The Lexington-Fayette Urban County Council announced a third round of medical debt for more than 2,000 residents.
The debt is erased in partnership with Undue Medical Debt, a nonprofit organization that erases medical debt. It eliminates debt by acquiring it from groups like hospitals and debt collectors. The debt relief efforts started with council approval in 2024 for a million dollar allocation.
Lexington Vice Mayor Dan Wu led the project. He said medical debt is the largest form of debt American carry, more than credit card or student debt.
“It's a real problem that's kind of deeply entrenched in our broken health insurance and medical system, and it's not something that we can impact on the local level, but when I discovered the idea, and this organization called Undue Medical Debt that does medical debt abolishment, I thought that was going to be a really impactful way that we could help folks in Fayette County,” Wu said.
He said if the entire allotment is used in the city’s three-year contract with Undue Medical Debt, about $90 to $100 million of debt should be paid off. So far, the organization has used just under $250,000 of the allotment since the contract started in 2025.
This announcement is the third round of medical debt payoffs in this agreement. According to a press release from the council, 2,185 Lexington residents will receive a notice in the mail that their debt has been relieved.
It will total to $4,850,146.13 in debt relief. Currently, more than $23 million of outstanding medical debt has been abolished for nearly 12,000 residents since the project started.
Wu said the 1 million dollars turns into $90 million through negotiations with hospitals and secondary markets trying to get the debts off the books. The ratio is often pennies on the dollar. Undue Medical Debt buys these debts with the council money and then doesn’t collect on them.
The $90 million to $100 million is an estimate from Undue Medical Debt based on demographics and similar cities. Wu said the total relief could be a little more or less than that number.
“I think the return on your investment couldn't be better,” Wu said. “There's basically nothing that we do as government where we get 100 to 1 on our money in terms of return.”
To be eligible for the debt relief, one must be a current resident of Lexington-Fayette County, have an income up to 400% of the Federal Poverty line – about $100,000 for a family of three – and face medical debt of 5% or more of your annual income.
When a resident’s debt is paid, a notice will arrive in the mail. Wu said the notice is legitimate and people should keep that letter for their records.
“It's really about physical health for me, because a lot of folks who are carrying unpaid medical debt, they don't go and seek regular medical care, and then they wait until situations get really bad and have to go to the ER, and ultimately that becomes an even bigger strain on all of our systems,” Wu said. “Our hope is for a lot of folks that this will be a reset for them to kind of shed this debt and then be able to take care of themselves again.”
