Overview
On August 13, 2024, the Orange County Board of County Commissioners approved a $4.5 million contract with Undue Medical Debt (using federal funds from the American Rescue Plan Act of 2021) to provide medical debt relief for an estimated 400,000 Orange County residents. Undue Medical Debt is a national nonprofit that has erased medical debt for millions of individuals across the United States.
Medical debt often stems from unexpected emergencies or major life events and is the leading cause of bankruptcy in the United States with nearly one-third of adults struggling to cover health care costs despite having health insurance. The Orange County Medical Debt Relief Program abolishes qualifying medical debt for eligible residents without tax consequences. By alleviating this burden, Orange County is taking a significant step toward financial relief and improved well-being for its residents.
Frequently Asked Questions
How does the Medical Debt Relief Program work?
Undue Medical Debt uses federal funds from the American Rescue Plan Act of 2021 provided by Orange County to analyze debt portfolios and purchase qualifying medical debt from health care providers like hospitals. Under the Program, Undue Medical Debt only purchases debt for eligible Orange County residents. After purchasing the debt, Undue Medical Debt cancels or abolishes the debt without requiring any action by the resident.
Undue Medical Debt works to eliminate as much medical debt as possible. However, a single episode of care can generate multiple bills from different providers. While the Program may have erased some of these debts, others may remain unpaid. Health care providers like hospitals must be willing to sell or donate qualifying medical debt portfolios to Undue Medical Debt for patients to experience debt relief.
What medical debts qualify for relief?
Orange County residents with qualifying medical debt that are in either of the following classes are eligible for medical debt relief under the Program:
- Residents living in a household with income at or below 400% of the Federal Poverty Guidelines; or
- Residents with medical debt that equals or exceeds 5% of their total household income.
Can I apply for medical debt relief?
No. This Program does not accept applications, and medical debt relief cannot be requested.
How will residents be notified of their medical debt relief?
Undue Medical Debt will notify eligible Program recipients by mail after specific medical debts have been acquired and cancelled. Each recipient will receive a letter signed by Undue Medical Debt notifying them of the debt relief.
I received a letter from Undue Medical Debt. How do I know it’s legitimate?
Will I need to pay taxes on relieved medical debt?
No. Cancelation of qualifying medical debts does not lead to income tax liabilities for Program recipients.
Will hospitals need to share my information?
Hospitals will need to share certain patient account data with Undue Medical Debt. The data includes patient demographic information, insurance status and payer, dates of service, balances owed, and other information that identifies debt relief qualifications.
The data-sharing process is HIPPA compliant, and no diagnoses codes or personal health information is shared.
Who is Undue Medical Debt?
Undue Medical Debt (IRS EIN 47-1442997) is a national nonprofit that raises funds to acquire and abolish medical debt. Since its founding in 2014 (as Medical Debt Resolution, Inc.), Undue Medical Debt has abolished more than $14 billion of medical debt, helping more than 9 million people across the United States.