On Monday evening, Cleveland City Council approved legislation that could have a huge impact on the lives of thousands of residents who deal with debt due to medical expenses.

The legislation calls for the use of $1.9 million in American Rescue Plan Act (ARPA) funds to eliminate the medical debt of nearly 50,000 Cleveland residents.

The city plans to purchase the debts through the nonprofit organization RIP Medical Debt, who specialize in buying “bundled medical debt portfolios on the secondary debt market, and then forgives that debt at pennies on the dollar.”

RIP Medical Debt does have three eligibility requirements for the program:

Patient (or guarantor) household income between 0% and up to 400% of Federal Poverty Guidelines (The city says the 400% figure means about 80% of Cleveland residents are eligible)
The medical debt being assessed represents 5% or more of annual household income
Recipients must be city of Cleveland residents
City leaders say a one-person household making up to $54,360 is eligible, as is a six-person household making up to $148,760,

When the bill was introduced to council in January, preliminary estimates showed that using the $1.9 million in American Rescue Plan Act (ARPA) funds would remove more than $190 million in medical debt.

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