FRANKFORT, Ky. (LEX News) — Kentucky Gov. Andy Beshear signed an executive order on Tuesday to provide relief to more than 130,000 Kentuckians struggling with medical debt.
Beshear is directing $2.5 million to Undue Medical Debt, a national nonprofit that buys debt from participating hospitals and collection agencies and relieves that debt for a fraction of the cost. The investment will relieve $250 million in medical debt. Every dollar Kentucky spends will relieve $100 in medical debt.
Undue Medical Debt has erased more than $49 billion in medial debt nationwide.
Beshear said one out of every five Kentuckians struggles with medical debt — and that the debt is not a choice, but the result of serious accidents, illnesses, or life-changing diagnoses.
"This is crushing debt. This isn't debt that you can pay off over time. It isn't debt that you have the capacity to or you plan to have. It is crushing debt that you couldn't do anything about and it's preventing you from getting ahead," Beshear said.
"Relieving this debt is the right thing to do to help Kentuckians who are overwhelmed by these extreme costs, which can cripple families for years, if not a lifetime,” added Beshear. “That’s especially true when medical debt results in bad credit, which can prevent families from securing the American Dream of owning a home. Unpredictable challenges shouldn’t be a barrier for a better future, and today we’re taking steps to help make sure that isn’t the case.”
Melissa Henry, a Kentuckian who has had some of her medical debt forgiven, said surprise medical events can bury people financially.
"It builds up and eventually becomes a mountain that you feel like you're never going to be able to climb," Henry said.
There is no application process for the debt relief. Starting next week, Kentuckians will automatically receive letters in the mail identifying which debt has been relieved and the amount.
To qualify for the program, residents must meet one of the following criteria:
- Be a Kentucky resident who owes at least 5% of their annual income in medical bills
- Or earn at or below 400% of the federal poverty level, which is around $100,000 for a family of three
Beshear said he is using money in the budget that was set aside to help Kentuckians access more housing. He said the medical debt relief supports that goal because it clears credit and helps people qualify for home loans.
