DC to cancel nearly $42 million in medical debt for low-income residents

WASHINGTON — Thousands of low-income D.C. residents will start receiving letters on Friday informing them that their medical debt has been wiped out. 

Mayor Muriel Bowser's office says nearly $42 million in debt from local hospitals will be canceled through an initiative funded by an anticipated year-end surplus from the Fiscal Year 2023 budget. The debt relief is expected to benefit over 62,500 Washingtonians, according to the Bowser administration. 

“This creative use of funds allows us to help tens of thousands of people at once. We know the burden of medical debt can be a barrier from going to the doctor, buying a home or going to college to have a fair shot in their health and overall wellbeing," Mayor Muriel Bowser said in a statement.

The D.C. government will be paying off the debt, buying it for only a fraction of the cost according to the mayor's office. The overall $41,999,157 total debt will be abolished for a cost to the city of $233,461 officials say.

Officials predict that approximately $26 million of the total debt relief will go to 36,000 District residents who make $25,000 or less per year. Eighty percent of the recipients live in D.C. zip codes that are majority Black or Latino according to the mayor's office.

Eligibility for the program was determined if the resident's income was less than four times the federal poverty level or if the medical debt was more than 5% of their annual household income.

"By releasing D.C. residents from the burden of medical debt, we’re making sure people have a fair shot," Bowser added. 

Residents cannot apply for the debt cancellation program, but those that will benefit from the initiative will receive marked letters from the nonprofit Undue Medical Debt in Long Island. The letters will detail the amount of debt that is being erased and the dates of service.

Tzedek DC, who provides legal help for low-incomes residents in the District, is providing assistance to help navigate the medical debt cancellation process.  

"If you get a letter from Undue Medical Debt that your debt has been canceled, you no longer owe the debt. The debt should not show up on your credit report. You do not owe taxes on the erased debt. You do not have to take any action," the group posted on their website.