
“With costs going up on everything, we had an vital possibility to put real money back into Lexington families’ pockets,” stated a city official. “We may not be able to fix all the problems with the national healthcare system, but as the form of government closest to the people, we can take meaningful steps to improve day-to-day lives.”
Eligibility and Notification
To qualify for debt relief, residents must be current Lexington-Fayette County residents and meet one of two financial criteria: an income up to 400% of the Federal Poverty Guidelines (approximately $100,000 for a family of three), or medical debt equaling 5% or more of their annual income.
Recipients will be notified via letter from Undue Medical Debt starting this week. Importantly, the debt relief will not be considered taxable income and will not incur any penalties.Residents are encouraged to retain these notification letters as verification of debt cancellation when interacting with creditors.
addressing a statewide Crisis
This initiative responds to a significant problem across Kentucky. According to Kentucky Voices for Health, the state ranks 10th nationally in the percentage of residents with debt in collections. Over half of Kentuckians (58%) report struggling with healthcare affordability, with a median medical debt in collections of $520. The burden of medical debt disproportionately impacts communities of color, residents of Appalachian counties, and those in rural areas.
A local physician assistant, working at a free clinic, highlighted the positive impact of the program.”The relief they’re gonna feel, the debt that’s been hanging over their heads is gone? They’re able to live an easier life, to not fear asking for help and accessing healthcare,” she explained.
It’s important to note that medical debt relief is source-based; Undue Medical Debt can only erase debts it acquires from partners like hospitals. Individuals cannot directly request debt relief. Lexington’s action joins a growing movement of cities and states taking local steps to alleviate the financial strain of medical debt for their residents.
