Matt Hearon checks his credit score every week. The 57-year-old from Florida had worked to lift his score to 720, where it had been stuck for months, thanks to a $2,000 medical debt. The debt weighed down Hearon's credit score for five years, during which it was sold and resold several times. The most recent company to hold the debt employed particularly aggressive tactics, Hearon said.
"They were calling my employer, which really disgusted me," he said.
One morning in early November, he logged on to Credit Karma for his regular check. His score had jumped 32 points. The medical debt had disappeared. Hearon was completely befuddled until later that afternoon when the mail came with a letter from RIP Medical Debt. It said an anonymous couple had purchased and forgiven his medical debt.
"As I read it the first time, I'm still thinking, 'This isn't right, this isn't real, it's got to be a scam or something,'" Hearon said.
It was only after speaking to his mother, who had seen a segment on NBC News about RIP Medical Debt, that Hearon realized the letter was legitimate.
"Obviously I was very grateful," he said.
John Oliver & RIP Medical Debt
RIP Medical Debt hit the national stage in 2016 when John Oliver forgave $15 million in medical debt on his HBO show "Last Week Tonight." After it aired, the charity took off in popularity.
Each donation led to more media coverage, which led to more donations, said Robert Goff, co-founder and director of RIP Medical Debt.
"We're thrilled by the media attention that we've gotten and what we've been able to do as a result of that," he said.
Since 2016, RIP Medical Debt has abolished more than $600 million in medical debt. That includes more than 345,000 credit accounts, with an average claim of $1,600, Goff said.
Having his medical debt forgiven raised Hearon's credit score from good to excellent and allowed him to focus on paying off other debt. He hopes he'll now be able to purchase a home.
"It took me by surprise that there are still actually good people out there doing things like this," he said.
How RIP Medical Debt works
RIP Medical Debt acquires medical debt much like a debt collector, but what it does after is very different. Health care providers sell medical debt to collectors at a deep discount if they can't collect it on their own. The buyers have the right to go after the full value.
Collectors pay so little to acquire medical debt that a few successful collections can earn them a profit. Similarly, RIP Medical Debt can have an outsize impact compared to the amount of money it spends, forgiving lots of debt while spending relatively little, Goff said. When RIP Medical Debt forgives debt, it notifies not only the beneficiary, but also credit reporting agencies so the debt is removed from credit reports.
RIP Medical Debt identifies people who make below a certain income and whose debt makes up more than 5% of their earnings, based on credit report data. Goff hopes the organization can target groups of people more specifically in the future, either by profession or disease.
"We're looking at debt of necessity, where people don't have the ability to cover it," Goff said.
While most forgiven debt is taxed, RIP Medical Debt beneficiaries face no tax consequences. Under tax law, the forgiveness is considered a gift, and doesn't count as taxable income, Goff said.
The impact of medical debt
About a third of Americans have some medical debt in collections. The median amount in collections is $1,450, according to a report from the Urban Institute using credit bureau and Census data. People who have medical debt try to avoid adding to it. They shun medical services and as a result, worsen their health, said Goff.
Medical debt has varied and far-reaching effects, said Caitlin Donovan, a spokeswoman for the Patient Advocate Foundation, a nonprofit that provides case management and financial aid to Americans with illnesses.
In the short-term, medical debt can drain patients' finances and force them to postpone other expenses. In the long-term, it affects their credit scores, which can make taking out a mortgage or other loan more expensive or even impossible. (It can also make insurance more expensive.) When medical debt goes to collections, it stays on your credit report for seven years. (Read our easy guide to reading your credit report.)
How to deal with medical debt on your own
One important thing to know is whether your health plan requires you to use a certain network of health providers. Seeing someone out-of-network can lead to outsize medical bills.
Second, understand your health plan's deductible. This is the amount you'll pay for health care before your insurance kicks in. With high-deductible health plans becoming more common, it's important to put aside enough money to meet your deductible in the event of an emergency.
Third, if you do end up with a bill you're worried about affording, make sure you talk to your health providers. They may be able to offer a discount or spread the payments out, Goff said.
Depending on your situation, outside organizations may be able to help. For example, the American Cancer Society assists cancer patients with lodging and transportation expenses.
"The worst thing you can do if you find yourself with medical bills you can't handle is go silent and don't talk to anybody," he said.
Image: Aleksandra Jankovic