Two retired women wipe out £1.1m in medical expenses debt for hundreds of strangers

Just $12,500 in donations enough to buy up millions in burdensome debt

Yellow envelopes informing people their medical debt has been cleared by strangers are arriving all over New York (Getty Images)

If a slim, yellow envelope with a Rye, New York, return address lands in your mailbox this Christmas season, do not throw it out. It’s not junk mail.

Some 1,300 such envelopes have been sent to New Yorkers containing the good news RIP Medical Debt, a New York-based nonprofit organisation, has purchased their medical debt — and forgiven it.

Last spring, Judith Jones and Carolyn Kenyon, both of Ithaca, New York, heard about RIP Medical Debt, which purchases bundles of past-due medical bills and forgives them to help those in need.

So the women decided to start a fundraising campaign of their own to assist people with medical debt in New York.

Over the summer months, the women raised $12,500 and sent it to the debt-forgiveness charity, which then purchased a portfolio of $1.5m (£1.1m) of medical debts on their behalf, for about half a penny on the dollar.

Ms Jones, 80, a retired chemist, and Ms Kenyon, 70, a psychoanalyst, are members of the Finger Lakes chapter of the Campaign for New York Health, which supports universal health coverage through passage of the New York Health Act.

“The way sort of opened,” Ms Jones said. They cast a wide net for donations, she said, explaining to people that the campaign was only a short-term fix for the larger problem of out-of-control medical costs.

“We tried to get people interested in the seriousness of medical debt,” she added, “and lead them to understand that when the New York Health Act passes, that will be the end of medical debt, because everyone will be covered.”

The 1,284 New Yorkers who had their debts forgiven as a result live in 40 of the state’s 62 counties, from Westchester to Chautauqua. The sources of the debt were some 130 hospitals and branches that had provided medical services, RIP Medical Debt said.

It has become increasingly easy for regular citizens to purchase bundles of past-due medical bills and forgive them because of the efforts of the debt-relief charity, which was founded in 2014 by two former debt collection industry executives, Craig Antico and Jerry Ashton.

After realising the crushing effect medical debts were having on millions of Americans, the men decided to flip their mindset. They began purchasing portfolios of old debts to clear them as a public service, rather than try to hound the debtors.

“I like doing this much more than I liked doing collecting,” Mr Antico said.

RIP Medical Debt had its first star turn in 2016, when John Oliver did a segment on his HBO show Last Week Tonight, in which he paid $60,000 (£47,000) to forgive $14.9m (£11.7m) in medical debts through the charity.

About 9,000 people received the yellow forgiveness envelopes as a result.

Since then, other high-profile efforts to forgive debts through the charity include fundraisers sponsored by NBC and Telemundo affiliates.

In all, the organisation says its donations have forgiven $434m (£340m) in medical debt, assisting some 250,000 people. That remains only a fraction, though, of the more than $750bn (£587bn) in past-due medical debt it says Americans owe.

“It is a drop in the bucket,” Mr Antico said.

Many people take on extra jobs or hours to afford health care, and 11 percent of Americans have turned to charity for relief from medical debts, according to a 2016 poll conducted by The Times and the Kaiser Family Foundation.

RIP Medical Debt specifically seeks to buy the debts of people who earn less than two times the federal poverty level, those in financial hardship and people facing insolvency.

It purchases the portfolios at a steep discount, a penny or less on the dollar. These bills have typically passed through several collection agencies and months or years of collections.

The people, who do not know they have been selected, receive the debt relief as a tax-free gift, and it comes off their credit reports.

Mr Antico said he thought of his charity as a “resolutionary, not a revolutionary” effort, one that offers people relief, but that cannot solve underlying issues like high medical costs.

Through personal data associated with the debt accounts, they are able to target specific classes of people, such as veterans, to relieve their debts.

“I do like the idea that people do not have to ask for help,” he said. “The random act of kindness is kind of a cool thing.”

The envelopes from Ms Jones and Ms Kenyon’s gift went out in November, but new letters are going out all the time. And don’t worry. Even if you throw your yellow letter out, your debt is still forgiven. You just might not know about it until the next time you run your credit.

New York Times